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matching inventory to demand all the way through

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Marketing channel management/supply chain management

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firms that buy products from manufacturers and resell them to retailers

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• Wholesaler

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sell products directly to customers

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• Retailers

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one that encourages people to pass along a marketing message to other potential consumers

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• Viral marketing program

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a facility for the receipt, storage, and redistribution of goods to company stores, may be operated by retailers, manufacturers, or distribution specialists

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• Distribution center

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used to ship directly to customers

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• Fulfillment centers

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• No intermediaries between the buyer and seller • Seller is a manufacturer • Customers → manufacturer

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Direct Marketing Channel

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• One or more intermediaries work with manufacturers to provide goods and services to customers • Customer → wholesaler → retailer → manufacturer

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Indirect Marketing Channel

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when supply chain members that buy and sell to one another are not in agreement about their goals, roles, or rewards/discord results

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• Vertical channel conflict

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disagreement or discord among members at the same level in the marketing channel (ex two competing retailers or two competing manufacturers)

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• Horizontal channel conflict

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several independent members, manufacturer, wholesaler, retailers, attempt to satisfy their own objectives and max their profits, often at the expense of the other members

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• Independent or conventional marketing channel

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a marketing channel in which the members act as a unified system o 3 types: • 1. Administered • 2. Contractual • 3. Corporate

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• Vertical marketing system

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no common ownership or contractual relationships, but the dominant channel members controls or holds the balance of power

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o Administered Vertical Marketing System

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threatens to punish or punishes the other channel member for not undertaking certain tasks

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• Coercive power

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supplier desperately wants to be associated with larger company because it attracts other retailers business

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• Referent power

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Independent firms at different levels of the marketing channel join through contracts to obtain economies of scale and coordination and to reduce conflict

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o Contractual Vertical Marketing System

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contractual agreement between a franchisor and a franchisee to operate a retail outlet using a name and formal developed and supported by the franchisor

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• Franchising

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The parent company has complete control and can dictate the priorities and objectives of the marketing channel because it owns multiple segments of the channel such as manufacturing plants, warehouse facilities, retail outlets

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o Corporate Vertical Marketing System

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marketing channel members are committed to maintaining the relationship over the long term and investing in opportunities that are mutually beneficial o Mutual trust o Open communication o Common goals o Interdependence o Credible commitments

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Strategic relationship/partnering relationship

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• Flow 1: (Customer to Store) • Flow 2: (Store to Buyer) • Flow 3 (Buyer to Manufacturer) • Flow 4 (Store to Manufacturer) • Flow 5 (Store to Distribution center) • Flow 6 (Manufacturer to distribution center to buyer)

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MAKING INFORMATION FLOW THROUGH MARKETING CHANNELS

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tag on HDTV packaging and the customer receives a receipt

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o Universal product Code (UPC)

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terminal records the purchase information and electronically sends it to the buyer at best buy corporate office

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o Point of Sale (POS)

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electronic document that the supplier sends the retailer in advance of a shipment to tell the retailer exactly what to expect in the shipment

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o Advanced shipping notice (ASN)

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computer to computer exchange of business documents from a retailer to a vendor and back

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o Electronic data interchange (EDI)

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improving marketing channel efficiency in which the manufacturer is responsible for maintaining the retailers inventory levels in each of its stores

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o Vendor managed inventory (VMI)

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o 1. Management of inbound transportation o 2. Receiving and checking using UPC or RFID o 3. Store and cross docking o 4. Getting merchandise floor ready: o 5. Preparing to ship merchandise to a store o 6. Shipping merchandise to stores

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MAKING MERCHANDISE FLOW THROUGH MARKETING CHANNELS

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tiny computer chips that automatically transmit to a special scanner all the info about a containers contents or individual products

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Radio frequency identification (RFID)

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affixing price and identification labels to the merchandise

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• Ticketing and marking:

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a document or display on a screen in a forklift truck indicating how much is each item goes in the storage area

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• Pick ticket

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: deliver less merchandise on a more frequent basis than traditional inventory systems • Reduced lead time with JIT system

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• Just in time system

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amount of time between the recognition that an order needs to be placed and the arrival of the needed merchandise at the sellers store and is available for sale

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• Lead time

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Information flow At the moment, merchandise availability is the major problem, but the problem was originally caused by difficulties in information flow. Beth was not informed that her order had been rejected until much too long after it was placed, leading her to believe that the order was on its way.

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Where does the predominant supply chain issue occur in this scenario?

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Zara uses a just-in-time inventory system which is an inventory management system that delivers less merchandise on a more frequent basis than traditional inventory systems.

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Zara has developed the practice of delivering less merchandise to its stores on a more frequent basis. This quick response system is called a(n) ________.

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Vertical conflict occurs between members at different levels of the channel, in this case retailers and corporate headquarters.

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As the case indicated, over time some stores had stockouts of popular merchandise while other stores were overstocked with the same item. This could lead to disagreements between the stores and Zara's corporate headquarters, which is a form of ______.

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corporate; vertical marketing system In a corporate vertical marketing system, the parent company, in this case Zara, has complete control and can dictate the priorities and objectives of the marketing channel because it owns multiple segments of the channel, such as manufacturing plants, warehouse facilities, and retail outlet

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Zara owns its factories, distribution centers, and retail stores. This is the ______ form of a ________.

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EDI Electronic data interchange (EDI) is the computer-to-computer exchange of business documents from a retailer to a vendor and back.

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Zara's store managers use hand held devices to immediately pass purchase information back to its corporate headquarters in Spain. This is a form of _______.

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VMI Vendor-managed inventory (VMI) is an approach for improving marketing channel efficiency in which the manufacturer is responsible for maintaining the retailer's inventory levels in each of its stores.

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One problem that occurred for Zara was that individual store managers were ordering too much inventory on popular items. One way Zara addressed this was to implement _________, whereby Zara used mathematical processes and assumed responsibility for managing each store's inventory.

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supply chain management Walmart has focused its efforts on streamlining its supply chain management functions. This includes storage, transportation, delivery, and distribution as well as building collaborative relationships with its suppliers.

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One of the ways that Walmart has been able to reduce the prices of its products, and add value to its customers, is by its continuing focus on streamlining all its _____ functions.

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Strategic relationships occur when supply chain members are committed to maintaining a relationship over the long term and investing in opportunities that are mutually beneficial.

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By combining their resources and developing shared goals, Procter & Gamble and Walmart were able to increase the value to the final consumer. Their relationship is considered _________.

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electronic data interchange The CFPR system discussed in the case is an example of electronic data interchange (EDI), which reduces the time between the decision to place an order and the receipt of merchandise. These increased efficiencies can result in lower costs and lower prices.

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Walmart and Procter & Gamble effectively implemented ________, which allowed for information to flow directly from Walmart's store to Procter & Gamble's production facilities. This streamlined production as well as distribution, thus reducing costs and getting products to Walmart's customers sooner.

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Interdependence between the supply chain members (Walmart and Procter & Gamble) is based on mutual benefits and is key to developing a sustainable strategic relationship.

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The strategic relationship between Walmart and Procter & Gamble is based on __________ because both firms realize that investments in supply chain management will create savings for consumers.

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customer to store: DVD player purchased store to buyer: POS terminal sends data buyer to manufacturer: corporate inventory order store to manufacturer: frequent, direct reorder store to distribution center: request delivery schedule manufacturer to distribution center and buyer: advanced shipping notice

answer

example of information flows

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