Chapter 2 The Character of Business Marketing

SUPPLY CHAIN MANAGEMENT SCM is proactively planning and coordinating the flow of products, services, and information among connected firms focusing on creating and delivering value to end users. SCM INVOLVES . . . INFORMATION SHARING JOINT PLANNING COORDINATION OF EFFORTS TO ELIMINATE WASTE BE INNOVATIVE IMPROVE QUALITY and PROVIDE FLEXIBILITY 2-2

SUPPLY CHAIN MANAGEMENT What is important in supply chain management? One is efficiency Two is effectiveness Discuss and explain.

BUSINESS TO BUSINESS: WHAT DETERMINES A SUCCESSFUL RELATIONSHIP? MOTIVATION ! THE SELLER’S MOTIVATION TO RELATE THE BUYER’S MOTIVATION TO RELATE IF THEY AREN’T EQUALLY MOTIVATED IT WON’T BE AN EQUAL RELATIONSHIP 2-4

BUSINESS TO BUSINESS: THE TYPES OF RELATIONSHIPS WHEN SELLER’S MOTIVATION TO RELATE IS HIGH RESULTS IN BUYER’S ADVANTAGE RESULTS IN STRATEGIC PARTNERSHIPS LOW HIGH BUYER’S MOTIVATION TO RELATE IS TRANSACTIONAL RELATIONSHIPS SELLER’S ADVANTAGE LOW 2-5

THE REALM OF RELATIONSHIPS High Low Seller’s motivation to relate Buyer’s motivation to relate Seller’s market Seller-maintained relation Joint relationship maintenance Buyer-maintained relation Buyer’s Market Discrete exchange (spot contracts) No exchange EXHIBIT 2-2 2-6

STRATEGIC PARTNERSHIPS OCCUR WHEN BOTH PARTIES HAVE MUTUALLY STRONG INTERESTS IN MAINTAINING AN ONGOING EXCHANGE 2-7

Strategic partnership Strategic partnerships have been influenced by the quality revolution. A management process of renewed dedication to customer satisfaction and efficiency. What is TQM?

JIT Many companies have found it necessary to reduce the number of suppliers at one hand, and try to work together (seller and buyer) to reduce inventories. Buyer as a co-producer concept! What does it mean? Six sigma?

JIT RELATIONSHIPS A SUPPLIER PRODUCES AND DELIVERS PRECISELY . . . THE NECESSARY QUANTITIES AT THE NECESSARY TIME WITH THE NECESSARY PERFORMANCE SPECIFICATIONS . . . EVERYTIME 2-10

GOING FOR HIGH PERFORMANCE RELATIONSHIPS SELLERS Want to: Sell Large Volumes Sell similar amounts over time Manage their selling and support expenses BUYERS Want: Reliable delivery without interruptions Reliable products with low rejection and defect rates Efficient lead times DEVELOP A COMMON GROUND 2-11

REQUIREMENTS FOR HIGH PERFORMANCE RELATIONSHIPS GOES BEYOND THE FINANCIAL CONSIDERATIONS: INTEGRITY FAIRNESS LOYALTY FLEXIBILITY INPUT INTO YOUR PARTNER’S STRATEGY PARTNER’S INPUT INTO YOUR STRATEGY COMPLIANCE WITH PROCEDURES AND AGREEMENT HONOR COMMITMENTS STAND BEHIND YOUR PRODUCTS 2-12

RELATIONSHIP DEVELOPMENT PHASES AWARENESS No interaction EXPLORATION Limited interaction EXPANSION Additional relational benefits COMMITMENT Sustaining actions (i.e. Contracts) EXHIBIT 2-4 2-13

TWO CHOICES FOR STAYING IN A BUSINESS RELATIONSHIP YOU WANT TO. THE REWARDS ARE FINANCIAL, STRATEGIC OR PSYCHOLOGICAL YOU HAVE TO. THE COST TO EXIT IS TOO HIGH OR THERE ARE NO ALTERNATIVES 2-14

SUGGESTIONS FOR MAKING BUSINESS- TO-BUSINESS RELATIONSHIPS LAST MAKE ON-SITE VISITS TO YOUR PARTNER TRADE PERSONNEL AND OFFICES MANAGE TOTAL DEPENDENCE WITH AN ALTERNATE SUPPLIER MAKE THE PLEDGE OF CONTINUOUS SERVICE DEVELOP A RELATIONAL CONTRACT PROVIDE OWNERSHIP BY BRINGING FUNCTIONS OR TECHNOLOGY WITHIN BOUNDARIES OF PARTNER’S FIRM 2-15