Chapter 13 & 14
Terms in this set (73)
CHAPTER 13: SUPPLY CHAIN MANAGEMENT
The connected chain of all the business entities, both internal and external to the company, that perform or support the logistics function.
Supply Chain Management
A management function that coordinates and integrates all of the activities performed by the supply chain members into a seamless process, from the source to the point of consumption, resulting in enhanced customer and economic value.
Supply Chain Agility
Operational strategy focused on inducing inventory velocity and operational flexibility simultaneously in the supply chain
Supply Chain Integration
When multiple firms or business functions in a supply chain coordinate their activities and processes so that they are seamlessly linked to one another in an effort to satisfy the customer.
Demand-Supply Integration (DSI)
A supply chain operational philosophy focused on integrating the supply-management and demand-generating functions of an organization.
Bundles of interconnected activities that stretch across firms in the supply chain.
-8 Critical Business processes:
1) Customer relationship management
2) Customer service management
3) Demand management
4) Order fulfillment
5) Manufacturing flow management
6) Supplier relationship management
7) Product development and commercialization
8) Returns management
Customer relationship management (CRM) process
Companies prioritize their marketing focus on different customer groups according to each group's long-term value to the company or supply chain.
Customer service management process
Presents a multi-company, unified response system to the customer whenever complaints, concerns, questions or comments are voiced.
Demand management process
Aligns supply and demand throughout the supply chain by anticipating customer requirements at each level and creating demand-related plans for action prior to actual customer purchasing behavior.
Order fulfillment process
A highly integrated process, often requiring persons from multiple companies and functions to come together and coordinate to create customer satisfaction at a given place and time.
Manufacturing flow management process
Ensuring that firms in the supply chain have the needed resources to manufacture with flexibility and to more products through a multi-stage production process.
Supplier relationship management process
Supports manufacturing flow by identifying and maintaining relationships with highly valued suppliers.
Product development and commercialization process
Group of activities that facilitates the joint development and marketing of new offerings among a group of supply chain partner firms.
Returns management process
Enables firms to manage volume of returned product efficiently while minimizing returns-related costs and maximizing the value of the returned assets to the firms in the supply chain.
Supply chain team
Group of individuals who orchestrate the movement of goods, services, and info from the source to the consumer.
Inventory control system
Method of developing and maintaining an adequate assortment of materials or products to meet a manufacturer's or a customer's demand.
Situation where a customer demand for an inventory item goes unfulfilled because the requested item is unavailable at the needed time and place.
Inventory held temporarily for the purpose of fulfilling predicted demand in a period.
Safety (buffer) stocks
Extra allotments of inventory that companies hold in the event that demand spikes or if forecasts regarding the amount of demand are too low.
Inventory that is currently moving within a transportation network to or from the company's facilities (plant, warehouse or sales location)
-Moving into the business from a supplier or out on the way to a customer.
Inventory that is being assembled or manufactured from its raw state into finished goods for sale.
An extra inventory buffer that is held in response to predictable demand increases that occur annually.
Materials requirement planning (MRP) or Materials Management
Inventory control system that manages replenishment of raw materials, supplies and components from the supplier to the manufacturer.
Automatic replenishment program
A real-time inventory system that triggers shipments only when a good is sold to the end user.
Order Processing System
System whereby orders are entered into the supply chain and filled.
Electronic Data Interchange (EDI)
Information technology that replaces the paper documents that usually accompany business transactions, such as purchase orders and invoices, with electronic transmission of the needed information to reduce inventory levels, improve cash flow, streamline operations and increase the speed and accuracy of the information transmission.
Smart RDIF (radio-frequency identification)
One example of EDI.
-Inventory handling and tracking system that employs radio-frequency electromagnetic fields to transfer and read product data via an electronic tag.
Production method whereby products are made in advance of demand based on forecasts and are stored until customer orders arrive.
Mass customization (build-to-order)
Production method whereby products are not made until an order is placed by the customer; products are made according to customer specification.
A hybrid production method whereby basic units of a finished good are manufactured in advance of actual demand and held in strategic form or location until demand occurs, when final customization takes place.
Method of moving inventory into,within, and out of a warehouse.
Basis of transportation criteria
- Relative cost
- Transit time
Logistics information system
The link that connects all the logistics functions of the supply chain.
Sustainable supply chain management
A supply chain management philosophy that embraces the need for optimizing social and environmental costs in addition to financial costs.
-Involves the integration and balancing of environmental, social, and economic thinking into all phases of the supply chain management process.
Outsourcing (Contract logistics)
A manufacturer's or supplier's use of an independent third party to manage an entire function of the logistics system, such as transportation, warehousing or oder process.
Third-party logistics company (3PL)
A firm that provides functional logistics services to others.
Fourth-party logistics company (4PL) or Logistics Integration
Consulting-based organization that assesses another's entire logistical service need and provides integrated solutions, often drawing on multiple 3PL's for actual service.
The outsourcing of a business process from one country to another for the purpose of gaining economic advantage.
The transfer of an offshored activity from a distant to a nearby country.
Supply Chain risk
Any potential disruption that threatens the supply chain's efficient and effective operations.
Supply chain security
Efforts made by companies to protect their in-transit inventory or value-transforming assets from external or internal threats.
Supply chain resiliency
The ability of a supply chain to return to its ideal operational state after being disrupted.
