CHAPTER 13

Supply Chain Management and

Marketing Channels

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 Chapter 14 Video
New Balance Hubway
New Balance Hubway is a bike sharing system in
the Boston area that uses automated stations to
provide a bike service to people looking to go short
distances. In this clip, employees discuss how the
retailing model works for Hubway, and how the
difference between brick and mortar and e-
business models allowed them to succeed in the
Boston area.

CLICK TO PLAY VIDEO

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Supply Chain Supply Chain
Management
The connected chain
of all of the business A management system
that coordinates and
entities, both internal
integrates all of the
and external to the activities performed by
company, that supply chain members
into a seamless
perform or support
process, from the
the logistics function. source to the point of
consumption, resulting
in enhanced customer
and economic value.

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 Benefits of Effective Supply
Chain Management
Supply chain oriented companies
commonly report:
• Lower inventory, transportation,
warehousing, and packaging costs
• Greater supply chain flexibility
• Improved customer service
• Higher revenues
• Increased performance and profitability

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 Supply Chain Integration

• A systems approach where the

overall performance of the chain is
greater than the sum of its parts.
• Occurs when multiple functional
areas coordinate business
processes to seamlessly link to one
another.

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 Internal Supply Chain
Integration
• Management practices that reflect a highly
coordinated effort between supply chain
firms or across business functions within
the same or different firms are said to be
“integrated.”
• From an internal perspective, the very best
companies develop a managerial
orientation toward demand-supply
integration (DSI).

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 External Supply Chain
Integration
Relationship Firm-to-Firm
Firm-to-FirmSocial
RelationshipIntegration
Integration Social
Interactions
Interactions
Measurement
Measurement
Integration
Integration Operational
Operational
Planning
Planningand
and
Technology
Technologyand
and Control
Control
Planning
PlanningIntegration
Integration

Material
Materialand
andService
Service
Supplier
SupplierIntegration
Integration Customer
Customer
Integration
Integration
Customer
CustomerIntegration
Integration

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 Supply Chain Integration
The
The ability
ability of
of two
two or
or more
more
companies
companies to to develop
develop social
social
Relationship
Relationship
Integration
connections
connections thatthat serve
serve to
to
Integration
guide
guide their
their interactions
interactions when
when
working
working together.
together.

The performance assessment

Measurement of the supply chain as a whole
Integration that also holds each individual
firm or business unit
accountable for meeting its own
goals.

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 Supply Chain Integration
Technology The creation and maintenance of
and planning information technology systems that
integration connect managers across and
through the firms in the supply chain.

Material & Requires firms to link seamlessly to

service supplier those outsiders that provide goods
integration and services to them so that they can
streamline processes and provide
quality customer experiences.
A competency that enables firms to offer
Customer long-lasting, distinctive, value-added
Integration offerings to those customers who
represent the greatest value to the firm
or supply chain.
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 Key Business Processes
 Customer relationship management
 Customer service management
 Demand management
 Order fulfillment
 Manufacturing flow management
 Supplier relationship management
 Product development and commercialization
 Returns management

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 Trends in Supply Chain
Management

Outsourcing
Outsourcing Logistics
Logistics Functions
Functions

Public-Private
Public-Private Partnerships
Partnerships

Electronic
Electronic Distribution
Distribution

Global
Global Supply
Supply Chain
Chain Management
Management

Supply
Supply Chain
Chain Analytics
Analytics and
and Technology
Technology

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 Outsourcing Logistics
Functions
Outsourcing
OutsourcingBenefits
Benefits

 Reduces inventories
 Locates stock at fewer plants and
distribution centers
 Provides same or better levels of
service

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 Electronic Distribution
A distribution technique that includes any kind of product or
service that can be distributed electronically, whether over
traditional forms such as fiber-optic cable or through satellite
transmission of electronic signals.

Three-dimensional printing is a newer method for distributing

products. Special printers create products based on a digital file
using liquefied raw materials shipped to the printer’s location.

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 Global Supply Chain
Management
The management of supply chain
risk is a critical business focus.

Proactive supply chain security

measures seek to protect key inventory
and assets while reactive supply chain
resiliency measures ensure that the
supply chain is back up and running as
soon as possible in the event that a
disruption occurs.
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Supply Chain Analytics and
Technology
• Supply chain analytics programs that
can interpret big data have great
potential for improving supply chain
operations.
• Advanced technology enabled by big
data is also improving supply chain
operations.

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 Marketing Channel
A set of interdependent organizations that
eases the transfer of ownership as products
move from producer to business user or
consumer.

Channel Members
Negotiate with one another, buy and sell products,
and facilitate the change of ownership between buyer
and seller in the course of moving the product from
the manufacturer into the hands of the final
consumer.

