Managing the Supply ChainLearning ObjectivesThe Supply ChainSlide 4Slide 5Slide 6Slide 7Slide 8Primary Marketing InstitutionsSlide 10The Supply Chain: Institutions Participating inSlide 12Facilitating InstitutionsThe Supply Chain: Sorting ProcessSlide 15Slide 16Types of Supply ChainsSupply Chain LengthSupply Chain Length: Strategic Decisions inSupply Chain Length: Direct and IndirectSupply Chain WidthWidth of Marketing Supply Chain:Slide 23Slide 24Control of the Supply ChainMarketing Channel PatternsVertical Marketing ChannelsSlide 28Slide 29Slide 30Slide 31Wholesale Sponsored Voluntary GroupSlide 33Slide 34Advantages to Franchise OwnershipDisadvantages to Franchise OwnershipYum! Brands Inc.Slide 38Managing Retailer-Supplier RelationsSlide 40Slide 41Managing Retailer-Supplier Relations:Slide 43Slide 44Slide 45Slide 46Slide 47Conflict Process Role of Channel InterdependencyCollaboration in the ChannelFacilitating Channel CollaborationFacilitating Channel Collaboration: Supply Chain Best Management PracticesSlide 52Slide 53Category ManagementQuestion to Ponder1Managing the Supply ChainManaging the Supply ChainChapter 5Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved.2Learning ObjectivesLearning Objectives• Discuss the retailer’s role as one of the institutions involved in the larger supply chain.• Describe the types of supply chains by length, width, and control.• Explain the terms dependency, power, and conflict and their impact on supply chain relations.• Understand the importance of having collaborative supply chain relationships.3The Supply ChainThe Supply ChainSupply ChainsIs a set of institutions that moves goods from the point of production to the point of consumption.•ChannelUsed interchangebly with chain.LO 14The Supply ChainThe Supply ChainThe supply chain, or channel, is affected by five external forces:Consumer behaviorCompetitor behaviorSocioeconomic environmentTechnological environmentLegal and ethical environmentLO 15The Supply ChainThe Supply ChainA supply chain or channel must perform eight marketing functions:BuyingSellingStoringTransportingSortingFinancingInformation gatheringRisk takingLO 16The Supply ChainThe Supply ChainA marketing function does not have to be shifted in its entirety to another institution or to the consumer but can be divided among several entities.LO 17The Supply ChainThe Supply Chain•Marketing System Is the set of institutions performing marketing functions (activities), the relationships between these institutions, and the functions that are necessary to create exchange transactions with target populations or consumers.LO 18The Supply ChainThe Supply Chain•Primary Marketing InstitutionsAre those channel members that take title to the goods as they move through the marketing channel. They include manufacturers, wholesalers, and retailers.LO 19Primary Marketing InstitutionsPrimary Marketing InstitutionsCostco is a primary marketing institution that acts as both a wholesaler (selling to small businesses) and a retailer (selling to households).LO 110The Supply ChainThe Supply Chain•Facilitating Marketing InstitutionsAre those that do not actually take title but assist in the marketing process by specializing in the performance of certain marketing functions.LO 111The Supply Chain: Institutions Participating inThe Supply Chain: Institutions Participating inLO 1: Exhibit 5.1Primary (Take Title)Facilitating (Do Not Take Title)ManufacturersWholesalers RetailersAgents/Brokers Financial Institutions Market Researchers Transporters Advertising Agencies Warehouses InsurersThe Supply Chain12The Supply ChainThe Supply Chain•Public WarehouseIs a facility that stores goods for safekeeping for any owner in return for a fee, usually based on space occupied.LO 113Facilitating InstitutionsFacilitating Institutions• Freelance broker• Manufacturer’s agent• Sales agent• Purchasing agentsLO 114The Supply Chain: Sorting ProcessThe Supply Chain: Sorting ProcessLO 1SOURCE: Virginia Newell Lusch, used with permission.15The Supply Chain: Sorting ProcessThe Supply Chain: Sorting ProcessLO 1SOURCE: Virginia Newell Lusch, used with permission.16The Supply Chain: Sorting ProcessThe Supply Chain: Sorting ProcessLO 1SOURCE: Virginia Newell Lusch, used with permission.ASSORTMENT17Types of Supply ChainsTypes of Supply ChainsLengthWidthControlLO 218 Supply Chain Length Supply Chain LengthDirect Supply ChainIs the channel that results when a manufacturer sells its goods directly to the final consumer or end user.•Indirect Supply ChainIs the channel that results once independent channel members are added between the manufacturer and the consumer.LO 219Supply Chain Length: Strategic Decisions inSupply Chain Length: Strategic Decisions inLO 2: Exhibit 5.2Supply ChainLengthSupply ChainLengthDirectDirectIndirectIndirectSupply Chain Width(Intensive, Selective,and Exclusive)Supply Chain Width(Intensive, Selective,and Exclusive)Controllingthe Supply ChainControllingthe Supply ChainSupply Chain Design20Supply Chain Length: Direct and IndirectSupply Chain Length: Direct and IndirectLO 2: Exhibit 5.3ManufacturerConsumerManufacturerRetailerManufacturerConsumerWholesalerRetailerConsumerDirect Supply Chain Indirect Supply ChainsSupply Chains21Supply Chain WidthSupply Chain Width•Intensive distribution Means that all possible retailers are used in a trade area. •Selective distribution Means that a moderate number of retailers are used in a trade area.•Exclusive distribution Means only one retailer is used to cover a trading area.LO 222Width of Marketing Supply Chain:Width of Marketing Supply Chain:LO 2: Exhibit 5.4ManufacturerRetailerOnly one retailer in trading area sells the product(s)Exclusive Distribution23Width of Marketing Supply Chain:Width of Marketing Supply Chain:LO 2: Exhibit 5.4ManufacturerRetailerModerate number of retailers in each trading area sell the product(s)RetailerSelective Distribution24Width of Marketing Supply Chain:Width of Marketing Supply Chain:LO 2: Exhibit 5.4ManufacturerRetailer All possible retailers in the trading area sell the product(s)RetailerRetailerRetailerIntensive Distribution25Control of the Supply ChainControl of the Supply Chain•Conventional Marketing Channel Is one in which each channel member is loosely aligned with the others and takes a short-term orientation. • Vertical Marketing Channels
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