Distribution technique that includes any kind of product or service that can be distributed electronically, whether over traditional forms such as fiber-optic cable or through satellite transmission of electronic signals.
Three-dimensional printing (3DP)
Creation of three-dimensional objects via an additive manufacturing (printing) technology that layers raw material into desired shapes.
CHAPTER 14: MARKETING CHANNELS
Marketing Channel (channel of distribution)
Set of interdependent organizations that eases the transfer of ownership as products move from producer to business user or consumer.
Al parties in the marketing channel who negotiate with one another, buy and sell products, and facilitate the change of ownership between buyer and seller in the course of moving the product from the manufacturer into the hands of the final consumer.
-Also called intermediaries, resellers and middlemen.
Elements of the composition and appearance of a product that make it desirable.
The increase in customer satisfaction gained by making a good or service available at the appropriate time.
The usefulness of a good or service as a function of the location at which it is made available.
The increased value of a product that is created as its ownership is transferred.
A channel intermediary that sells mainly to consumers.
Ex. Selling on Neiman Marcus, where "x" brand sends their jeans for the store to sell.
Institution that buys goods from manufacturers and resells them to businesses, government agencies, and other wholesalers or retailers and that receives and take title to goods, stores them in its own warehouses and later ships them.
Agents and Brokers
Wholesaling intermediaries who do not take title to a product but facilitate its sale from producer to end user by representing retailers, wholesalers or manufacturers.
Ex. Insurance companies.
A marketing channel in which there are no intermediaries.
Ex. telemarketing, mail order, catalog shopping, online shopping.
Dual distribution (multiple distribution)
The use of two or more channels to distribute the same product to target markets.
Non-physical (often electronic) channels that facilitate the unique market access of products and services.
Ex. Internet, mail-order channels or infomercials.
Strategic channel alliance
A cooperative agreement between business firms to use the other's already established distribution channel.
Ex. Whirpool signed a deal w/ Chinese retailer "Suning Appliance Company" to have access to its 1,700 stores in China.
Channel that enables customers to return products or components for reuse or remanufacture.
Ex. Apple, Best Buy and Walmart offer consumers the opportunity to recycle items ranging from plastic bags and batteries to tv and Christmas trees.
Drop and shop
System that allows customers to recycle used electronics at the entrance of a retailer.
Factors affecting channel choice:
Levels of Distribution Intensity
1) INTENSIVE DISTRIBUTION - form of distribution aimed at maximum market coverage. Manufacturer tries to have the product available in every outlet where potential customers might want to buy it.
2) SELECTIVE DISTRIBUTION - form of distribution achieved by screening dealers to eliminate all but a few in any single area.
3) EXCLUSIVE DISTRIBUTION - form of distribution that established one or a few dealers within a given area.
Types of Channel Relationships
1) ARM'S LENGTHS RELATIONSHIPS - relationship between companies that is loose, characterized by low relational investment and trust, and usually taking the form of a series of discrete transactions with no or low expectation of future interaction or service.
Ex. Real estate purchases.
2) COOPERATIVE RELATIONSHIPS - relationship between companies that takes the form of informal partnership with moderate levels of trust and information sharing as needed to further each company's goals
Ex. Coca-cola entered into a cooperative relationship with McDonald's to increase sales. The two companies work closely and have a clearly defined relationship, but remain two separate entities.
3) INTEGRATED RELATIONSHIPS - A relationship between companies that is tightly connected, with linked processes across and between firm boundaries and high levels of trust and inter-firm commitment.
a) Vertical Integration: all the related channel members are owned by a single legal entity.
b) Supply chain: several companies act as one.
Ex. Samsung works with select suppliers to manufacture their products. Companies remain separate but work as one, viewing success as a group outcome.
4)CO-OPETITION - a relationship that mixes elements of cooperation and competition between two partners.
Ex. Microsoft and Apple cooperate by allowing their competitors to use their software, such as Microsoft Word or AppleiTunes. They still remain competitors.
A channel structure whereby a single manufacturer supplies a single retailer, offering a single supply and demand point throughout the chain.
A channel structure whereby a single retailer uses multiple suppliers.
A channel structure whereby a single supplier provides products to multiple retailers.
The capacity of a particular marketing channel member to control or influence the behavior of other channel members.
Ex. Amazon's size and buying power have allowed it to pressure its suppliers into selling to Amazon at the lowest possible prizes.
A situation that occurs when one marketing channel member intentionally affects another member's behavior.
A member of a marketing channel that exercises authority and power over the activities of another channel member.
A clash of goals and methods between distribution channel members. Two types:
a) Horizontal Conflict - A channel conflict that occurs among channel members on the same level.
Ex. 2 or more different wholesalers or two or more different retailers.
b) Vertical Conflict - a channel conflict that occurs between different levels in a marketing channel, mostly typically between the manufacturer and wholesaler or between the manufacturer and retailer.
Secretive behavior that improves a firm's standing at the expense of a partner firm.
a) Active Opportunism - When a firm violates agreements and restrictions, or forces another firm to renegotiate existing agreements when new circumstances arrive.
b) Passive Opportunism - When a firm refuses to meet specific obligations or fails to change when new situations arise.
Ability to conduct commerce using a mobile device for the purpose of buying or selling goods or services.
-Enables consumers using wireless mobile devices to connect to the Internet and shop.