MARKETING MANAGEMENT-II

LECTURE-2
 Supply
chain management and its role in
marketing

 Creating value through supply chains

 Managing and coordinating supply chains

 The connected chain of
Supply Chain all of the business
entities, both internal
and external to the
company, that perform or
support the logistics
function
Supply Chain Management (SCM) is concerned with the
management and control of the flows of material,
information, and finances in supply chains.

Cash
Products and Services
Information
THAILAND INDIA MEXICO TEXAS US
N-Tier Suppliers Suppliers Logistics Distributors Retailers

Supply Side OEM Demand Side

Demand

Supply
The task of SCM is to design, plan, and execute the activities at
the different stages so as to provide the desired levels of service
to supply chain customers profitably
 Minimizingsupply chain costs while
keeping a reasonable service level
customer satisfaction/quality/on time
delivery and service.

 SCMis not strictly a cost reduction

paradigm
1. A supply chain consists of
Supplier Manufacturer Distributor Retailer Customer

Upstream
Downstream
2. SCM aims to Match Supply and
Demand, profitably for products
and services

SUPPLY SIDE DEMAND SIDE

3. Achieves

Product
+ + + + +
The right The right
Price
The right The right
Store Quantity
The right
Customer =
The right
Time
Higher
Profits
 The
supply chain consists of upstream and
downstream partners.
Upstream from the company is the set of firms that
supply the raw materials, components, parts,
information, finances, and expertise needed to
create a product or service.

Downstream marketing channel partners, such as

wholesalers and retailers, form a vital link between
the firm and its customers.
 In
Push systems, work release is based on
downstream demand forecasts
 Keeps inventory to meet actual demand
 Acts proactively

 In
Pull systems, work release is based on
actual demand or the actual status of the
downstream customers
 May cause long delivery lead times
 Acts reactively
Dell / Compaq
 Dell buys some components for a product from
its suppliers after that product is purchased by
a customer. Extreme case of a pull process
 Zara, Spain’s answer to Italy’s Benetton
 Sells apparel with a short design-to-sale cycle,
avoids markdowns.
 Toyota / GM / Volkswagen
 McMaster Carr / W.W. Grainger, sell auto parts
 Amazon
Relationship Integration Firm-to-Firm Social
Interactions
Measurement
Integration Operational
Planning and
Technology and Control
Planning Integration
Material and Service
Supplier Integration
Internal Operations Customer
Integration Integration

Customer Integration
 Dellstrives for 100% transparency, and as
part of the supply chain strategy, they have
opened the doors to suppliers’ and
manufacturing facilities in 2016; allowing
customers to see first-hand how Dell
products are made and the people who make
them. The company is using technology to
make this experience accessible to a larger
number of customers and stakeholders
 The creation and maintenance of
Technology information technology systems
and planning that connect managers across
integration and through the firms in the
supply chain

Requires firms to link seamlessly

Material and to those outsiders that provide
service goods and services to them so
supplier that they can streamline
integration processes and provide quality
customer experiences.
 Supply Chain Integration
Internal Links internally performed work
Operations into a seamless process that
Integration stretches across departmental
and/or functional boundaries,
with the goal of satisfying
customer requirements

A competency that enables firms to

Customer offer long-lasting, distinctive, value-
Integration added offerings to those customers
who represent the greatest value to
the firm or supply chain
 Customer relationship management
 Customer service management
 Demand management
 Order fulfillment
 Manufacturing flow management
 Supplier relationship management
 Product development and
commercialization
 Returns management
 Management of inbound transportation

Receiving and checking using UPC and RFID

Storing and Cross-Docking

Getting Merchandise Floor Ready

Preparing to ship

Shipping to store
 Radio
Frequency
Receiving Checking
Distribution
(RFID) Tags

Container
Arrival
Undamaged computer
receipt
chips

Ordered =
received
 Traditional

Cross-docking

Combinations
 Logistics

Logistics is…
the process of strategically managing
the efficient flow and storage of raw
materials, in-process inventory, and
finished goods from point of origin to
point of consumption.
 Sourcing & Procurement
Logistics Information System
Production Scheduling

Supply Order Processing

Chain
Team Inventory Control

Warehouse & Materials Handling

Transportation
 Nestlecollaborates with the commercial
teams and suppliers to develop the demand
forecast, and to ensure responsibly sourced
materials. In alignment with operations, the
company balances inventory levels to
establish the right supply of products. Supply
chain is responsible for safely storing and
transporting products to meet customers’
and consumers’ needs in-full and on-time.
Nestle is an aligned, agile, and adaptable
organisation that is committed to delivering
results, not only within supply chain, but also
in support of overall business priorities.
 Asstrategic partner of the business, the
procurement team helps the company
achieve sustainable growth. Procurement
professionals at Nestlé, ensure responsibly-
sourced supply and create value. Located in
hubs in Switzerland, Panama and Malaysia,
the division provides a range of services,
including the management of procurement
for specific raw materials, packaging,
indirect materials and other services. The
hubs also support markets with managing
local spend.
 Honda manufacturing subsidiaries virtually
everywhere around the world operate as autonomous
companies, designing and producing vehicles based
on local conditions and consumer behavior.
 Honda's success in the international arena is directly
linked to unremittingly re-examining with every new
automobile model.
 Honda's factories are purposefully the most labor
intensive in the auto industry, employing robots only
in areas that are dangerous or otherwise obviously
less fit for humans than machines. Output and quality
standards are too often set to the levels that the
technology can achieve and rather than the
boundless creativity of human imagination.
JIT
A process that redefines and
simplifies manufacturing by
reducing inventory levels and
delivering raw materials at the
precise time they are needed
on the production line.
 For manufacturers: reduces raw material
inventories; immediate shipping of products
 For suppliers: daily or hourly deliveries rather
than weekly
 For customers: lower costs; shorter lead times;
products tailored to customer needs
 Order Processing
An Order Processing System is…

a system whereby orders are

entered into the supply
chain and filled.

Order processing is becoming more automated

through the use of computer technology known
as ELECTRONIC DATA INTERCHANGE (EDI).
 Inventory Control

A method of developing and

maintaining an adequate
assortment of materials or
Inventory
products to meet a
Control
manufacturer’s or a
System
customer’s demand
 Inventory Control
Tools for managing inventory include:
 Materials Requirement Planning (MRP) or
materials management – supplier to
manufacturer
 Distribution Resource Planning (DRP) –
manufacturer to end user
 Automatic Replenishment Programs –
minimal forecasting