Marketing 3

The customer relationship management process provides

a set of comprehensive principles for the initiation and maintenance of customer relationships and is often carried out with the assistance of specialized CRM computer software.

In addition to the value of managing returns from a pure asset-recovery perspective, many firms are discovering that returns management also creates

additional marketing and customer service touch points that can be leveraged for added customer value above and beyond normal sales and promotion-driven encounters.

A company's supply chain includes

all of the companies involved in all of the upstream and downstream flows of products, services, finances, and information, from initial suppliers (the point of origin) to the ultimate customer (the point of consumption).

Smart RFID (radio-frequency identification)

an inventory handling and tracking system that employs radio-frequency electromagnetic fields to transfer and read product data via an electronic tag, is another type of advanced computer technology that is helping companies manage their supply chains.

The logistics information system serves

as the link connecting all of the operational components of the supply chain.

8 Key Business Processes

1 Customer relationship management 2 Customer service management 3 Demand management 4 Order fulfillment 5 Manufacturing flow management 6 Supplier relationship management 7 Product development and commercialization 8 Returns management

Supply Chain Integration

A systems approach where the overall performance of the chain is greater than the sum of its parts.

Customer Integration

A competency that enables firms to offer long-lasting, distinctive, value-added offerings to those customers who represent the greatest value to the firm or supply chain.

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 the newest method for distributing products. Special printers create products based on a digital file using liquefied raw materials shipped to the printer's location.

Postponement

A hybrid strategy that takes advantages from build-to-stock and build-to-order strategies. Product based on generic forecasts Shipped to locations near major customers Customer places order and manufacturing is completed to customer's specifications

Supply Chain Management

A management system that coordinates and integrates all of the activities performed by supply chain members into a seamless process, from the source to the point of consumption, resulting in enhanced customer and economic value

Marketing Channel

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

Order Processing

A system whereby orders are entered into the supply chain and filled.

Merchant Wholesaler

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

Customer Relationship Management

CRM allows companies to prioritize their marketing focus on different customer groups according to each group's long-term value to the company or supply chain.

accessibility

Carriers ability to move goods over a specific route or network

reliability

Consistency with which the carrier delivers goods on time and in good condition.

Specialization and Division of Labor

Creates greater efficiency Provides lower production costs Create time, place, form, and exchange utility

Supply Chain Functions

Critical to the success of any supply chain is orchestrating the means by which products move physically through it. This is accomplished via the execution of three interdependent groups of supply chain functions that exist within a business organization.

Most companies carry inventory as a sort of insurance policy against customer stockouts:

Cycle stocks of inventory include those items that are expected to be sold as finished goods (or the materials that go into making finished goods) in a given demand period. Safety stocks, also called buffer stocks, are extra allotments of inventory that companies sometimes choose to hold. At any given time, companies may also have in-transit inventory moving into the business from a suppliers or out on the way to a customer. Work-in-process inventory reflects inventory that is being assembled or manufactured from its raw state into finished goods for sale. During certain times of the year when sales are traditionally higher, the company may hold some seasonal inventory to augment the demand in excess of cycle stock that is expected to occur.

Contact Efficiency: Retailer

Firms in the channel that sell directly to customers Retailers simplify distribution by cutting the number of transactions required by consumers, making an assortment of goods available in one location.

Production Scheduling

In a traditional mass-marketing manufacturing, production begins when forecasts call for additional products to be made or inventory is low, called build-to-stock. In a customer-focused "pull" manufacturing environment, production of goods is not started until an order is placed by the customer specifying the desired configuration, also known as mass customization or build-to-order. In this environment of customer demand and mass customization, supply chains need to be flexible and be able to shift production based on demand.

Supply Chain Integration 2

Highly integrated supply chains (those that are successful in achieving many or all of these types of integration) have been shown to be better at satisfying customers, managing costs, delivering high-quality products, enhancing productivity, and utilizing company or business unit assets, all of which translate into greater profitability for the firms and their partners working together in the supply chain.

Benefits of Supply Chain Management:

Lower inventory, transportation, warehousing, and packaging costs Greater supply chain flexibility Improved customer service Higher revenues Increased performance and profitability

Internal 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). Under the DSI philosophy, those functional areas in the company charged with creating customer demand communicate frequently and are synchronized with the parts of the business charged with fulfilling the created demand. companies operating under a DSI philosophy are better at their business because all of the different divisions within the company "play from the same sheet of music."

