10.1: Supply Chains and the Value Delivery Network Flashcards
What is a supply chain?
A supply chain is a system that consists of upstream and downstream partners, including suppliers, manufacturers, and resellers, involved in producing a product or service and making it available to buyers.
What are upstream partners in a supply chain?
Upstream partners are firms that supply
the raw materials,
components,
parts,
information,
finances,
and expertise needed to create a product or service
What are downstream partners in a supply chain?
Downstream partners are marketing channel partners, such as wholesalers and retailers, that form a vital link between the firm and its customers.
Why is the term “demand chain” considered better than “supply chain”?
The term “demand chain” is considered better because it suggests a sense-and-respond view of the market, where planning starts by identifying the needs of target customers and organizing a chain of resources and activities to create customer value.
What is the limitation of the demand chain view of a business?
The demand chain view is limited because it takes a step-by-step, linear view of purchase-production-consumption activities, rather than recognizing the complex, continuously evolving nature of modern value delivery networks.
What is a value delivery network?
A value delivery network is made up of the company, suppliers, distributors, and customers who “partner” with each other to improve the performance of the entire system, creating customer value and delivering a product or service efficiently.
What is a marketing channel (or distribution channel)?
A marketing channel is a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user.
How do a company’s channel decisions impact other marketing decisions?
Channel decisions affect
pricing,
sales force and communications,
and product development,
as they influence the company’s relationship with intermediaries and determine the capabilities of its channel members.
Why is it important to carefully design distribution channels?
Distribution channel decisions often involve long-term commitments to other firms, and replacing channels can be difficult or impossible. Management must design channels to work effectively in both the current and future selling environments.
Why do producers use intermediaries in their marketing channels?
Producers use intermediaries because they create greater efficiency in making goods available to target markets by offering contacts, experience, specialization, and scale of operation that the firm may not be able to achieve on its own.
How do intermediaries reduce the amount of work for producers and consumers?
Intermediaries reduce the number of channel transactions by
consolidating contacts,
allowing producers to reach multiple customers with fewer contacts and
making it easier for consumers to access a broader range of products.
What is the role of marketing intermediaries in the economic system?
Marketing intermediaries transform the assortments of products made by producers into the assortments wanted by consumers. They buy large quantities from producers and break them down into smaller quantities and broader assortments desired by consumers.
What are some key functions performed by members of the marketing channel?
Key functions include information gathering and distribution, promotion, contact, matching, negotiation, physical distribution, financing, and risk taking. These functions help complete transactions and fulfill them efficiently.
Figure 10.1: How a Distributor Reduces the Number of Channel Transactions
What is a channel level?
A channel level is each layer of marketing intermediaries that performs some work in bringing the product and its ownership closer to the final buyer.
Figure 10.2 Consumer and Business Marketing Channels
