Mark 13
five types of external integration
1. *Relationship* integration is the ability of two or more companies to develop social connections that serve to guide their interactions when working together. 2. *Measurement* integration reflects the idea that performance assessments should be transparent and measurable across the borders of different firms, and should also assess the performance of the supply chain as a whole while holding each individual firm or business unit accountable for meeting its own goals 3. *Technology and planning* integration refers to the creation and maintenance of information technology systems that connect managers across the firms in the supply chain. 4. *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 work processes and thereby provide smooth, high-quality customer experiences. 5. *Customer *integration is 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.
multichannel marketing strategy,
Because of these varying preferences through different stages of the shopping cycle, many companies have begun to employ a multichannel marketing strategy, whereby customers are offered information, goods, services, and/or support through one or more synchronized channels design does create redundancy and complexity in the firm's distribution system.
PRODUCT FACTORS
Complex, customized, and expensive products tend to benefit from shorter and more direct marketing channels. sell better through a direct sales force more standardized a product is, the longer its distribution channel can be and the greater the number of intermediaries that can be involved without driving up costs choice of channel may change over the life of the product. products become more common and less intimidating to potential users, producers tend to look for alternative channels.
eight critical business processes on which supply chain managers must focus
Customer relationship management Customer service management Demand management Order fulfillment Manufacturing flow management Supplier relationship management Product development and commercialization Returns management
supply chain management..
Many modern companies are turning to _____________________________ for competitive advantage. completely customer-driven management philosophy.
fashion flash sale
On these sites, new designer clothing items are made available every day—often at a discount from 15 to 80 percent, and always for an extremely limited tim
Intergration
Several organizations work in concert to form a seamless system, rather than a group of separate companies each performing a certain task. Integration involves a balance between barriers and enablers. Companies that work closely with their suppliers encounter problems such as corporate culture, information hoarding, and trust issues
third-party logistics company (3PL
These service providers sell logistics solutions instead of physical products.
marketing channels perform three essential functions that enable goods to flow between producer and consumer.
Transactional logistical facilitating
dual or multiple distribution
When a producer selects two or more channels to distribute the same product to target markets, this arrangement is called Multiple distribution channels must be organized and managed as a group, and managers must orchestrate their use in synchronization if whole system is to work well online shopping = multiple distribution strategy.
marketing channel ( channel of distribution)
__________________ can be viewed as a canal or pipeline through which products, their ownership, communication, financing and payment, and accompanying risk flow to the consumer a set of interdependent organizations that eases the transfer of ownership as products move from producer to business user or consumer "downstream" portion of the supply chain that connects a producer with the customer
fourth-party logistics companies (4PLs) or logistics integrators
a consulting-based organization that assesses another's entire logistical service needs and provides integrated solutions, often drawing on multiple 3PLs for actual service create and manage entire solutions for getting products where they need to be, when they need to be there.
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 not be limited only to products and services that are mostly composed of information that can therefore be easily digitized.
. Outsourcing, or contract logistics
a manufacturer's or supplier's use of an independent third party to manage an entire function of the logistics system, such as transportation, warehousing, or order processing
sales and operations planning (S&OP)
a method companies use to align production with demand by merging tactical and strategic planning methods across functional areas of the business
Sustainable supply chain management
a supply chain management philosophy that embraces the need for optimizing social and environmental costs in addition to financial costs better addresses current business needs and develops long-term initiatives that allow it to mitigate risks and avail itself of future opportunities in ways that preserve resources for future generations and ensure long-term viability. environmentally friendly materials sourcing simultaneously generate cost savings, protect the Earth's natural resources, and ensure that socially responsible business practices are enacted common misconception- increases supply chain costs disproportionately, and therefore should be enacted only when business leaders are willing to act altruistically or for the purposes of good public relations.
demand-supply integration (DSI)
a supply chain operational philosophy focused on integrating the supply-management and demand-generating functions of an organization those functional areas in a company charged with creating customer demand (such as marketing, sales, or research/development) communicate frequently and are synchronized with the parts of the business charged with fulfilling the created demand (purchasing, manufacturing, and logistics). enhances customer satisfaction gains efficiencies from ordering and using only those materials that lead directly to sales better at their business because all of the different divisions within the company "play from the same sheet of music.
supply chain orientation
a system of management practices that are consistent with a "systems thinking" approach
selective distribution
achieved by screening dealers and retailers to eliminate all but a few in any single area. consumer must seek out the product
Advanced technology
acquisition and analysis of big data allows a company to replace human reasoning with faster and more efficient decision making that is based on information rather than intuition company can automate many of its supply chain processes cheaply and accurately by robots.