Tools for managing inventory include:

Materials requirement planning (MRP) or materials management Supplier to manufacturer Distribution resource planning (DRP) Finished goods inventory from manufacturer to end user Automatic replenishment programs Triggered only when a good is sold to the end user. Electronic link conned with bar-code scanners. Minimal forecasting

Channel Intermediaries

Merchant Wholesaler Agents and Brokers

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.

Trends in Supply Chain Management

Outsourcing Logistics Functions Supply Chain Risk, Security, and Resilience Electronic distribution

Factors Suggesting Type of Wholesaling Intermediary to Use

Product characteristics Buyer considerations Market characteristics Product characteristics, buyer considerations, and market conditions determine the type of intermediary the manufacturer should use. Each of these will determine which type of intermediary is appropriate for a product.

Outsourcing Logistics Functions: Benefits

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

Material and service supplier integration

Requires firms to link seamlessly to those outsiders that provide goods and services to them so that they can streamline processes and provide quality customer experiences.

Marketing Channel Functions

Specialization and division of labor Overcoming discrepancies Providing contact efficiency

Global Logistics and Supply Chain Management

Strategically, there are many reasons why a company might wish to globalize its supply chain. At the same time, globalization has brought about great uncertainty for modern companies, and specifically, their supply chains.

Supply Management

Supply managers plan strategies, develop specifications, select suppliers, and negotiate price and service levels. The goal of most supply management activities is to reduce the costs of raw materials and supplies.

capability

The ability of the carrier to provide appropriate equipment and conditions (refrigeration)

Relationship Integration

The ability of two or more companies to develop social connections that serve to guide their interactions when working together.

Supply Chain

The connected chain of all of the business entities, both internal and external to the company, that perform or support the logistics function.

Technology and planning integration

The creation and maintenance of information technology systems that connect managers across and through the firms in the supply chain.

Customer Service Management

The customer service management process presents a multi-company, unified response system to the customer whenever complaints, concerns, questions, or comments are voiced.

Demand Management

The demand management process seeks to align supply and demand throughout the supply chain by anticipating customer requirements at each level and create demand-related plans of action prior to actual customer purchasing behavior.

traceability

The relative ease with which a shipment can be located and transferred

Supply Chain Risk, Security, and Resiliency

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

Manufacturing Flow Management

The manufacturing flow management process is concerned with ensuring that firms in the supply chain have the needed resources to manufacture with flexibility and to move products through a multi-stage production process.

Order Fulfillment

The order fulfillment process is a highly integrated process, often requiring persons from multiple companies and multiple functions to come together and coordinate to create customer satisfaction at a given place and time.

Inventory Control

The organization's inventory control system develops and maintains an adequate assortment of materials or products to meet a manufacturer's or a customer's demands.

Measurement Integration

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

Product Development and Commercialization

The product development and commercialization processes include the group activities that facilitates the joint development and marketing of new offerings among a group of supply chain partner firms.

Returns Management

The returns management process enables firms to manage volumes of returned product efficiently, while minimizing returns-related costs and maximizing the value of the returned assets to the firms in the supply chain.

Supplier Relationship Management

The supplier relationship management process supports manufacturing flow by identifying and maintaining relationships with highly valued suppliers.

cost

Total amount a carrier charges

Transit time

Total time carrier has possession of goods

A marketing channel can be viewed as

a large pipeline through which products, their ownership, communication, financing and payment, and accompanying risk flow to the consumer.

Warehousing and Materials Handling

a method of moving inventory into, within, and out of the warehouse. Most manufacturers today have moved to automated materials-handling systems to minimize the amount of handling.

Outsourcing, or contract logistics is

a rapidly growing initiative in which a manufacturer or supplier turns over an entire logistical function (often buying and managing transportation, warehousing, and/or light postponed manufacturing) to an independent third-party logistics company (3PL).

The goal of inventory management is

to keep inventory levels as low as possible while maintaining an adequate supply of goods to meet customer demand.

Agents and Brokers

Wholesaling intermediaries who facilitate the sale of a product by representing channel members. Do not take title to goods

Designing a new product with the help of suppliers and customers can allow

a company to introduce features and cost cutting measures into final products.

Nearshoring

to locations such as Mexico or the Caribbean nations ensures low costs while reducing supply chain risk.

Companies moving offshore must

carefully consider the pros and cons, and build supply management systems that can manage very diverse tasks. Logistically, it is critical for importers of any size to understand and cope with the legalities of trade in other countries.

The goals of the manufacturing flow management process are

centered on leveraging the capabilities held by multiple members of the supply chain to improve overall manufacturing output in terms of quality, delivery speed, and flexibility, all of which tie to profitability.

Members of the supply chain

communicate, coordinate, and cooperate extensively.

