Place (Distribution Channels and Supply Chain Management Flashcards
Making goods and services available in the right quantities and locations when consumers want them
Place
Supplier Network consists of
consists of processes and activities necessary to turn raw materials into a good or service
Sub component manufacturers, component manufacturers, and assembly plant
Supplier network is upstream/downstream
upstream
Channels of distribution consist of
firms or individuals who participate in the flow of products from the manufacturer to the final customer
Assembly plants, distribution channels: wholesalers and retailers, and consumers
Distribution channels are upstream/downstream
downstream
Logistics service providers move stuff from
Subcomponent manufacturers (100s) Component Manufacturers (dozens) Assembly Plant (handful) Distribution Channels: wholesalers and retailers (100s, 1000s, respectively) Consumers (millions)
Direct channel
manufacturer sells directly to consumer through the internet or in company-owned stores
Manufacturer to customer
Indirect channel
one or more intermediaries work with manufacturer to deliver goods to consumers
manufacturer to retailer to customer
OR
manufacturer to wholesaler to retailer to customer
wholesalers
firms that buy products from different manufacturers and then sell them to multiple retailers (B2B)
retailers
firms that buy products from manufacturers or other intermediaries to sell to consumers (B2C)
Retail Distribution Center
large retailers set up central warehouse locations
instead of shipping directly to each retail location, a manufacturer can make one shipment to the retail distribution center, which sends the supplies to the retailers as needed
facility for the receipt, storage, and redistribution of goods to company stores or consumers
may be operated by retailers, manufacturers, or distribution specialists
Market Channel is valuable because
- Reduces transaction costs like paperwork, transportation and fulfillment, packaging
- Creates efficiencies such as breaking bulk and creating assortments
- Customer relations
breaking bulk
manufacturer ships in large quantities and wholesaler breaks up into smaller quantities
creating assortments
one intermediary can sell multiple manufacturers’ products in one location
customer relations
assist in buying decisions, offer repair services, educate, and offer credit or financing
vertical conflict
when channel members are not in agreement over goals, roles, or rewards
between manufacturers and retailers
horizontal conflict
disagreements between channel members of equal levels (like Home Depot and Lowe’s engaging in a price war)
between retailers
The internet caused _____ which initially caused a radical distribution strategy change, as well as increased ____ between supply chain members
disintermediation
knowledge management-sharing knowledge
Disintermediation
eliminating traditional intermediaries, works well with digital/information goods
music industry, travel, brokerages
independent (conventional) channel system
each intermediary operates independently with their own profit and sales objectives, even at the expense of a channel partner
vertical marketing systems
independent intermediaries act in a unified manner, sharing information and other strategic needs
administered vertical system
the more powerful partner dominates and controls the relationship
Manufacturers like Walmart vs. small mom & pop operations
contractual vertical system
contracts determine the extent and management of the relationship, coordinate and reduce conflict
Target/Walmart with a larger manufacturer
Franchising
corporate vertical system
parent company has complete control because it owns multiple segments of the channel, manufacturing, warehousing, retail
American Apparel, Apple
Franchise
contractual agreement between franchisee and franchisor that allows franchisee to operate a retail outlet using a name and format developed by the franchisor
Franchisees typically:
pay a lump sum and royalty on sales to operate
comply with rules that the franchisor sets
receive some assistance from franchisor
manufacturer-sponsored retailer franchise
Ford and its independent franchised dealers
manufacturer-sponsored wholesaler franchise
Coca-Cola’s licensed bottlers
service-firm sponsored retailer franchise
McDonalds, Avis, Holiday Inn
intensive distribution
selling through all suitable wholesalers and retailers, many intermediaries
selective distribution
using fewer outlets in a specific territory but more than exclusive
Apple
exclusive distribution
selling only through a single outlet in a region
selected retailers
Power exists when
one channel member has the means or ability to dictate actions of another member
reward power
rewards for doing what the dominant company wants
coercive power
punish for behavior
referent power
need association
supplier desperately wants to be associated with dominant company
expertise power
knowledge, how-to, product or marketing specialty
information power
use of consumer info
providing or withholding consumer and market info
legitimate power
contractual obligation
occurs in an administered vertical marketing system
Strategic relationships require
mutual trust, open communication, common goals, interdependence, credible commitments
supply chain management
management of flows among the firms in a supply chain to maximize total profitability
includes physical movement of and sharing of information about goods
how firms integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless operation of merchandise production and distribution
channel players
manufacturer -> wholesaler -> retailer -> customer
outsourcing vs. insourcing
contracting with a specialist that brings in an external company to run essential operations (services the company’s supply chains)
Conflict affects
affects pricing, incentives, price wars, presentation, and more
