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Marketing Channels and Supply Chain Management 12 Prepared by Deborah Baker Texas Christian University Chapter 12
Marketing Channels and
Supply Chain Management
12
Prepared by
Deborah Baker
Texas Christian University
Chapter 12 Version 6e
©2002 South-Western
1
Learning Objectives 1. Explain what a marketing channel is and why intermediaries are needed. 12 2.
Learning Objectives
1.
Explain what a marketing channel is and
why intermediaries are needed.
12
2.
Define the types of channel intermediaries
and describe their functions and activities.

Chapter 12 Version 6e

©2002 South-Western

2
2
Learning Objectives (continued) 3. Describe the channel structures for consumer and business-to-business products and discuss alternative
Learning Objectives (continued)
3.
Describe the channel structures for
consumer and business-to-business
products and discuss alternative channel
arrangements.
12
4.
Define supply chain management and
discuss its benefits.
5.
Discuss the issues that influence channel
strategy.
Chapter 12 Version 6e
©2002 South-Western
3
Learning Objectives (continued) 6. Explain channel leadership, conflict, and partnering. 12 7. Describe the logistical components
Learning Objectives (continued)
6.
Explain channel leadership, conflict, and
partnering.
12
7.
Describe the logistical components of the
supply chain.
8.

Discuss the concept of balancing logistics service and cost.

4
4
Learning Objectives (continued) 6. Explain channel leadership, conflict, and partnering. 12 7. Describe the logistical components
Learning Objectives (continued) 6. Explain channel leadership, conflict, and partnering. 12 7. Describe the logistical components
Learning Objectives (continued) 6. Explain channel leadership, conflict, and partnering. 12 7. Describe the logistical components

Chapter 12 Version 6e

©2002 South-Western

Learning Objectives (continued) 9. Discuss new technology and emerging trends in supply chain management. 12 10.
Learning Objectives (continued)
9.
Discuss new technology and emerging
trends in supply chain management.
12
10.
Discuss channels and distribution
decisions in global markets.
11.
Identify the special problems and
opportunities associated with distribution
in service organizations.
Chapter 12 Version 6e
©2002 South-Western
5
1 Learning Objective
1
Learning Objective
Explain what a marketing channel is and why intermediaries are needed.
Explain what a marketing channel
is and why intermediaries are needed.
1 Marketing Channels Marketing Channel A set of interdependent organizations that ease the transfer of ownership
1
Marketing Channels
Marketing
Channel
A set of interdependent organizations
that ease the transfer of ownership as
products move from producer to
business user or consumer.
Supply
Chain
The connected chain of all the business
entities, both internal and external to the
company, that perform or support the
logistics function.
1 Marketing Channel Functions Specialization and Division of Labor
1
Marketing Channel Functions
Specialization and
Division of Labor
Channels Fulfill Three Important Functions
Channels
Fulfill
Three
Important
Functions
Overcoming Discrepancies
Overcoming
Discrepancies

Providing Contact

Efficiency

1 Marketing Channel Functions Specialization and Division of Labor Channels Fulfill Three Important Functions Overcoming Discrepancies
Specialization and 1 Division of Labor
Specialization and
1
Division of Labor
  • Provides economies of scale

  • Aids producers who lack resources to

market directly

  • Builds good relationships with

customers

1 Overcoming Discrepancies
1
Overcoming Discrepancies
Discrepancy of Quantity The difference between the amount of product produced and the amount an end
Discrepancy
of
Quantity
The difference between the amount
of product produced and the
amount an end user wants to buy.
The lack of all the items a
Discrepancy
customer needs to receive full
of
Assortment
satisfaction from a product or
products.
1 Overcoming Discrepancies
1
Overcoming Discrepancies
Temporal Discrepancy A situation that occurs when a product is produced but a customer is not
Temporal
Discrepancy
A situation that occurs when a
product is produced but a
customer is not ready to buy it.
The difference between the
Spatial
location of a producer and the
Discrepancy
location of widely
scattered markets.
1 Contact Efficiency Zenith Sony RCA Toshiba
1
Contact Efficiency
Zenith
Sony
RCA
Toshiba
1 Contact Efficiency Zenith Sony RCA Toshiba Zenith Chapter 12 Version 6e Sony RCA Toshiba 12
1 Contact Efficiency Zenith Sony RCA Toshiba Zenith Chapter 12 Version 6e Sony RCA Toshiba 12
1 Contact Efficiency Zenith Sony RCA Toshiba Zenith Chapter 12 Version 6e Sony RCA Toshiba 12
1 Contact Efficiency Zenith Sony RCA Toshiba Zenith Chapter 12 Version 6e Sony RCA Toshiba 12
1 Contact Efficiency Zenith Sony RCA Toshiba Zenith Chapter 12 Version 6e Sony RCA Toshiba 12
1 Contact Efficiency Zenith Sony RCA Toshiba Zenith Chapter 12 Version 6e Sony RCA Toshiba 12
Zenith
Zenith
1 Contact Efficiency Zenith Sony RCA Toshiba Zenith Chapter 12 Version 6e Sony RCA Toshiba 12