Customized or highly complex products such as computers, specialty foods, or custom uniforms are usually sold through
agent or broker, who may represent one or multiple companies
Channel members(intermediaries, resellers, and middlemen)
all parties in the marketing channel who 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 providing specialization and division of labor, overcoming discrepancies, and providing contact efficiency.
Social shopping
allows multiple retailers to sell products to customers through social media sites.
Global Supply Chain Management
allure of foreign markets Cheap labor advantages and trade barriers/tariffs geopolitical conflict, foreign nationalization of assets and knowledge diffusion, and highly variable quality standards. company to new technologies, introduces competition to domestic suppliers who have become lackadaisical, and build brand equity. complexities of handling overseas logistics are too great to overcome. contingency plans
supply chain agility.
an operational strategy focused on creating inventory velocity and operational flexibility simultaneously in the supply chain *Agile companies *synchronize their activities through the sharing of supply and demand market information, spend more time than their competitors focusing on activities that create direct customer benefits, partner closely with suppliers and service providers to reduce customer wait times for products, and constantly seek to reduce supply chain complexity through the evaluation and reduction (or elimination) of stock-keeping units (SKUs) that customers aren't buying, among other strategies.
Business processes
are composed of bundles of interconnected activities that stretch across firms in the supply chain; they represent key areas that some or all of the involved firms are constantly working on to reduce costs and/or generate revenues for everyone throughout supply chain management.
Retailers and merchant wholesalers
are examples of intermediaries that take title to products in the marketing channel and resell them.
Merchant wholesalers
are organizations that facilitate the movement of products and services from the manufacturer to producers, resellers, governments, institutions, and retailers. take title to the goods they sell, and most of them operate one or more warehouses where they receive finished goods, store them, and later reship them to retailers, manufacturers, and institutional clients. do not dramatically alter the form of a good nor sell it directly to the consumer, their value hinges on their providing time and place utility and contact efficiency to retailers
Digital channels
are pathways for moving product and information toward customers such that they can be sent and/or received with electronic devices, such as computers, smartphones, tablets, or video game consoles.
Retailers
are those firms in the channel that sell directly to consumers as their primary function. provide contact efficiency for consumers. simplify distribution by reducing the number of transactions required by consumers, and by making an assortment of goods available in one location.
specialization and division of labor
breaking down a complex task into smaller, simpler ones and assigning these to specialists creates greater efficiency and lower average production costs via economies of scale. Some channel members can accomplish certain tasks more efficiently than others because they have built strategic relationships with key suppliers or customers or have unique capabilities. aid producers in creating time, place, and exchange utility for customers, such that products become aligned with their needs.
wholesaler channel
commonly used for low-cost items that are frequently purchased, such as candy, cigarettes, and magazines.
manufacturing flow management process
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 Firms with flexible manufacturing have the ability to create a wide variety of goods and/or services with minimized costs associated with changing production techniques. creating flexible agreements with suppliers and shippers so that unexpected demand bursts can be accommodated 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 directly to profitability. LEAN = built before demand occurs, no waste AGILE = prioritize customer responsiveness
returns management process
customers choose to return a product to the retailer or supplier, thereby creating a reversed flow of goods within the supply chain. 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. creates additional marketing and customer service touch points that can be leveraged for added customer value returns quickly creates a positive image allows the firm to recognize weaknesses in product design ability to try products without being charged for returning them actually leads to greater revenues for companies.
supply chain analytics
data analyses that support the improved design and management of the supply chain bigger and better data should allow supply chain forecasting to become more accurate; shipments to be re-routed in the event of traffic or bad weather; and warehouses to be stocked with exactly the products customers want (and none they don't want)
customer service management process
designed to ensure that those customer relationships remain strong. presents a multi-company, unified response system to the customer whenever complaints, concerns, questions, or comments are voiced. positive impact on revenues additional sales gained through the additional customer contact.
customer relationship management (CRM) process
designed to identify and build relationships with good customers enables companies to prioritize their marketing focus on different customer groups according to each group's long-term value to the company or supply chain. Once higher-value customers are identified, firms should focus more on providing customized products and better service to this group than to others
reverse channels
enable consumers to return products to the retailer or manufacturer in the event of a product defect, or at the end of the product's useful life to the consumer. move products upstream, in the direction of the producer.
