Summary Lecture 13 Notes

Learning Objectives

  • Examine different types of relationships between retailers and suppliers.

  • Assess key factors determining the relationship nature.

  • Understand the supply chain and the impact of digital technologies.

  • Analyze how suppliers are recruited and evaluated.

  • Evaluate the impact on shoppers.

Supply Chain Management

  • Definition: A series of activities and inputs that produce specific value outputs for customers (Lambert & Cooper, 2000).

  • Efficient management encompasses:

    • Product design

    • Procurement

    • Planning and forecasting

    • Production

    • Distribution

    • Fulfillment

    • After-sales support

    • End-of-life disposal

Defining and Measuring Value

  • Key questions:

    • How is value defined?

    • How can it be measured?

    • What is the worth of products/services to customers?

Relationship Value

  • Important for suppliers and retailers to seek efficiencies, risk sharing, and value creation.

  • Establishing long-term relationships enhances mutual benefits:

    • Shift from transactional to relational focus is essential.

    • Relationship value serves as a metric for supplier performance evaluation (Eggert and Ulaga, 2002).

Value Co-Creation and Collaboration

  • Areas for collaboration include:

    • Category management

    • Price promotions

    • Advertising campaigns

    • Vendor-managed inventory

Importance of Value

  • Value generation is central to exchange relationships, informing marketing strategies (Lindgreen et al., 2006).

  • Commitment and trust are key drivers in cooperative relationships (Hunt and Morgan, 1994).

Evolution of Relationship Marketing Theory

  • Transition from transactional marketing to relationship marketing:

    • Focus on customer base stability over short-term sales.

Characteristics of Relationship Marketing

  • Key traits include:

    • High trust and commitment levels.

    • Long-term relationship perspective.

    • Open communication and information sharing.

    • Quality commitment and customer orientation.

From Transactional to Partnership

  • Mutual benefits in competitive advantages, profitability, and increased sales.

Case Studies

  • Coca-Cola & McDonald's:

    • Collaborative relationship with shared benefits.

    • Innovations like the Extra Value Meal.

  • Intel & Apple:

    • Shift towards backward integration with self-manufactured processors.

Supply Chain Dynamics

  • Key stakeholders: Internal enterprise functions, supplier networks, and distributive networks.

  • Distribution affects profitability and customer experience:

    • Channels include wholesalers, retailers, and the internet.

Supplier Roles

  • Transition from traditional resource provision to partnership roles in value creation.

  • Digitalization has enhanced supply chain information flow and real-time decision making.

Disintermediation & Reintermediation

  • Disintermediation defined as removing intermediaries, leading to direct relationships with consumers (e.g., Nike, Dell).

  • Reintermediation involves adding new partners in the supply chain to enhance value.

Challenges and Opportunities

  • Threats to traditional retailers from the direct-to-consumer model:

    • Cost reductions and efficiencies.

    • Need for a strong brand and digital presence.

    • Risks of alienating existing partners.

Criteria for Selecting Suppliers

  • Include production capacity, innovation capabilities, managerial processes, sustainability, quality assurance, and responsiveness.

The "Dark Side" of Relationships

  • Issues such as self-interest, greed, and dependency can impact supplier-retailer dynamics.

Shift of Power Dynamics

  • Rise of dominant retailers (e.g., Walmart, Tesco) impacting manufacturers.

  • Retailers using power strategically for cost concessions and vendor management.

Impact on the Shopper

  • Effects include lower prices, greater transparency, and potential reduction in market choices due to retailer agendas.

Tailoring the Supply Chain

  • Need for strategic fit across diverse customer segments:

    • Employing various operations for different products to match responsiveness.

Types of Supply Chains

  • Continuous replenishment supply chain: Predictable demand.

  • Lean supply chain: Cost efficiency focus.

  • Agile supply chain: High responsiveness to unpredictable demand.

  • Fully flexible supply chain: Targets niche markets.

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