Chapter 12 Version 6e

1 Contact Efficiency Zenith Sony RCA Toshiba Zenith Chapter 12 Version 6e Sony RCA Toshiba 12
Sony
Sony
1 Contact Efficiency Zenith Sony RCA Toshiba Zenith Chapter 12 Version 6e Sony RCA Toshiba 12
RCA
RCA
1 Contact Efficiency Zenith Sony RCA Toshiba Zenith Chapter 12 Version 6e Sony RCA Toshiba 12
Toshiba
Toshiba
1 Contact Efficiency Zenith Sony RCA Toshiba Zenith Chapter 12 Version 6e Sony RCA Toshiba 12

12

1 Contact Efficiency Zenith Sony RCA Toshiba Zenith Chapter 12 Version 6e Sony RCA Toshiba 12
1 Contact Efficiency Zenith Sony RCA Toshiba Zenith Chapter 12 Version 6e Sony RCA Toshiba 12
Circuit City
Circuit City
1 Contact Efficiency Zenith Sony RCA Toshiba Zenith Chapter 12 Version 6e Sony RCA Toshiba 12
1 Contact Efficiency Zenith Sony RCA Toshiba Zenith Chapter 12 Version 6e Sony RCA Toshiba 12
1 Contact Efficiency Zenith Sony RCA Toshiba Zenith Chapter 12 Version 6e Sony RCA Toshiba 12
1 Contact Efficiency Zenith Sony RCA Toshiba Zenith Chapter 12 Version 6e Sony RCA Toshiba 12

©2002 South-Western

2 Learning Objective
2
Learning Objective
Define the types of channel intermediaries and describe their functions and activities.
Define the types of channel
intermediaries and describe their
functions and activities.
2 Channel Intermediaries Retailer A channel intermediary that sells mainly to customers. An institution that buys
2
Channel Intermediaries
Retailer
A channel intermediary that
sells mainly to customers.
An institution that buys goods
Merchant
from manufacturers, takes title
Wholesaler
to goods, stores them,
and resells and ships them.
Agents and
Brokers
Wholesaling intermediaries who
facilitate the sale of a product by
representing channel member.
2 Channel Intermediaries Retailers Take Title to Goods Merchant Wholesalers Take Title to Goods Agents and
2
Channel Intermediaries
Retailers
Take Title to Goods
Merchant
Wholesalers
Take Title to Goods
Agents
and
Do NOT Take Title to Goods
Brokers
Channel Functions 2 Performed by Intermediaries Contacting/Promotion Transactional Functions Negotiating Risk Taking
Channel Functions
2
Performed by Intermediaries
Contacting/Promotion
Transactional
Functions
Negotiating
Risk Taking

Logistical

Functions

Channel Functions 2 Performed by Intermediaries Contacting/Promotion Transactional Functions Negotiating Risk Taking Logistical Functions Physically distributing
Physically distributing Storing Sorting
Physically distributing
Storing
Sorting

Facilitating

Function

Channel Functions 2 Performed by Intermediaries Contacting/Promotion Transactional Functions Negotiating Risk Taking Logistical Functions Physically distributing
Researching Financing ©2002 South-Western 16
Researching
Financing
©2002 South-Western
16
2
2
Logistics materials, in-process
Logistics
materials, in-process

The process of strategically managing the efficient flow and storage of raw

inventory, and finished goods from point of origin

to point of consumption.

