chapter supply chain and channel management fifteen Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

15-2 LEARNING OBJECTIVES LO 15-1Understand the importance of marketing channels and supply chain management. LO 15-2Understand the difference between direct and indirect marketing channels. LO 15-3Describe how marketing channels are managed. LO 15-4Describe the flow of information and merchandise in the marketing channel.

15-3 Supply Chain Management

15-4 Marketing Channels Add Value Reduce number of transactions Increase value for consumers More efficient and effective ©Brand X Pictures/PunchStock FedEx commercial with John Moschitta

15-5 Designing Marketing Channels Manufacturer Customer Direct Channel Manufacturer Customer Retailer Direct Channel One Intermediary Manufacturer Customer Retailer Wholesaler Direct Channel Two Intermediaries

15-6 Managing the Marketing Channel and Supply Chain Manufacturer Retailer 3 Retailer 2 Retailer 1 Horizontal Conflict

15-7 Managing the Marketing Channel and Supply Chain through Vertical Marketing Systems Independent or conventional supply chain Independent marketing channel Vertical marketing channel

15-8 Types of Vertical Marketing Systems Administered vertical marketing system Corporate vertical marketing system Contractual vertical marketing system

15-9 Power RewardCoerciveReferentExpertiseInformationLegitimate

15-10 Managing Marketing Channels and Supply Chains Through Strategic RelationshipsStrategic Relationships Mutual Trust Open Communications Common GoalsInterdependence Credible Commitments

check yourself What are the differences between an indirect and a direct marketing channel? 2.What are the differences among the three types of vertical marketing systems? 3.How do firms develop strong strategic partnerships with their marketing channel partners?

15-12 Making Information Flow through Marketing Channels

15-13 Data Warehouse

15-14 Electronic Data Interchange Cycle time Quality of communications Easily analyzed and used Photo by Cabela’s

15-15 Vendor-Managed Inventory DH Kong/Plush Studios/Getty Images

15-16 Pull and Push Supply Chain Pull Orders based on sales data More accurate inventory Better when demand is uncertain Push Merchandise allocated based on forecast Does not need sophisticated IS system Good for steady demand items

check yourself What are the marketing channel links associated with each information flow? 2.How do marketing channel members use data warehouses to make decisions? 3.What is EDI and how is it used? 4.Why do some marketing channels use VMI, while others do not? 5.What is the difference between a push and pull marketing channel?

15-18 Making Merchandise Flow Through Marketing Channels

15-19 The Distribution Center Inbound TransportationDistribution Center Dispatcher coordinates deliveries Manufacturer may pay transportation expenses or retailers may negotiate directly with trucking companies and pay expenses Steve Cole/Photodisc/Getty Images

15-20 The Distribution Center Receiving and CheckingDistribution Center Receiving Arrival receipt Checking Undamaged Ordered = received Radio Frequency Distribution (RFID) Tags Container computer chips David Buffinton/Getty Images Photo by Scott Olson/Getty Images

15-21 The Distribution Center Storing and Cross-DockingDistribution CenterCross-Docking TraditionalCross-dockingCombinations Walter Hodges/Digital Vision/Getty Images

15-22 The Distribution Center Getting Merchandise Floor-ReadyDistribution Center Ticketing and marking Increasingly firms are forcing suppliers to ship floor ready merchandise

15-23 The Distribution Center Shipping Merchandise to StoresDistribution Center Shipping merchandise to stores is complex for multi-store chains Distribution centers use sophisticated routing and scheduling systems Ryan McVay/Getty Images

15-24 The Distribution Center Inventory Management Through Just-In-Time SystemsDistribution CenterJust-In-Time Systems Just-in-time (JIT) Quick response (QR) Zappos Website Courtesy Tubular Steel, Inc.

check yourself How does merchandise flow through a typical marketing channel? 2.Why have just-in-time supply chain systems become so popular?

Return to slide Merchandise cartons that are cross-docked are prepackaged by the vendor for a specific store. Glossary

Return to slide Manufacturers can ship merchandise either directly to a store or to a distribution center, where it is then shipped to the store. Glossary

Return to slide Electronic data interchange (EDI) is the computer- to-computer exchange of business documents from a retailer to a vendor and back. Glossary

Return to slide Just-in-time inventory systems are inventory management systems designed to deliver less merchandise on a more frequent basis than traditional inventory systems. Glossary

Return to slide Radio frequency identification (RFID) tags are tiny computer chips that automatically transmit to a special scanner all the information about a container’s contents or individual products. Glossary

Return to slide A strategic relationship or partnering relationship involves the supply chain members being committed to maintaining the relationship over the long term and investing in opportunities that are mutually beneficial. Glossary

Return to slide Supply chain management is a set of approaches and techniques firms employ to integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless operation in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time, as well as to minimize system wide costs while satisfying the service levels that their customers require. Glossary

Return to slide Vendor-managed inventory (VMI) is an approach for improving supply chain efficiency in which the manufacturer is responsible for maintaining the retailer’s inventory levels in each of its stores. Glossary