Chapter 15 part 2

Functions of a Wholesaler

- Buying (estimating demand for next channel member, closer to end consumer & better knows trend) - Selling (acts as a sales force calling) - Storing (takes on the risk and cost of inventory) - Transportation (cost of transporting goods/delivery) - Provides Market Info (acts as intermediary between retailers & producers) - Financing (grants credits to retailers) - Risk Taking ( credit, inventory, and transportation risk)

Wholesaling

- Transaction where products are bought for resale, for making other products, or for general business operations (not to consumer) - mfg->w/s->retailer->consumer - only b2b selling

When to use Wholesaling service

- smaller producers for cost savings - producers may want to put resources elsewhere - wholesalers are more efficient - retailers may prefer wholesalers (can carry more products)

Warehousing

-Design and operation of facilities for storing and moving goods -Functions: receiving, identifying, sorting, dispatching to storage, holding goods, recalling and assembling, and dispatching shipments -Make Bulk & Break Bulk -Private warehouses (company operated) -Public warehouses (businesses that lease storage space and distribution facilities to other firms) -Distribution Centers

Inventory Management

-Developing and maintaing adequate assortments of products to meet customers' needs (min inventory costs, ye sufficient supply of goods.) -Just in Time: mgmt where supplies arrive just when needed for production or resale -Reorder Point = (Order Lead Time x Usage Rate) + Safety Stock

Physical Distribution: Objectives

-maximize customer service -decrease costs -decrease cycle time -meet standards of customer service (order fulfillment and avoiding backorders) -reducing total distribution costs -reducing cycle time (process completion)

Merchant Wholesalers: Limited-Service Wholesalers (4)

1) Cash and Carry Wholesalers 2) Truck Wholesalers 3) Drop Shipper 4) Mail-Order Wholesaler

Merchant Wholesalers: Full Service (4)

1) General Merchandise Wholesalers 2) General-Line/Limited Line Wholesalers 3) Specialty-Line Wholesalers 4) Rack-Jobbers

Physical Distribution (Logistics)

Activities used to physically move products from producer to consumer and other end users

2) General-Line/Limited Line Wholesalers

Carry only a few product lines, but many products within those lines (Groceries-packed goods)

3) Specialty-Line Wholesalers

Carry only a single product line or a few items within a product line (Groceries-Fruit)

Physical Distribution: Outsourcing

Contracting physical distribution tasks to third parties with specialized logistics skills who do not have managerial authority within the marketing channel (fulfilled by Amazon)

1) Cash and Carry Wholesalers

Customers pay cash and furnish transportation (fishing wharf)

Agents and Brokers

Do not take title to products and are compensated with commissions for negotiating exchanges between sellers and buyers

Manufactures Agents

Independent that represents 2+ sellers and usually offers complete product lines in territories

Selling Agent

Markets product line or a manufacturer's entire output worldwide

Transportation

Movement of products from where they are made to where they are used -railroads (most used) -trucks (2nd) -waterways (4th) -airways (5th) -pipelines (3rd) Intermodal Transportation -two or more transportation modes used Freight Forwarders -org. that consolidate shipments from several firms into lots

5 Functions of Physical Distribution

Order Processing, Inventory Management, Materials Handing, Warehousing, Transportation

Order Processing

Receipt and transmission of sales order info (order entry, handling, and delivery) - Electronic Data Interchange (A computerized means of integrating order processing with production, inventory, etc)

4) Rack-Jobbers

Specializing in non-food products, who merchandises goods on racks in retail shops (Magazines, books, greeting cards)

Merchant Wholesalers

Take title, assume risk, and buy and resell products to other wholesalers, to retailers, or to other business customers. -Full Service and Limited Source Wholesalers

3) Drop Shipper

Takes title to goods and negotiates sales but never actually takes possession of products (coal,lumber)

Materials Handling

The physical handling of products in warehousing operations and the transportation from point of production to points of consumption -unit loading (1 or more boxes on a pallet and handled by mechanical means) -containerization (consolidation of many small items into a single large container)

2) Truck Wholesalers

Transports products directly to customers for inspection and selection (snap on tools)

4) Mail-Order Wholesaler

Uses catalogs instead of a sales force to sell products to retail and business buyers (small retailers to acquire inventory)

1) General Merchandise Wholesalers

Wide product mix but limited depth within product line (Convienence Stores

Brokers

bring buyers and sellers together on a temporary basis

Commission Merchant

receives goods on consignment from local sellers and negotiates sales large central markets

Agents

represent either buyer or seller, usually on a more permanent basis -manufactures agents -selling agents -commission merchants