3 Learning Objective
3
Learning Objective
3 Learning Objective Describe the channel structures for consumer and business-to-business products and discuss alternative channel

Describe the channel structures for consumer and

business-to-business products and discuss alternative channel arrangements.
business-to-business products
and discuss alternative
channel arrangements.
3
3
Direct Channel
Direct Channel

directly to consumers.

A distribution channel in which producers sell

3 Channels for Consumer Products Direct Retailer Wholesaler Agent/Broker Channel Channel Channel Channel Producer Producer Producer
3
Channels for Consumer Products
Direct
Retailer
Wholesaler
Agent/Broker
Channel
Channel
Channel
Channel
Producer
Producer
Producer
Producer
Agents or
Brokers
Wholesalers
Wholesalers
Retailers
Retailers
Retailers
Consumers
Consumers
Consumers
Consumers
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Channels for Business-to- 3 Business Products Direct Industrial Agent/Broker Agent/Broker Direct Channel Distributor Channel Industrial Channel
Channels for Business-to-
3
Business Products
Direct
Industrial
Agent/Broker
Agent/Broker
Direct
Channel
Distributor
Channel
Industrial
Channel
Channel
Producer
Producer
Producer
Producer
Producer
Agents or
Brokers
Agents or
Brokers
Industrial
Industrial
Distributor
Distributor
Industrial
Industrial
Industrial
Industrial
Government
User
User
User
User
Buyer
Chapter 12 Version 6e
©2002 South-Western
21
3 Alternative Channel Arrangements Multiple Channels
3
Alternative Channel Arrangements
Multiple Channels
Different Channels May be Used
Different
Channels
May be Used

Nontraditional

Channels

Adaptive Channels

Strategic Channel Alliances

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4 Learning Objective
4
Learning Objective
4 Learning Objective Define supply chain management and discuss its benefits. Chapter 12 Version 6e ©2002

Define supply chain management and discuss its benefits.

4 Learning Objective Define supply chain management and discuss its benefits. Chapter 12 Version 6e ©2002
4 Learning Objective Define supply chain management and discuss its benefits. Chapter 12 Version 6e ©2002
4 Supply Chain Management
4
Supply Chain Management
4 Supply Chain Management A management system that coordinates and integrates all of the activities performed

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.

4 Supply Chain Management
4
Supply Chain Management
Results of Supply Chain Management
Results
of
Supply Chain
Management
Focus on Innovative Solutions Competitive with focus on Customer Satisfaction
Focus on Innovative Solutions
Competitive with focus on
Customer Satisfaction

Synchronized Flow

4 Supply Chain Management Results of Supply Chain Management Focus on Innovative Solutions Competitive with focus

Customer Value

4 Role of Supply Chain Management
4
Role of Supply Chain Management
4 Role of Supply Chain Management Communicator of customer demand from point of sale to supplier

Communicator of customer demand from point of sale to supplier

Role of Supply Chain Management
Role of
Supply Chain
Management
4 Role of Supply Chain Management Communicator of customer demand from point of sale to supplier
4 Role of Supply Chain Management Communicator of customer demand from point of sale to supplier

Physical flow process that engineers the

movement of goods

Supply Chain Management 4 Activities Determine channel strategy and level of distribution intensity
Supply Chain Management
4
Activities
Determine channel strategy and
level of distribution intensity

Manage relationships

in the supply chain

Supply Chain Management 4 Activities Determine channel strategy and level of distribution intensity Manage relationships in

Manage the logistical components

of the supply chain

Supply Chain Management 4 Activities Determine channel strategy and level of distribution intensity Manage relationships in

Balance the costs of the supply chain with the service level demanded by customer

Supply Chain Management 4 Activities Determine channel strategy and level of distribution intensity Manage relationships in
Benefits of 4 Supply Chain Management
Benefits of
4
Supply Chain Management
Common Benefits of Supply Chain Management
Common Benefits
of Supply Chain
Management
Reduced Costs Improved Service Chapter 12 Version 6e ©2002 South-Western
Reduced Costs
Improved Service
Chapter 12 Version 6e
©2002 South-Western

Enhanced Revenues

Benefits of 4 Supply Chain Management Common Benefits of Supply Chain Management Reduced Costs Improved Service

