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Global Supply Chain Management

INTRODUCTION

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Global Supply Chain Management

• The Global supply chain includes all the firms that engage in activities that are necessary to convert raw materials into a good or service and put it in the hands of the consumer or business customer.

• Supply chain management is the management of flows among the firms in a supply chain to maximize total profitability

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Figure 15.3: Supply Chain

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What is a Distribution Channel?

• Series of firms or individuals that facilitate the movement of a product from the producer to the final customer

– Direct

– Indirect

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Functions of Distribution Channels

• Time, place, and ownership utilities

• Logistics functions

• Transportation and storage functions

• Efficiency creation

• Facilitating functions

• Repair and maintenance functions

• Risk-taking

• Communications and transaction functions

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Supermarkets as Channel Members

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Creating Efficiencies

• Breaking bulk - channel members purchase large quantities from manufacturers and sell smaller quantities to many different customers

• Creating assortments - channel members provide a variety of products in one location

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Figure 15.4: Reducing Transactions

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Channel Member Functions

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The Internet

• Even small firms with limited resources can enjoy competitive advantages by making products available to customers around the globe at a very low cost

• Disintermediation - process by which traditional intermediaries are eliminated as companies question the value added by layers in the distribution channel

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Types of Wholesaling Intermediaries

• Wholesaling intermediaries are firms that handle the flow of products from the manufacturer to retailer or business user

– Independent

– Manufacturer owned

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Independent Intermediaries

Merchant wholesalers• Full-service• Limited-service• Cash-and-carry

wholesalers• Truck jobbers• Drop shippers• Mail-order

wholesalers• Rack jobbers

Merchandise Agents or Brokers

• Manufacturers’ agents

• Selling agents• Commission

merchants• Merchandise

brokers

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Rack Jobbers

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Wholesalers

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Manufacturer-Owned Intermediaries

Sales Branches

Sales Offices

Manufacturers’Showrooms

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Independent Intermediaries

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Figure 15.5: Types of Distribution Channels

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Types of Distribution Channels

• Consumer channels

– Direct

– Manufacturer-retailer-consumer

– Manufacturer-wholesaler-retailer-consumer

• Business-to-business channels

– Direct

– Manufacturer-industrial distributor-business customer

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Consumer Channels

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B2B Channels

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The Internet as Distribution Channel

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Dual Distribution Systems

• Multiple channel usage

• Example:

– pharmaceutical industry sells to hospitals, clinics, and organizational customers directly and to consumers indirectly through drug retailers

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Dual Distribution Systems

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Figure 15.6: Steps in Distribution Planning

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Cooperatives

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Marketing Systems

Conventional

Vertical

Horizontal

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Vertical System

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Vertical Marketing Systems

Administered

Corporate

Contractual

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Contractual VMS

Wholesaler-Sponsored

Retailer-Cooperative

Franchise Organizations

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Distribution Intensity

Decision Factors:Company,

Customers, Channels,

Constraints, and Competition

Intensive, Exclusive, or Selective Distribution

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Exclusive Distribution

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Selective Distribution

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Selective Distribution

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Intensive Distribution

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Managing the Channel

• Selecting channel partners

• Managing the channel of distribution

– Channel leader is the dominant firm that controls the channel

– Channel leaders have some form of power relative to other members

Economic Legitimate Reward

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Need for Inventory Control

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Logistics

• Process of designing, managing, and improving the movement of products through the supply chain

– purchasing

– manufacturing

– storage

– transport

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Logistics and Customer Satisfaction

• Traditionally, logistics was thought of as physical distribution

– order processing, warehousing, materials handling, transportation, and inventory control

– objective to deliver product at lowest cost

• Now, customers’ goals become the logistics provider’s goals

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Logistics Functions

Functions

OrderProcessing

WarehousingMaterialsHandling

TransportationInventoryControl

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Transportation Mode Considerations

Dependability

Cost

Speed of Delivery

Accessibility

Capability

Traceability

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Modes of Transportation

Rail

Water

Truck

Air

Pipeline

Internet

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Water Transportation

Water transportationis best for large, bulky,nonperishable goods

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Tracking Movements

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