MARK3001 Lecture 9 Outline of Last Lecture I. Ethics in MarketingA. Definition of ethicsi. Why is it important? B. Definition of lawsC. What is ethical is not always legal, and what is legal is not always ethicalD. Legal or ethical obligation?i. Real-life situation exampleE. Outcomesi. Two models1. Personal model2. Business model F. Framework for ethical decisionsi. Four sets of normsii. Societal Normsiii. General Business Norms1. Basic business values: a. Consumer rightsb. Caveat emptor2. Industry standards:a. The American Marketing Association i. Standards set by AMAiv. Company Normsv. Personal Value Norms1. Personal moral philosophies:a. Moral Idealism b. Utilitarianism G. Level of Responsibility Model1. Profit (Investors Only)2. Stakeholder3. SocietalOutline of Current Lecture I. The Supply Chain [DIAGRAM]These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.II. Logisticsa. Definitionb. Objective c. Usually measured in terms ofi. Order cycle time ii. Product availabilityiii. Order accuracy iv. Flexibilityv. Information d. Logistical components of the supply chain:i. Sourcing and procurement1. Objectiveii. Production scheduling1. Definition2. Build to stock vs. build to order3. Build to stock example4. Build to order exampleiii. Order processing1. Definition2. EDI a. Definition3. VMIa. Definitioniv. Inventory control1. Definition2. Goal v. Warehouse and material handling1. Functions2. Dedicated Strategya. Definition3. Random Strategya. Definitionvi. Transportation1. Railroads 2. Motor Carriers 3. Pipelines 4. Water 5. Airways III. Trends in supply chain managementa. Advanced computer technology (RFID)i. Example b. Outsourcing of logistics functions (3PL’s)i. Explanation of 3PLii. Examplec. Electronic DistributionIV. Relationship of logistics to marketing mix:a. ExampleCurrent LectureI. The Supply Chain (sometimes called a value chain or a demand chain)Supply ChainPhysical Supply Network Physical Distribution NetworkRaw Materials + Components + Manufacturing + Resellers + ConsumersII. Logisticsa. The management of the physical flow of items: raw materials, components, and products across the supply chainb. Objective of logistics: to give the customer the needed level of customer service at the lowest costc. Usually measured in terms of:i. Order cycle time – if not short, it needs to be consistentii. Product availabilityiii. Order accuracy – do they get the order right?iv. Flexibilityv. Information – can you track it? What’s the order’s status?d. Logistical components of the supply chain:i. Sourcing and procurement1. Objective: obtain the needed supplies in the right quality at the lowest cost. Develop long-term relationships with suppliersii. Production scheduling1. Determining method and timing of manufacturing of a mix of products2. Build to stock vs. build to order3. Build to stock example: cereal - product availability is good, but have to be very accurate in determining the demand4. Build to order example: Europe auto industry – less risky for the manufacturer, but the product availability is not very highiii. Order processing1. A system for easily receiving orders and accurately and quickly filling them2. EDI – electronic data interchangea. Computer to computer exchange of ordering information3. VMI – vendor managed inventorya. The vendor decides when to re-stockb. Vendor has visibility across multiple, and often competing, companiesc. Has to keep the store between a range (minimum-maximum)iv. Inventory control1. Maintaining the correct amount of inventory2. Goal is to meet product availability standards while keeping costs low: MRP (material resource planning) and DRP (distribution resource planning) systemsv. Warehouse and material handling1. Functions: a. Storing productsb. Moving products within a facility (receiving, sorting, storing, finding, getting ready for shipment)2. Dedicated Strategya. Set places for specific things in the warehouse, but may not always have enough space for a certain group of thingsduring different seasons (ex: toys during Christmas season)3. Random Strategya. No designated places for things. It can be hard to find stuff,but its offers more flexibility with spacevi. Transportation1. Railroads – most used for inter-city2. Motor Carriers – highest degrees of accessibility3. Pipelines – petroleum products4. Water – Mississippi river and Great Lakes are most-used5. Airways – relatively fast, but not fastest for short trips. Pretty expensive. Used for high value, low density products (ex: technology like phones)III. Trends in supply chain managementa. Advanced computer technology (RFID)i. Ex: Peach Pass ii. You don’t need to have a direct line of sight, like you do when checking out and scanning grocery barcodesb. Outsourcing of logistics functions (3PL’s)i. Let someone else do all of your logistics (3rd Party Logistics company)ii. Ex: UPS is a huge 3PL’s companyc. Electronic DistributionIV. Relationship of logistics to marketing mix:a. Product characteristics can significantly impact logistics costs (ex: concentrated fabric softener vs. fabric softener with water in it)b. Logistics must be aware of upcoming promotionsc. Effective logistics can reduce prices and/or increase