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Chapter 13

Supply Chain Management

MKT 337
Class #14 October 14, 2015

Bill Peterson 2015

Slide 2

Herrs Supply Chain:

Potato
Supplier

Vegetable
Oil Supplier

Salt
Supplier

Seasonings
Supplier

Packaging
Supplier

Herrs

Wholesaler

Supermarkets

Convenience
Stores

Wholesaler

Restaurants

Vending
Machine Co.

Wholesaler

Discount
Stores

Sports
Stadiums

Other
Retailers

Karen & Jim

Bill Peterson 2015

Slide 3

SupplierBusiness.com

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Slide 4

Bill Peterson 2015

Slide 5

The Marketing Process:

Initiating the
Process

Strategic
Planning

Marketing
Environment

Buyer Behavior

Segmentation - Targeting - Positioning

Creating
Value

Product

10 11 12

Place

13 14 15

Promotion
16 17 18 19

Price
20 21

Capturing
Value
Customer Relationship Management

1
3

Overview
Ethics

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5
9

Global
Research
Slide 6

Key Points of Todays Discussion:


The role of the supply chain in creating value for customers
Important considerations in building and managing a supply chain

Bill Peterson 2015

Slide 7

For Next Class (10/19/15):


Exam 2

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Slide 8

Diaper vs. Goliath

Business Week, October 7, 2010

Bill Peterson 2015

Slide 9

Key Processes of Supply Chain Management:


Customer
Relationship
Management
Customer Service
Management
Demand
Management

Order Fulfillment

Manufacturing Flow
Management
Supplier
Relationship
Management
Product
Development &
Commercialization
Returns
Management

Bill Peterson 2015

Slide 10

Customer Service Management:


Customer
Relationship
Management
Customer Service
Management

Demand
Management

Order Fulfillment

Manufacturing Flow
Management
Supplier
Relationship
Management
Product
Development &
Commercialization
Returns
Management

Bill Peterson 2015

Slide 11

Demand Management:
Customer
Relationship
Management
Customer Service
Management
Demand
Management

Order Fulfillment

Manufacturing Flow
Management
Supplier
Relationship
Management
Product
Development &
Commercialization
Returns
Management

Bill Peterson 2015

Slide 12

Order Fulfillment:
Customer
Relationship
Management
Customer Service
Management
Demand
Management

Order Fulfillment

Manufacturing Flow
Management
Supplier
Relationship
Management
Product
Development &
Commercialization
Returns
Management

Bill Peterson 2015

Slide 13

Manufacturing Flow Management:


Customer
Relationship
Management
Customer Service
Management

Sample Manufacturing Flow Management:

Demand
Management

Order Fulfillment

Manufacturing Flow
Management
Supplier
Relationship
Management
Product
Development &
Commercialization
Returns
Management
Source: Oracle Corporation

Bill Peterson 2015

Slide 14

Supplier Relationship Management:


Customer
Relationship
Management
Customer Service
Management
Demand
Management

Order Fulfillment

Manufacturing Flow
Management
Supplier
Relationship
Management
Product
Development &
Commercialization
Returns
Management

Bill Peterson 2015

Slide 15

Supplier Relationship Management:


Customer
Relationship
Management
Customer Service
Management
Demand
Management

Order Fulfillment

Manufacturing Flow
Management
Supplier
Relationship
Management
Product
Development &
Commercialization
Returns
Management

Bill Peterson 2015

U.S. retail sales of organic


food more than tripled to $32.3 billion
over the decade through 2013
significant costs and risks that
U.S. farmers face in converting from
conventional to organic farming
You can have great brands and
great products, but if you dont have
supply of products, youre going to
be in trouble
Slide 16

Supplier Relationship Management:


Customer
Relationship
Management
Customer Service
Management
Demand
Management

Polyvinylidene
Fluoride
Supplier

Battery
Suppliers

Order Fulfillment

Manufacturing Flow
Management
Supplier
Relationship
Management
Product
Development &
Commercialization
Returns
Management

Bill Peterson 2015

Slide 17

Product Development and Commercialization:


Customer
Relationship
Management
Customer Service
Management
Demand
Management

Order Fulfillment

Manufacturing Flow
Management
Supplier
Relationship
Management
Product
Development &
Commercialization
Returns
Management

Bill Peterson 2015

Slide 18

Returns Management:
Customer
Relationship
Management
Customer Service
Management
Demand
Management

Order Fulfillment

Manufacturing Flow
Management
Supplier
Relationship
Management
Product
Development &
Commercialization
Returns
Management

Bill Peterson 2015

Slide 19

Returns Management:
Customer
Relationship
Management

e.g.

Customer Service
Management
Demand
Management

Order Fulfillment

Manufacturing Flow
Management
Supplier
Relationship
Management
Product
Development &
Commercialization
Returns
Management

Bill Peterson 2015

Slide 20

Balancing Logistics Costs and Customer Service:


The Goal of Logistics:
Provide the targeted level
of customer service

Transportation
Costs

Communication

Dependability

at the least cost.


Materials
Handling and
Warehousing
Costs

Time

Order
Processing
Costs

Inventory
Costs

Convenience

Customer Service Factors


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Stockout
costs

Logistics Cost Factors


Slide 21

Customer Service Factors:

Time: the time between ordering


the item and when it is received
and ready for sale or use
Communication

Dependability

Time

Dependability: consistency of
replenishment

Convenience: minimum of
effort on the part of the buyer

Convenience

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Communication: monitoring
service and anticipating future
needs
Slide 22

Logistics Cost Factors:

Flexible; fast; can get products


close to the customer. (35%*)
Efficient; good for bulky items
over long distances. (31%)
Used for petroleum & chemicals;
reliable; low cost. (16%)

Transportation
Costs

Materials
Handling and
Warehousing
Costs
Order
Processing
Costs

Inventory
Costs

Cost-efficient; slow; good for bulky


items, esp. international. (11%)
Fast; expensive; good for
high-value, low-bulk items. (5%)

Stockout
costs

Almost immediate & almost costless delivery of digital products.


*Based on total cargo ton-miles in US
Bill Peterson 2015

Slide 23

Logistics Cost Factors:


Reasons for Inventory:
Buffer against variations in
supply and demand
Promote production efficiencies
Promote purchasing and
transportation discounts
Provide a hedge against price
increases
Protect the firm against
strikes and shortages
Costs:
Capital costs
Inventory service costs
Storage costs
Risk costs

Transportation
Costs

Materials
Handling and
Warehousing
Costs
Order
Processing
Costs

Inventory
Costs

Stockout
costs

Inventory Strategies:
Just in case
Just in time
Vendor-managed inventory
Bill Peterson 2015

Slide 24

Balancing Logistics Costs and Customer Service:

Transportation
Costs

Communication

Dependability

Materials
Handling and
Warehousing
Costs

Time

Order
Processing
Costs

Inventory
Costs

Convenience

Customer Service Factors


Bill Peterson 2015

Stockout
costs

Logistics Cost Factors


Slide 25

The Last Mile:

7,500 miles
Over 25% of logistics
costs are incurred in
the last mile

Solutions to the Last Mile:

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Slide 26

Outsourcing Logistics Functions:

We Love Logistics Commercial


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Inside the UPS Logistics Campaign


Slide 27

Supply Chain Example (fashion clothing):

Wholesaler
Designers

Producers

worldwide

Asia

ship
Distribution
Center
Macys-controlled

Designers

Producers

Spain

Europe

air
Logistics Center
Zara-controlled

Bill Peterson 2015

Slide 28