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.