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Component Manufacturer. Automobile Manufacturer. Commodity Supplier ... the supply chain across functions within and between retailers and manufacturers ...

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supply chain and marketing channels

SUPPLY CHAIN AND MARKETING CHANNELS

Professor Ed Fox

Cox School of Business

Southern Methodist University

what is a channel of distribution
What is a Channel of Distribution?
  • A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption by the consumer or business user
  • Channel decisions are among the most important decisions that management faces and directly affect every other marketing decision
distribution channels examples
Distribution Channels EXAMPLES

Retailer

Grower

Manufacturer

Broker/ Distributor

Wholesaler

Consumer Packaged Goods

Dealer

Commodity Supplier

Component Manufacturer

Automobile Manufacturer

Automobiles

why are intermediaries used
Why Are Intermediaries Used?
  • Greater efficiency in making goods available to target markets
  • Offer the firm more than it can achieve on it’s own because of the intermediaries’:
    • contacts
    • experience
    • specialization
    • scale of operation
  • Match supply and demand
supply chain design issues

Analyze Consumer Needs

Supply ChainDESIGN ISSUES

Set Channel Objectives & Constraints

Identify Major Alternatives

Convenience (Decentralization)

Evaluate the Major Alternatives

Variety

Waiting Time

Lot Size

supply chain design issues6

Analyze Consumer Needs

Set Channel Objectives & Constraints

Supply ChainDESIGN ISSUES

Identify Major Alternatives

Evaluate the Major Alternatives

Exclusive

Distribution

Selective

Distribution

Intensive

Distribution

supply chain management what is quick response
Supply Chain ManagementWHAT IS QUICK RESPONSE?
  • Quick Response (QR) was pioneered by apparel retailers and manufacturers
    • Addressed high demand uncertainty and long lead times
    • Examples include retailers Dayton Hudson and Sears, and manufacturers Levi Strauss and Milliken & Co
  • As discount department stores adopted QR, non-fashion manufacturers increased focus n integrated supply chain management
    • Emphasis was on cost reduction
    • Examples include retailers Wal-Mart, Kmart and Target, and manufacturer Procter & Gamble
supply chain management what is quick response10
Supply Chain Management WHAT IS QUICK RESPONSE?
  • Quick Response (QR) encompasses a number of related initiatives and techniques to integrate the supply chain across functions within and between retailers and manufacturers
    • QR leverages the application of technology
  • The danger is that QR, poorly implemented, can simply shift costs from retailer to manufacturer
supply chain management quick response
Supply Chain ManagementQUICK RESPONSE
  • Point-of Sale Data
  • Scanning

or

  • Forecasting
  • EDI
  • Electronic Ordering
  • Electronic Funds Transfer

Information

Consumer

Retailer

Manufacturer

  • Cross Docking
  • Computer Controlled Material Handling
  • Flow Through Distribution
  • Barcoding
  • Vendor Managed Inventory
  • Just-in-Time Manufacturing

Product

  • Quick Response effectiveness depends on:
    • Integration of manufacturer and retailer systems
    • Commitment
    • Capabilities of technology
trends in quick response
Trends in Quick Response
  • Consolidation in discount and department stores has left strong, sophisticated national retailers that demand Quick Response (QR) from suppliers
    • For example, most Target and Kmart suppliers are on EDI, 2500+ Wal-Mart Retail Link users (1995)
    • Facilitated by standardization; e.g., Voluntary Interindustry Communcations Standards (VICS) and Uniform Product Codes (UPC)
  • Many variations on cross-docking
    • Streamline “picking” and other material handling
  • Manufacturing flexibility is lagging distribution initiatives
supply chain management what is e c r
Supply Chain ManagementWHAT IS E.C.R.?
  • Efficient Consumer Response (ECR) is essentially Quick Response adapted for the U.S. packaged goods industry
    • Broader scope than QR
  • Promise of $30 billion savings from:
    • Efficient Store Assortment
    • Efficient Product Introduction
    • Efficient Promotion
    • Efficient Replenishment
supply chain management e c r
Supply Chain ManagementE.C.R.
  • Category Management
  • EDI
  • Electronic Ordering
  • Electronic Funds Transfer
  • Point-of Sale Data
  • Scanning

or

  • Forecasting

Information

  • Just-in-Time Manufacturing

Consumer

Retailer

Manufacturer

  • Continuous Replenishment Program (CRP)
  • Direct Store Delivery (DSD)
  • Supplier Managed Inventory
  • Store Order Pallets
  • Cross Docking
  • Computer Controlled Material Handling
  • Flow Through Distribution
  • Barcoading

Product

  • ECR involves supply chain initiatives beyond Quick Response
trends in e c r
Trends in E.C.R.
  • Retailers are hesitant to make investments
    • EDI is prevalent
    • Continuous Replenishment Programs (CRP) and Direct Store Delivery (DSD), initiatives that are manufacturer funded, are increasingly common
    • Few retailers are investing in warehouse systems, which represent large retailer investments
  • Scanning discipline and continuing mistrust have limited the exploitation of scanner data for ECR
  • Efficient assortment and efficient promotions have seen the most activity