28

5 Learning Objective
5
Learning Objective
Discuss the issues that influence channel strategy.
Discuss the issues that
influence channel strategy.
5 Channel Strategy Decisions Issues that Influence Channel Strategy Factors Affecting Levels of Distribution Channel Intensity
5
Channel Strategy Decisions
Issues that Influence
Channel Strategy
Factors
Affecting
Levels of
Distribution
Channel
Intensity
Choice
Market Factors Producer Factors
Market Factors
Producer Factors
5 Channel Strategy Decisions Issues that Influence Channel Strategy Factors Affecting Levels of Distribution Channel Intensity

Product Factors

5 Channel Strategy Decisions Issues that Influence Channel Strategy Factors Affecting Levels of Distribution Channel Intensity

Chapter 12 Version 6e

Selective Distribution
Selective Distribution

Intensive Distribution

5 Channel Strategy Decisions Issues that Influence Channel Strategy Factors Affecting Levels of Distribution Channel Intensity
Exclusive Distribution
Exclusive Distribution
5 Channel Strategy Decisions Issues that Influence Channel Strategy Factors Affecting Levels of Distribution Channel Intensity

30

©2002 South-Western

5 Market Factors Customer Profiles Consumer or Industrial Customer Size of Market Market Factors That Affect
5
Market Factors
Customer Profiles
Consumer or Industrial
Customer
Size of Market
Market Factors
That Affect
Channel
Choices
Geographic Location
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5 Product Factors
5
Product Factors
5 Product Factors Product Complexity Product Factors That Affect Channel Choices Chapter 12 Version 6e Product
Product Complexity Product Factors That Affect Channel Choices Chapter 12 Version 6e
Product Complexity
Product Factors
That Affect
Channel
Choices
Chapter 12 Version 6e

Product Price

5 Product Factors Product Complexity Product Factors That Affect Channel Choices Chapter 12 Version 6e Product
5 Product Factors Product Complexity Product Factors That Affect Channel Choices Chapter 12 Version 6e Product
Product Life Cycle
Product Life Cycle

Product Delicacy

5 Product Factors Product Complexity Product Factors That Affect Channel Choices Chapter 12 Version 6e Product

©2002 South-Western

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5 Producer Factors
5
Producer Factors
5 Producer Factors Producer Resources Number of Product Lines Producer Factors That Affect Channel Choices Chapter
Producer Resources Number of Product Lines Producer Factors That Affect Channel Choices Chapter 12 Version 6e
Producer Resources
Number of Product Lines
Producer Factors
That Affect
Channel
Choices
Chapter 12 Version 6e
©2002 South-Western

Desire for Channel Control

5 Producer Factors Producer Resources Number of Product Lines Producer Factors That Affect Channel Choices Chapter

33

5 Levels of Distribution Intensity Intensity Level Objective Number of Intermediaries Intensive Achieve mass market selling.
5
Levels of Distribution Intensity
Intensity Level
Objective
Number of
Intermediaries
Intensive
Achieve mass market
selling.
Convenience goods.
Many
Selective
Work with selected
intermediaries.
Shopping and some
specialty goods.
Several
Exclusive
Work with single
intermediary. Specialty
goods and industrial
equipment.
One
6 Learning Objective
6
Learning Objective
Explain channel leadership, conflict, and partnering.
Explain channel leadership,
conflict, and partnering.
6 Managing Channel Relationships Channel Power
6
Managing Channel Relationships
Channel Power
Social Dimensions of Channels
Social
Dimensions
of Channels

Channel Control

6 Managing Channel Relationships Channel Power Social Dimensions of Channels Channel Control Channel Leadership Channel Conflict
6 Managing Channel Relationships Channel Power Social Dimensions of Channels Channel Control Channel Leadership Channel Conflict
Channel Leadership
Channel Leadership

Channel Conflict

6 Managing Channel Relationships Channel Power Social Dimensions of Channels Channel Control Channel Leadership Channel Conflict

Channel Partnering

6 Managing Channel Relationships Channel Power Social Dimensions of Channels Channel Control Channel Leadership Channel Conflict
Channel Power, 6 Control, and Leadership A channel member’s capacity to Channel control or influence the
Channel Power,
6
Control, and Leadership
A channel member’s capacity to
Channel
control or influence the behavior
Power
of other channel members
A situation that occurs when one
Channel
marketing channel member
Control
intentionally affects another
member’s behavior.
Channel
Leader
A member of a marketing channel
that exercises authority/power over
the activities of other members.
6
6
Channel Conflict distribution channel members.
Channel Conflict
distribution channel members.