Agents and brokers
facilitate the sales of products downstream by representing the interests of retailers, wholesalers, and manufacturers to potential customers. do not take title to goods and services they market but do facilitate exchanges get a fee or commission based on sales volume
PRODUCER FACTORS
factors pertaining to the producer itself are important to the selection of a marketing channel. producers with large financial, managerial, and marketing resources are better able to perform their own marketing, and thus will use more direct channels. Smaller or weaker firms, on the other hand, must rely on intermediaries to provide these services for them. producers with only one or two product lines, producers that sell several products in a related area are able to choose channels that are more direct. sell products with exclusive brand images, such as designer perfumes and clothing, usually avoid channels in which discount retailers are present.
MARKET FACTORS
ffecting distribution channel choices are market considerations. Who are the potential customers? What do they buy? Where do they buy? When do they buy? How do they buy?
Intensive distribution
form of distribution aimed at maximum market coverage. product available in every outlet where potential customers might want to buy it buyers are unwilling to search for a product
offshoring outsourcing logistics
he outsourcing of a business process from one country to another for the purpose of gaining economic advantage
supply chain
includes all of the companies involved in the upstream and downstream flow of products, services, finances, and information, extending from initial suppliers (the point of origin) to the ultimate customer (the point of consumption).
facilitating
includes research and financing. Who are the buyers? Where are they located? Why do they buy?
product development and commercialization process
includes the group of activities that facilitate the joint development and marketing of new offerings among a group of supply chain partner firms. more than one supply chain entity is responsible for ensuring new product success Designing a new product with the help of suppliers and customers can enable a company to introduce features and cost-cutting measures into final products Customers provide information about what they want suppliers can help design for quality and manufacturability more obstacles can be identified early and opportunities for cost reduction are made possible.
digital marketplaces
instead of selling a tangible product, digital marketplaces sell the rights to songs, movies, and television shows through their websites and applications
three options for intensity of distribution
intensive distribution, selective distribution, exclusive distribution.
mass-manufactured goods such as automobiles may require parts from all over the world and therefore many
intermediaries.
integration can be either
internal external both
Transactional functions
involve contacting and communicating with prospective buyers to make them aware of existing products and to explain their features, advantages, and benefits.
supplier relationship management process
is closely related to the manufacturing flow management process and contains several characteristics that parallel the customer relationship management process. highly dependent on supplier relationships for flexibility. provides structural support for developing and maintaining relationships with suppliers. close-knit, integrated relationships with suppliers provide a means through which performance advantages can be gained.
order-to-cash cycle
is minimized as much as possible.
philosophy supply chain management
is that by visualizing and exerting control over the entire supply chain, supply chain managers can balance supply and demand needs, maximize strengths, increase efficiencies at each level of the chain.
key principle of supply chain management
is that multiple entities (firms and/or their functional areas) should work together to perform tasks as a single, unified system, rather than as multiple individual units acting in isolation. overall performance of the supply chain will be greater than the sum of its parts.
supply chain management
is to coordinate and integrate all of the activities performed by supply chain members into a seamless process, from the source to the point of consumption, ultimately giving supply chain managers "total visibility and control" of the materials, processes, money, and finished products both inside and outside the company they work for.
affecting supply chain management
logistics, maintaining a secure supply chain and minimizing supply chain risk, and maintaining a sustainable supply chain.
Benefits of Effective Supply Chain Management
lower inventory, transportation, warehousing, and packaging costs; greater logistical flexibility; improved customer service; and higher revenues. clear relationship between supply chain performance and both profitability and company value.
book-of-the-month
lubs have provided customers products periodically over time.
public-private partnerships (PPPs)
magnitude of a supply chain dilemma is too great for a company and its suppliers or outsourcing partners to handle alone firms to work together with government agencies Critical to the satisfaction of both company and societal interests and provide a mechanism by which very-large scale problems or opportunities can be addressed Red Cross, future national and global supply chain problems as well.
choice of channels
market factors, product factors, and producer factors.
nontraditional channels
may help differentiate a firm's product from the competition by providing additional information about products. mail-order television or video channels, or infomercials gain market access and customer attention without having to establish physical channel intermediaries and can also provide another sales avenue for larger firms.
Taking title
means they actually own the merchandise and control the terms of the sale—for example, price and delivery date.
standardized product such as soda or toothpaste are often sold through
merchant wholesaler and retailer channel
retailer channel
most common when the retailer is large and can buy in large quantities directly from the manufacturer. Walmart, Sears, and car
exclusive distribution
nly one or a few dealers within a given area. search or travel extensively to buy the product, exclusive distribution is usually confined to consumer specialty goods, a few shopping goods, and major industrial equipment.
