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MARKETING CHANNELS
Martin Stopford
Before discussing the supply chain
management concept, we need to
understand the marketing channels…
• “sets of interdependent organizations involved
in the process of making a product or service
available for use or consumption.”
• Ownership channel
– Manufacturers
– Wholesalers
– Retailers
Relationship of Logistics to
Marketing and Production
LOGISTICS
Sample
activities: MARKETING
PRODUCTION/ •Transport Interface Sample
OPERATIONS • Inventory
Interface activities: activities:
Sample activities: • Order • Customer
• Quality control activities: • Promotion
• Product processing service • Market
• Detailed production
scheduling • Materials standards research
scheduling • Plant • Pricing
• Equipment maint. handling • Product
location • Packaging
• Capacity planning mix
• Purchasing • Retail • Sales force
• Work measurement
location management
& standards
Production-
logistics Marketing-
interface logistics
interface
}
nt Systems Strategic Product Process
Decisions Design Design
Decisions Decisions
Engineering
Measuremen Systems
}
t Decisions
Product
Decisions
Reward
Decisions Price
Decisions
Promotion
Decisions
Marketin
g
Place (How,
{ }
where, how Systems
much)
Production
Inventory Capacity
Decisions Decisions
Product
Marketing
Promotion
Price
Place-Customer
service levels
Transport
Logistics
Inventory
carrying costs costs
• Negotiations channel
– Buy and sell agreements are reached
• Financing channel
– Payments for goods
• Promotions channel
– Promoting a new or existing product
• Logistics channel
– Moving and storing product
throughout the channel
Channel Intermediaries/
Facilitators
• Ownership channel
– Banks, public warehouses
• Negotiations channel
– Brokers
• Financing channel
– Banks, insurance companies
• Promotions channel
– Advertising agencies, public relations agencies
• Logistics channel
– Freight forwarders
Main differences between marketing
channels and the supply chain
• Reengineering: While the marketing channel
appears to concentrate on existing products,
the supply chain includes more room for
considering the reengineering of products
and processes.
Activity frag
How shipping affects international
logistics and supply chains?
1)During the first stage of supply chain
evolution (fragmentation to physical
distribution), international maritime
industry restricted its activities to sea leg,
concentrating on operating vessels, fleet
scheduling and stowage planning (these
were invisible to the shipper).
How shipping affects international
logistics and supply chains?
2)With the advent of the second stage
(integrated logistics management), the
shipping industry started offer through
IN WHAT
transport WAYS including
services AND HOW? the
development of intermodal transport.
3) The third stage of supply chain
management has seen the shipping
industry becoming more integrated into the
shipper’s supply chain.
Different Supply Chain Configurations
Supply Chain - Major Decisions
Location Decisions
Production Decisions
Inventory Decisions
Transportation Decisions
• Shipment Scheduling
Operational • Resource Scheduling
• Short Term Planning (Weekly,Daily)
Globalization of Supply
•
Chains
Increasing globalization
– Lower priced materials and labor
– Global perspective of companies
– Development of global competition
• Extremely difficult to execute due
to differences
– Cultural, economic, and technological
– Political, spatial, and logistical
How long is the supply chain?
• For many firms, the supply chain extends from their suppliers’
suppliers to their customers’ customers and beyond.
• A fiber provider
• A yarn manufacturer
• A textile manufacturer
• A clothing design firm
• A textile launderer
• Distributors
• Retailers
• Firms supplying transportation, information or distribution
services to any of Levi’s partners in the supply chain.
Supply
Chain for
Milk
Products
Supply chain:
structure and tiering
Supply chain can be fairly
complex. The supply
chain for a car
manufacturer includes
hundreds of suppliers,
dozens of manufacturing
plants (for parts) and
assembly plants (for
cars), dealers, direct
business customers,
wholesalers, customers,
and support functions
such as product
engineering and
purchasing.
Barriers to Supply Chain
Management
• Regulatory and political
considerations
• Lack of top management
commitment
• Reluctance to share, or use,
relevant data
• Incompatible information systems
• Incompatible corporate cultures
That’s all for today…
Thanksss