Moving operations offshore exposes

companies to risks associated with geopolitical conflict, foreign nationalization of assets and knowledge diffusion, and highly variable quality standards. Foreign suppliers are often less reliable, and due to the lengthening of the supply chain, variability in transportation service can lead to service failures.

Supply chain managers choose a mode of transportation on the basis of several criteria:

cost Transit time reliability capability accessibility traceability

fourth-party logistics companies (4PLs) or logistics integrators,

create and manage entire solutions for getting products where they need to be, when they need to be there.

Supply chain teams typically

cut across organizational boundaries, embracing all parties who participate in moving the product to market.

Specialized expertise of channel members

enhances the overall performance of the channel.

The management of supplier relationships is a key step toward

ensuring that firms' manufacturing resources are available, and thereby the supplier relationship management process has a direct impact on each supply chain member's bottom-line financial performance.

Demand management: it is very difficult to predict

exactly what items and quantities customers will buy prior to purchase; however, much of the uncertainty in demand planning can be mitigated by conducting collaborative planning, forecasting, and replenishment (CPFR) activities with the company's customers and suppliers.

Inventory decisions

for both raw materials and finished goods, have a big impact on supply chain costs and the level of service provided.

The components of the system include

for example, software for materials acquisition and handling, warehouse-management and enterprise-wide solutions, data storage and integration in data warehouses, mobile communications, electronic data interchange, radio-frequency identification (RFID) chips, and the Internet.

The supply chain team, in concert with the supply chain information system, orchestrates

the movement of goods, services, and information from the source to the consumer.

The allure of foreign markets is strong, due to

increasing demand for imported products worldwide. Cheap labor advantages and trade barriers/tariffs have encouraged firms to expand their global manufacturing operations.

Understanding and integrating supply and demand

information at every level will allow supply chain managers to optimize their decisions, reduce waste, and respond quickly to sudden changes in the supply chain.

The supply chain consists of several

interrelated and integrated components, as shown on the previous slide.

Sustainable supply chain management

involves the integration and balancing of environmental, social, and economic thinking into all phases of the supply chain management process.

Time and place utility (on test)

is created when a transport company moves boxes from the place of manufacture to the store near customers.

Exchange utility (on test)

is created when channel members (usually retailers) swap the product for money.

Demand management seeks to

minimize the costs of serving multiple types of customers who have variable wants and needs.

The best supply chain teams....

move beyond the organization to include external participants, such as suppliers, transportation carriers, and third-party logistics suppliers.

Supply Chain Integration occurs when

multiple functional areas coordinate business processes to seamlessly link to one another.

in Product Development and Commercialization new products and services are...

not the sole responsibility of a single firm who serves as inventor, engineer, builder, marketer, and sales agent; rather, they are often the product of a multi-company collaboration with multiple firms and business units playing unique roles in new product development, testing, and launch activities, among others.

One of the most fundamental processes in supply chain management is

the order fulfillment process, which involves generating, filling, delivering, and providing on-the-spot service for customer orders.

Marketing channels facilitate

the physical flow of goods through the supply chain, representing "place" or distribution in the marketing mix.

Order processing is becoming more automated through

the use of computer technology known as electronic data interchange (EDI).

Since many firms do not view order fulfillment as a core competency

they often outsource this function to a third party logistics firm that specializes in the order fulfillment process.

American companies have been offshoring, or outsourcing logistics to

service providers located in countries with lower labor costs, such as China or India.

By enacting sustainable supply chain management principles, companies can

simultaneously generate cost savings, protect the Earth's natural resources, and ensure that socially responsible business practices are enacted.

Supplier relationship management provides

structural support for developing and maintaining relationships with suppliers.

In response to the need for firms to both reduce costs and act as leaders in protecting the natural environment, many are adopting

sustainable supply chain management principles as a key part of their supply chain strategy.

When the order fulfillment process is managed diligently,

the amount of time between order placement and receipt of the customer's payment following order shipment (known as the order-to-cash cycle) is minimized as much as possible.

Efforts to achieve world-class global supply chain management mean that

the balancing of supply and demand—and the satisfaction of more and more customers worldwide—are becoming a reality for many companies.

In a world-class supply chain

the customer may not know where the business activities of one firm or business unit end and where those of another begin—all the participating firms and business units appear to be reading from the same script.

Working together, the components of the logistics information system are

the fundamental enablers of successful supply chain management.

As the world continues to globalize, supply chain management will

undoubtedly continue to take on a globalized flavor.

Form utility is created (on test)

when channel members transform raw materials into a consumable form for customers.