Understanding and integrating supply and demand-related information
optimize their decisions, reduce waste, respond quickly to sudden changes in supply or demand.
firms do not view order fulfillment as a core competency
outsource this function to a 3PL that specializes in the order fulfillment process.
Drop and shop
programs use convenience to get consumers to recycle products, like batteries or cell phones, during a regular trip to the store.
logistics service
provider is focused on logistical functions only, clients receive better service in a timely, efficient manner, thereby increasing their customers' satisfaction and boosting the perception of added value to a company's offerings.
book is needed immediately
purchased at retail—at the school bookstore—and will include a markup.
today market
reversal of the flow of demand from "push" to "pull"
gray marketing channels
secondary channels that are unintended to be used by the producer, and which often flow illegally obtained or counterfeit product toward customers
demand management process
seeks to minimize the costs of serving multiple types of customers who have variable wants and needs. seeks to align supply and demand throughout the supply chain by anticipating customer requirements at each level and creating customer-focused plans of action prior to actual purchases being made. atisfy customers in the most efficient and effective ways possible. Activities such as collecting customer data, forecasting future demand, and developing activities that smooth out demand help bring available inventory into alignment with customer desires. can ease pressure on the production process and allow companies to satisfy most of their customers greater flexibility in manufacturing, marketing, and sales programs. sales and operations planning (S&OP)
buyer and seller are localized in one area, which facilitates the use of a
simple agent/broker relationship,
omnichannel distribution operation
supports their multichannel retail operations and unifies their retail interfaces so that all customers receive equal and efficient service.
Direct marketing
telemarketing, mail order and catalog shopping, and forms of electronic retailing such as online shopping and shop-at-home television networks typical in business and industrial markets.
renting items
that are usually only sold to end consumers.
strategic channel alliances
that enable them to use another manufacturer's already-established channel most often when the creation of marketing channel relationships may be too expensive and time consuming.
three-dimensional printing (3DP)
the creation of three-dimensional objects via an additive manufacturing (printing) technology that layers raw material into desired shapes 3DP, smaller, localized supply chains will become the norm and small manufacturers will produce many more custom products than ever before over very short lead times remove much of the need for transportation
form utility
the elements of the composition and appearance of a product that make it desirable
big data
the exponential growth in the volume, variety, and velocity of information and the development of complex, new tools to analyze and create meaning from such data challenge of extracting usable date harvest more useful information, many companies are using cloud computing to collaborate on big data projects and analyze findings in a quick and cost-effective manner.
Time
the increase in customer satisfaction gained by making a good or service available at the appropriate time
exchange utility
the increased value of a product that is created as its ownership is transferred
order cycle time
the time delay between the placement of a customer's order and the customer's receipt of that order
Nearshoring
the transfer of an offshored activity from a distant to a nearby country
place utility
the usefulness of a good or service as a function of the location at which it is made available
employ secondary channels, using either an active or passive approach.
to engage a segment of customers who might otherwise never experience the product by offering it at a more easily affordable price or under trial conditions
direct channel
to sell directly to consumers in order to keep purchase prices low.
Logistical functions
typically include transportation and storage of assets, as well as their sorting, accumulation, consolidation, and/or allocation for the purpose of conforming to customer requirements
13-3 THE KEY PROCESSES OF SUPPLY CHAIN MANAGEMENT
video
supply chain integration
when multiple firms or business functions in a supply chain coordinate their activities and processes so that they are seamlessly linked to one another in an effort to satisfy the customer
agent/ broker channel
when one or more channel members are small companies lacking in marketing power
M-commerce
whereby a mobile device is used to assess, compare, and/or buy products. experiencing the largest growth in both retail and channel decision-making
engaging in vested outsourcing relationships
whereby both parties collaborate deeply to find mutually beneficial arrangements that allow both parties to "win" by reducing overall costs while achieving better performance.
order fulfillment process
which involves generating, filling, delivering, and providing on-the-spot service for customer orders 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. The best order fulfillment processes reduce order cycle time while ensuring that the customer receives exactly what he or she wants. understanding and integrating the company's internal capabilities with customer needs, and matching these together so that the supply chain maximizes profits while minimizing costs and waste.
When there is no time pressure, customers may save money on books by ordering online and taking direct distribution from a
wholesaler
industrial distributors
wholesalers and channel members that buy and take title to products. companies selling standardized items of moderate or low value