A clash of goals and methods between

Horizontal Conflict Occurs among channel members on the same level
Horizontal
Conflict
Occurs among channel members
on the same level
6 Channel Conflict distribution channel members. A clash of goals and methods between Horizontal Conflict Occurs
Vertical Conflict Occurs among channel members at different levels
Vertical
Conflict
Occurs among channel members
at different levels
6
6
Channel Partnering The joint effort of all
Channel Partnering
The joint effort of all

channel members to create a supply chain that serves customers and creates a competitive advantage.

Transaction- vs. 6 Partnership-Based Firms Transaction-Based Partnership-Based Short-term relationships Long-term relationships Multiple suppliers Few suppliers Adversarial
Transaction- vs.
6
Partnership-Based Firms
Transaction-Based
Partnership-Based
Short-term relationships
Long-term relationships
Multiple suppliers
Few suppliers
Adversarial relationships
Cooperative partnerships
Price dominates
Value-added services dominate
Minimal supplier investment
High supplier/buyer investment
Minimal information sharing
Extensive information sharing
Firms are independent
Minimal functional
Firms are interdependent
Extensive functional
area interaction
area interaction
Chapter 12 Version 6e
©2002 South-Western
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7 Learning Objective
7
Learning Objective
Describe the logistical components of the supply chain.
Describe the logistical components
of the supply chain.
Integrated Logistical 7 Components of the Supply Chain Sourcing & Procurement
Integrated Logistical
7
Components of the Supply Chain
Sourcing & Procurement

Logistics Information System

Production Scheduling

Integrated Logistical 7 Components of the Supply Chain Sourcing & Procurement Logistics Information System Production Scheduling

Order Processing & Customer Service

Integrated Logistical 7 Components of the Supply Chain Sourcing & Procurement Logistics Information System Production Scheduling
Integrated Logistical 7 Components of the Supply Chain Sourcing & Procurement Logistics Information System Production Scheduling

Inventory Control

Integrated Logistical 7 Components of the Supply Chain Sourcing & Procurement Logistics Information System Production Scheduling

Warehouse & Materials Handling

Integrated Logistical 7 Components of the Supply Chain Sourcing & Procurement Logistics Information System Production Scheduling
Transportation ©2002 South-Western 42
Transportation
©2002 South-Western
42
Supply Chain Team
Supply
Chain
Team
Integrated Logistical 7 Components of the Supply Chain Sourcing & Procurement Logistics Information System Production Scheduling

Chapter 12 Version 6e

7 Sourcing and Procurement Plan Purchasing Strategies Develop Specifications Role of Purchasing Departments Select Suppliers Negotiate
7
Sourcing and Procurement
Plan
Purchasing Strategies
Develop
Specifications
Role of
Purchasing
Departments
Select
Suppliers
Negotiate
Price
Negotiate
Service Levels
Chapter 12 Version 6e
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7 Production Scheduling
7
Production Scheduling
Traditional Focus Customer Focus Push/Pull Push Pull Strategy Start of Production Customer-Order Inventory-Based Based Manufacturing Mass
Traditional Focus
Customer Focus
Push/Pull
Push
Pull
Strategy
Start of
Production
Customer-Order
Inventory-Based
Based
Manufacturing
Mass Production
Mass Customization
7 Just-in-Time Manufacturing
7
Just-in-Time Manufacturing
7 Just-in-Time Manufacturing A process that redefines and simplifies manufacturing by reducing inventory levels and delivering

A process that redefines

and simplifies manufacturing by reducing

inventory levels and

delivering raw materials just when they are needed

on the production line.

7 Benefits of JIT
7
Benefits of JIT
  • Reduces raw material inventories

  • Shortens lead times

  • Creates better supplier relationships

  • Reduces production and storeroom costs

  • Reduces paperwork

7 Electronic Data Interchange
7
Electronic Data Interchange
7 Electronic Data Interchange Information technology that replaces paper documents that accompany business transactions. Chapter 12

Information technology that replaces paper documents that accompany business transactions.

