IDIS 240

OEM

Original Equipment Manufacturer - buys the product and "rebrands" to sell as their own with warranty

MRO

Maintenance Repair Operation - people who fix something with a problem

Contractor

Person who provides supplies or service under contract

Breaking bulk

Shipping something in individual components

3PL

3rd Party Logistics Provider - specializes in warehousing and transportation services that customize to customers based on market conditions

RFID

Radio Frequency Identification Tags

What is supply chain management?

A management system that coordinates and integrates all the activities performed by supply chain members into a seamless process, from the source to the point of consumption, resulting in enhanced customer and economic value.

Why is a supply chain needed?

-inadequate finances for certain functions -product assortment -"contact efficiency"

What are the 5 specific service outputs

-selling the product -inventory on hand -credit extending for customers -transportation to customer's location -servicing such as assembling product

Why do distributors have channel power? (3)

-they can economically provide the services needed to get the product to the consumer -they can anticipate future trends and future changes -servicing and providing aftermarket support

What are the trends benefitting distributors? (4)

-information of trends is becoming more valuable -JIT inventory always needs to be ready -mass customization of products -reduction of vendors

What are the types of distribution? (3)

-Exclusive - one Maserati dealer -Selective - few Rolex dealers -Intensive - many Coca-Cola dealers

Define "product-based" and "customer-based" purchasing.

-Product-based - buy off what will make a profit; old-fashioned -Customer-based - buy based off what the customer needs

Define receiving.

Must avoid error and be done in a timely manner

Define "counter-sales", "inside sales", and "outside sales."

-Counter-sales - interaction with a counter and display -Inside-sales - no face to face interaction; difficult to sell -Outside-sales - going to the customers place of business

When is a sale completed?

A sale is completed once the product is bought and utilized.

Define "order filling."

Fulfilling an order once the ticket is printed; should be done in an efficient manner

Define "buy-out."

When a distributor sells out of something, they must go to a local dealer and buy it and sell for a loss in order to keep future business

What are responsibilities of the manufacturer? (3)

-producing quality products -creating markets -understand and protect the industrial channel

What are the responsibilities of a sales representative? (2)

-sale in a certain area of assignment -skills of knowledge, negotiation, etc.

What is an agent?`

-a sales representative that will represent multiple companies -usually do not store inventory

"Contact costs" and "contact efficiency."

What are the differences in 1) "factory-owned distributorship" and 2) "non-factory-owned distributorship?"

1. -started because of a lack of other channels -best way to get representation -must sell other products to be of full service

2. -more independent than manufacturer -full service with all the functions of a distributor

What is an end user?

Does not resell the product in the present form

Required Services fall into at least 1 of what 3 components of Distribution?

-Knowledge -Logistics -Financing

Required Services fall in to at least one of what 3 components of Distribution?

-Knowledge -Logistics -Financing

Knowledge

-Product Knowledge -Product Application -Vendor Knowledge -Customer Knowledge -Financing Knowledge -Logistical Knowledge

Financing

-Traditional Lending -Consignment -Extending Credit

Logistics

-Wait time -Delivery time -Local delivery -Reverse Logistics -Breaking bulk -Packaging -Assortment -Local Access -Purchase time

Consumer Channel Design

Manufacturer---------------------->Consumer Manufacturer----->Retailer--------->Consumer Manufacturer-->Wholesaler-->Retailer-->Consumer

If you're a manufacturer, why not sell direct to end user?

...

Industrial Channel Design

Manufacturer------------------------>End User Manufacturer----->Distributor---->End User Manufacturer-->Master Distributor-->Distributor-->End User

If you are a manufacturer of industrial goods why not sell direct to the end user?

...

What is an end user?

Does not resell in present form

Required Services fall in to at least one of what 3 components of customer value?

-Form -Place -Time

Required Services fall in to at least one of what 3 components of Distribution?

-Knowledge -Logistics -Financing

Knowledge

-Product Knowledge ---Specifications -Product Application -Vendor Knowledge -Customer Knowledge -Financing Knowledge -Logistical Knowledge

Financing

-Traditional Lending -Consignment -Extending Credit

Logistics

-Wait time -Delivery time -Local delivery -Reverse Logistics -Breaking bulk -Packaging -Assortment -Local Access -Purchase time

What is customer service?

The greater the difference between the service outputs of the manufacturer and the requirements of the consumer, the more likely intermediaries will be used.

MRO

Manage Repairing Operations

What are the levels of distribution?

Exclusive---->Selective----->Intensive

What is supply chain management?

A management system that coordinates and integrates all the activities performed by supply chain members into a seamless process, from the source to the point of consumption, resulting in enhanced customer and economic value.

Why is the supply chain needed?

-Inadequate finances for necessary functions -Customers' desire for product assortment -Better rate of return on core business (Outsourcing) -Contact "efficiency"

What are the 5 specific service outputs?

-Selling -Inventory -Credit -Transportation -Servicing

Why do distributors have channel power?

-far more economically provide the needed services to get the product from the manufacturer to the end user -Distributors leverage customer and manufacturer relationships -distributors provide value-added services

Major trends benefiting distributors

-Increasing value of information -move toward mass customization -increase use of "Just in Time" inventory -Reductions in number of vendors

What are two types of purchasing?