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Marketing Channel Functions

Specialization
Specializationand
anddivision
divisionof
of labor
labor

Overcoming
Overcoming discrepancies
discrepancies

Providing
Providingcontact
contactefficiency
efficiency

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How Marketing Channels Reduce the
Number of Required Transactions

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 Channel Intermediaries

An
An institution
institution that
that buys
buys goods
goods
Merchant
Merchant from
from manufacturers,
manufacturers, takes
takes title
title
Wholesaler
Wholesaler to
to goods,
goods, stores
stores them,
them, and
and
resells
resells and
and ships
ships them.
them.

Wholesaling
Wholesaling intermediaries
intermediaries
Agents
Agents && who
who facilitate
facilitate the
the sale
sale of
of aa
Brokers
Brokers product
product by
by representing
representing
channel
channel members.
members.

AA channel
channel intermediary
intermediary that
that
Retailer
Retailer sells
sells mainly
mainly to
to consumes.
consumes.

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 Channel Intermediaries

Retailers simplify distribution by cutting

the number of transactions required by
consumers, making an assortment of
goods available in one location.

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 Channel Functions
Performed by Intermediaries
Contacting/Promotion
Transactional
Transactional Negotiating
Functions
Functions
Risk Taking

Physically distributing
Logistical
Logistical Storing
Functions
Functions
Sorting

Facilitating Researching
Facilitating
Functions
Functions Financing

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Marketing Channels for Consumer Products

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Alternative Channel
Arrangements

Dual or multiple distribution

Nontraditional channels

Strategic channel alliances

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 Factors Affecting Channel
Choice

Market
Market Factors
Factors
Who
Whoare
arethe
thepotential
potentialcustomers?
customers?Where,
Where,how
howwhen
when…?
…?

Product
Product Factors
Factors
Complex
Complexvs.
vs.standardized?
standardized?New/old?
New/old?Stage
Stageof
of the
thePLC?
PLC?

Producer
Producer Factors
Factors
Resources?
Resources? Experiences?
Experiences? Desire?
Desire?

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Market Factors

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 Product Factors
Product
ProductComplexity
Complexity

Product
ProductPrice
Price

Product
ProductStandardization
Standardization

Product
Product Product
ProductLife
LifeCycle
Cycle
Factors
Factors
That
That Affect
Affect
Channel
Channel Product
ProductDelicacy
Delicacy
Choices
Choices

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 Producer Factors

Producer
ProducerResources
Resources

Number
Numberof
ofProduct
Product Lines
Lines

Producer
Producer
Factors
Factors
That
That Affect
Affect
Channel Desire
Desirefor
forChannel
Channel
Channel
Choices Control
Control
Choices

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 Levels of Distribution Intensity
Intensity Number of
Objective
Level Intermediaries

Achieve mass market

Intensive selling. Many
Convenience goods.

Work with selected

intermediaries.
Selective Shopping and some
Several
specialty goods.
Work with single
intermediary. Specialty
Exclusive goods and industrial
One
equipment.

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 Types of Channel Relationships
Benefits Hazards

Arm’s Length Fulfills a one time or Parties unable to

Relationship unique need; low develop relationship;
involvement/risk low trust level

Cooperative Formal contract without Some parties may

Relationship capital need more relationship
investment/long-term definition
commitment; “happy
medium”
Integrated Closely bonded High capital
Relationship relationship; explicitly investment; any failure
defined relationships could affect every
channel member

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Global Channel Relationships

Global
GlobalChannel
Channel
Development
Development

Channel
Channel Gray
Graymarketing
marketing
policies
policies differ
differ channels
channels
 Channel Power, Control,
and Leadership
AAchannel
channelmember’s
member’scapacity
capacitytotocontrol
control
Channel
Channel or
orinfluence
influencethe
thebehavior
behaviorof
ofother
otherchannel
channel
Power
Power members.
members.

AAsituation
situationthat
thatoccurs
occurswhen
whenoneonemarketing
marketing
Channel
Channel channel
channelmember
memberintentionally
intentionallyaffects
affectsanother
another
Control
Control member’s
member’sbehavior.
behavior.

AAmember
memberof ofaamarketing
marketingchannel
channelthat
that
Channel
Channel exercises
exercisesauthority
authorityand
andpower
powerover
overthe
the
Captain
Captain activities
activitiesof
ofother
othermembers.
members.

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 New Developments in
Channel Management

Multichannel
Multichannel The ability to interact with
/Omnichannel
/Omnichannel potential customers on
Marketing
Marketing various platforms.

Purchasing
Purchasinggoods
goods
M-commerce
M-commerce through
throughmobile
mobile
devices.
devices.

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