7
7
Inventory Control System
Inventory Control System

A method of developing

and maintaining an adequate assortment of

materials or products to

meet a manufacturer’s or a customer’s demand.

Warehouse and 7 Materials-Handling Receive goods into warehouse
Warehouse and
7
Materials-Handling
Receive goods into
warehouse
Functions of Materials Handling
Functions
of
Materials
Handling

Identify, sort and label goods

Dispatch the goods to temporary storage

Recall, select, or pick the

goods for shipment

7 Transportation Cost Transit Time Reliability Criteria Capability for Transportation Accessibility Mode Choice Traceability Chapter 12
7
Transportation
Cost
Transit Time
Reliability
Criteria
Capability
for
Transportation
Accessibility
Mode
Choice
Traceability
Chapter 12 Version 6e
©2002 South-Western
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Criteria for Ranking 7 Modes of Transportation Lowest Highest Relative Air Truck Rail Pipe Water Cost
Criteria for Ranking
7
Modes of Transportation
Lowest
Highest
Relative
Air
Truck
Rail
Pipe
Water
Cost
Transit
Water
Rail
Pipe
Truck
Air
Time
Reliability
Pipe
Truck
Rail
Air
Water
Capability
Water
Rail
Truck
Air
Pipe
Accessibility
Truck
Rail
Air
Water
Pipe
Traceability
Air
Truck
Rail
Water
Pipe
Chapter 12 Version 6e
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8 Learning Objective
8
Learning Objective
Discuss the concept of balancing logistics service and cost.
Discuss the concept of
balancing logistics service and cost.
8
8
Logistics Service Interrelated activities ensure that the right product is in the right place at the
Logistics Service
Interrelated activities
ensure that the right
product is in the right
place at the right time.

performed by a member of the supply chain to

8 Logistical Competencies
8
Logistical Competencies
  • Devise logistics service strategies as a means of competitive differentiation

  • Integrate members of supply chain to achieve operating excellence

  • Respond quickly to changing logistical requirements

  • Constantly monitor all aspects of the supply chain

9 Learning Objective
9
Learning Objective
Discuss new technology and emerging trends in supply chain management.
Discuss new technology
and emerging trends in
supply chain management.
Trends in 9 Supply Chain Management
Trends in
9
Supply Chain Management
Trends in 9 Supply Chain Management Trends Affecting the Logistics Industry Advanced Computer Technology Outsourcing of
Trends Affecting the Logistics Industry
Trends
Affecting the
Logistics
Industry

Advanced

Computer Technology

Trends in 9 Supply Chain Management Trends Affecting the Logistics Industry Advanced Computer Technology Outsourcing of
Outsourcing of Logistics Functions
Outsourcing of
Logistics Functions

Electronic

Distribution

Trends in 9 Supply Chain Management Trends Affecting the Logistics Industry Advanced Computer Technology Outsourcing of
10 Learning Objective
10
Learning Objective
Discuss channels and distribution decisions in global markets.
Discuss channels and distribution
decisions in global markets.
Channels and Distribution 10 Decisions for Global Markets
Channels and Distribution
10
Decisions for Global Markets

Global Channel Development

Channels and Distribution 10 Decisions for Global Markets Global Channel Development Channel structure differs Channel types
Channel structure differs Channel types differ “Gray” marketing channels
Channel structure differs
Channel types differ
“Gray” marketing channels
Awareness of trade legalities Global Supply Chain Management Transportation Infrastructure
Awareness of trade legalities
Global Supply
Chain Management
Transportation Infrastructure

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11 Learning Objective
11
Learning Objective
Identify the special problems and opportunities associated with distribution in service organizations.
Identify the special problems and
opportunities associated with
distribution in service organizations.
Channels and Distribution 11 Decisions for Services
Channels and Distribution
11
Decisions for Services
Channels and Distribution 11 Decisions for Services Minimizing wait times Managing service capacity Areas of Focus
Minimizing wait times Managing service capacity Areas of Focus for Service Distribution Chapter 12 Version 6e
Minimizing wait times
Managing service capacity
Areas of Focus
for
Service Distribution
Chapter 12 Version 6e
©2002 South-Western

Improving delivery through new channels

Channels and Distribution 11 Decisions for Services Minimizing wait times Managing service capacity Areas of Focus

60