-Product based purchasing -Customer based purchasing

Product Based Purchasing

-Buy what can be sold at profit -Distributor decides what to buy, sales team figures out to whom it can be sold at a profit -A little "Old School" but still exists in many channels

Customer Based Purchasing

-Distributor decides to buy based on the requirements of the customers they are serving -Tries to provide products at desired service level and most economical cost

Inside the Distributor

-Purchasing -Receiving -Sales -Order Filling -Buy-outs -Packing -Shipping

RFID Tags

Radio Frequency Identification tags. Kind of like toll tags.

Sales

-Counter sales -Inside telephone sales -Outside sales

Counter Sales

Consists of product display and counter separating customer from the storage area

Inside telephone sales

No face to face interaction with customer makes it more difficult as the representative cannot see the product or the facial responses or cues of the customer

Outside Sales

Meets the customer in person at the customers' business place

Order Filling

Also known as picking. Picker should know the exact matching item and location.Accuracy is the key.

Buy-Outs

Required when merchandise ordered by customer not available in inventory. Normally buy-outs are done from the local competitor to satisfy customer orders

Packing

After the sales order is picked, merchandise is packed in boxes or cartons so that it can be shipped to the customer

Shipping

-freight lines for out of town customers -Delivery department for local customers -"will call" locations where customer can pick them up

What are the manufacturer's motivations?

Product design and production

Manufacturer's Responsibility

-Producing quality products -Maintaining consistent lead-times -Creating markets -Printed or electronic catalogs -Provide technical information and training -Protect the channel (Design Wins) -Understand value and compensate channel partners

Manufacturer Sales Representative (Factory Rep)

-Responsible for sales in a given territory -May call on end users, distributors, specifiers, or agents -Titles include ---Manufacturer Representative ---Outside Sales Representative ---Sales Representative ---Account Manager ---Sales Engineer ---Field Application Engineer ---Etc. -Skills required ---Product knowledge ---Market knowledge ---Negotiation skills ---Teaching skills ---Understanding of relationships and partnerships -Position Development

What is an agent?

-Similar responsibilities, customer base, duties, and required skills as Manufacture Sales Representative previously discussed (may even refer to themselves as 'Manufacturer Rep'). -Usually represents multiple companies each of which whose sales in a given territory do not support a full salaried employee -May call on distributors, end users, specifiers, and manufacturers -Usually complimentary products -Do not stock inventory; typically

Non-factory Owned Distributor

-Full service with all functions of a distributor -More independent than manufacturer

3rd Party Logistics

-Transportation -Warehousing -Providing information such as tracking and PODs -Complete logistic function -Global Shipping

OEM

Orignal equipment manufacturer

wholesaler

A type of business that buys goods in large amounts and resells them to other businesses in smaller lots, or retailers.

distributor

A business that does not manufacture its own products, but purchases and resells these products. Such a business usually maintains a finished goods inventory, usually a wholesaler.

"buying direct"

Procuring goods or services straight from the manufacturer or supplier, and by-passing all intermediaries such as distributors, wholesalers, and retailers.

supply chain management

A management system that coordinates and integrates all the activities performed by supply chain members into a seamless process, from the source to the point of consumption, resulting in enhanced customer and economic value.

consumer channel design

manufacturer->wholesaler->retailer->consumer

industrial channel design

manufacturer->master distributor->distributor->end user

OEM

original equipment manufacturer

MRO

maintenance, repair & operations

consignment

selling it for me for a % of the profit

logistics

Breaking Bulk, Packaging, Assortment, Local Access, Purchase Time, Wait Time, Delivery Time, Local Delivery, Reverse Logistics

financing

traditional lending, consignment, extending credit

up-stream

part of production process involves searching for and extracting raw materials.

down-stream

part of production process involves processing the materials collected during the upstream stage into a finished product.

end user

does not resale product in present form

wait time-logisitics

how long customer will wait

assortment-logistics

bundling products & services

breaking bulk-logistics

selling in small quantities

packaging-logisitics

ensuring order for correctness & proper packaging for shipment or delivery

purchase time-logisitics

when the customer wants to place the order

reverse logistics

A complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling.

contact efficiency

the efficiency gained in terms of a reduction in the number of contacts required through the use of channel intermediaries ex. the graph that uses distributors to get products from manufacturer to retailer or end user

exclusive distribution level

ex. Maserati-only one dealer in houston

selective distribution level

ex. rolex-a few high end retailers in houston

intensive distribution level

ex. coke-can buy almost anywhere

customer value

the relationship between benefits and the sacrifice necessary to obtain those benefits

5 basic functions of a distributor

selling, inventory, credit, transportation, servicing

how to distributors expand their market places?

distribute outside their geographic area

why do distributors have channel power?

add value to the product for the manufacturers and therefore have an economic advantage and control ease & availability of products and the cost for these -Economics of providing distribution functions -Distributors leverage customer and manufacturer relationships -Distributors provide value-added services

major trends benefitting the distributor

increasing value of info, move toward mass customization, increased use of "just-in-time" inventory, reductions in # of vendors

New business models allow for what in manufacturer & distributor relations?

mutual benefit

successful distributors reduce cost by..

understanding the needs of the manufacturer and becoming a true partner

the future of distribution

continued channel consolidation and implementation

product based purchasing

Buy what can be sold at profit, Distributor decides what to buy, sales team figures out to whom it can be sold at a profit, "Old School"