C H A P T E R SUPPLY CHAIN AND CHANNEL MANAGEMENT 15 McGraw-Hill/Irwin Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Supply Chain and Channel Management L E A R N I N G O B J E C T I V E S LO1 Define supply chain management LO2 Recognize the value added by the supply chain. LO3 Describe the flow of merchandise and the flow of information in the supply chain. LO4 Describe how supply chains are managed. 15-2
Zara Royalty-Free/CORBIS Royalty-Free/CORBIS Zara Customers Zara Website 15-3
Supply Chain Management 15-4
Supply Chain, Marketing Channels, and Logistics are Related Marketing channel Logistics management Chad Baker/Getty Images Similar but different Ryan McVay/Getty Images 15-5
Behind the Scenes at Costco 15-6
Supply Chains Add Value 15-7
Supply Chains Streamline Distribution Reduce number of transactions Increase value for consumers More efficient and effective Brand X Pictures/PunchStock FedEx Commercial 15-8
Supply Chain Management Affects Marketing Fulfilling delivery promises Meeting customer expectations Reliant on an efficient supply chain Courtesy Zara International, Inc. Courtesy Zara International, Inc. 15-9
Check Yourself 1. How does supply chain management add value? 15-10
Making Information Flow 15-11
Data Warehouse 15-12
Photo by Cabela s Electronic Data Interchange Cycle time Easily analyzed and used Quality of communications 15-13
Vendor-Managed Inventory DH Kong/Plush Studios/Getty Images 15-14
Collaborative Planning, Forecasting, and Replenishment Digital Vision/Getty Images 15-15
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 15-16
Check Yourself 1. What are the various supply chain links associated with each information flow? 2. What is the difference between push and pull supply chains? 15-17
Making Merchandise Flow 15-18
Bakery with Conscience 15-19
How does Dell s Merchandise Flow How does Dell s Merchandise Flow Courtesy Dell, Inc. 15-20
Distribution Center versus Direct Store Delivery What are the advantages of a distribution center? Mario Tama/Getty Images 15-21
The Distribution Center Management of inbound transportation Receiving and checking using UPC and RFID Storing and Cross-Docking Getting Merchandise Floor Ready Preparing to ship Shipping to store ABC News Segment on a Walgreens Warehouse 15-22
Inbound Transportation Dispatcher coordinates deliveries Manufacturer may pay transportation expenses or retailers may negotiate directly with trucking companies and pay expenses Steve Cole/Photodisc/Getty Images 15-23
Receiving and Checking Receiving Checking Radio Frequency Distribution (RFID) Tags Arrival receipt Undamaged Container computer chips David Buffinton/Getty Images Ordered = received Photo by Scott Olson/Getty Images 15-24
Storing and Cross-Docking Traditional Cross-docking Combinations Walter Hodges/Digital Vision/Getty Images 15-25
Getting Merchandise Floor-Ready Ticketing and marking Increasingly firms are forcing suppliers to ship floor ready merchandise 15-26
Shipping Merchandise to Stores Shipping merchandise to stores is complex for multi-store chains Distribution centers use sophisticated routing and scheduling systems Ryan McVay/Getty Images 15-27
Courtesy Tubular Steel, Inc. Inventory Management Through Just-In-Time Systems Just-in-time (JIT) Quick response (QR) Zappos Website 15-28
Benefits of JIT Systems Reduced lead time James Leynse/Corbis Increased product availability and lower inventory investment 15-29
Check Yourself 1. How does merchandise flow through a typical supply chain? 2. Why have just-in-time supply chain systems become so popular? 15-30
Courtesy The Stanley Works Managing the Marketing Channel and Supply Chain Supply chain or channel conflict 15-31
Managing the Marketing Channel and Supply Chain through Vertical Marketing Systems Independent or conventional supply chain 15-32
Types of Vertical Marketing Systems Independent or conventional supply chain Administered vertical marketing system Contractual vertical marketing system Corporate vertical marketing system 15-33
Managing Marketing Channels and Supply Chains Through Strategic Relationships Common Goals Open Communications Interdependence Mutual Trust Strategic Relationships Credible Commitments 15-34
Used by Permission of Deutsch Inc as Agent for National Fluid Milk Processor Promotion Board Relationship of supply chain members 15-35
Check Yourself 1. What are the differences between the three types of vertical marketing systems? 2. How do firms develop strong strategic partnerships with their supply chain partners? 15-36