Chapter 15 - Supply Chain and Channel Management

Supply Chain Management

A set of approaches and techniques firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless operation in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time, as well as to minimize systemwide costs while satisfying the service levels their customers require

Marketing Channel Management

Developing and maintaining partners and relationships within the supply chain. To do so, it includes the set of approaches and techniques firms employ to integrate their suppliers efficiently and effectively to serve their customers

Wholesaler

Firm engaged in buying, taking title to, often storing, and physically handling goods in large quantities, then reselling the goods (usually in smaller quantities) to retailers or industrial or business users

Distribution Center

A facility for the receipt, storage, and redistribution of goods to company stores or customers; may be operated by retailers, manufacturers, or distribution specialists

Fulfillment Center

Warehouse facilities used to ship merchandise directly to

Just-In-Time (JIT) Inventory System / Quick Response (QR) Inventory System

Inventory management system designed to deliver less merchandise on a more frequent basis than traditional inventory systems; the firm gets the merchandise “just in time” for it to be used in the manufacture of another product, in the case of parts or components, or for sale when the customer wants it, in the case of consumer goods

Direct Supply Chain

A supply chain in which there are no intermediaries; the manufacturer sells directly to the buyer

Indirect Supply Chain

When one or more intermediaries work with manufacturers to provide goods and services to customers

Franchising

A contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a business using a name and format developed and supported by the franchisor

Vertical Channel Conflict

A type of channel conflict in which members of the same marketing channel, for example, manufacturers, wholesalers, and retailers, are in disagreement or discord

Horizontal Channel Conflict

A type of channel conflict in which members at the same level of a marketing channel, for example, two competing retailers or two competing manufacturers, are in disagreement or discord, such as when they are in a price war

Power

A situation that occurs in a marketing channel in which one member has the means or ability to have control over the actions of another member in a channel at a different level of distribution, such as if a retailer has power or control over a supplier

Corporate Vertical Marketing System

A system in which the parent company has complete control and can dictate the priorities and objectives of the marketing channel; it may own facilities such as manufacturing plants, warehouse facilities, retail outlets, and design studios

Independent Marketing Channel / Conventional Marketing Channel

A marketing channel in which several independent members—a manufacturer, a wholesales, and a retailer—each attempt to satisfy its own objectives and maximize its profits, often at the expense of the other members

Reward Power

A type of marketing channel power that occurs when the channel member exerting the power offers rewards to gain power, often a monetary incentive, for getting another channel member to do what it wants it to do

Coercive Power

A type of marketing channel power that occurs when a member uses threats or punishment of the other channel member for not undertaking certain tasks. Delaying payment for late delivery would be an example

Referent Power

A type of marketing channel power that occurs if one channel member wants to be associated with another channel member. The channel member with whom the others wish to be associated has the power and can get them to do what they want

Expertise Power

A type of marketing channel power that occurs when a channel member uses its expertise as leverage to influence the actions of another channel member

Information Power

A type of marketing channel power within an administered vertical marketing system in which one party (e.g., the manufacturer) provides or withholds important information to influence the actions of another party (e.g., the retailer)

Legitimate Power

A type of marketing channel power that occurs if the channel member exerting the power has a contractual agreement with the other channel member that requires the other channel member to behave in a certain way. This type of power occurs in an administered vertical marketing system

Strategic Relationship / Partnering Relationship

A supply chain relationship that the members are committed to maintaining long term, investing in opportunities that are mutually beneficial; requires mutual trust, open communications, common goals, and credible commitments

Universal Product Code (UPC)

The black and white bar code found on most merchandise; it contains a 13-digit code that indicates the manufacturer of the item, a description of the item, information about special packagin, and special promotions

Radio Frequency Identification (RFID)

Tiny computer chip that automatically transmits to a special scanner all the information about a container’s contents or individual products

Advanced Shipping Notice (ASN)

An electronic document that the supplier sends the retailer in advance of a shipment to tell the retailer exactly what to expect in the shipment

Mobile Task Management

This technology is a wireless network and a mobile device that receives demand notification and enables a speedy response