Logistics and Supply Chain Management

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Logistics and Supply Chain Management

• Chapter 16with Duane Weaver

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Marketing Channel Logistics Building Blocks

• Inventory Management
• Holding costs
• Reducing inventory
• Pseudo inventory reduction
• Real inventory reduction
• Fulfillment and Transportation
• The Essentials
• Third-Party Logistics Providers
• Orders, Invoices, and Payments (Audit Control)

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Origin and Practices ofSupply Chain Management
(SCM)

• Supply Chain
• set of entities that collectively manufactures
  a product and sell it to an endpoint (the
  ultimate customer).
• Value-Added chains that include ONLY players that
  add value in Production and Distribution.
• Effective unification of product flows in SCM
  requires
• Market orientation
• Effective Channel Management
• Effective Logistics

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SCM techniques - ECR

• Efficient Consumer Response (ECR)
• Category Management and Efficient Promotions
• Stock product category as a whole (vs. brand or
  individual product)
• ABC (activity based costing) helps to manage by
  category
• Good for commodity categories (diapers,
  toothpaste)
• Continuous Replenishment Planning (CRP)
• Replace stock based on speedy knowledge of
  consumer withdrawals
• Integrates push systems (stocking to forecast)
  with pull system (consumer withdrawals Point of
  Purchase systems)
• Obstacles
• Stock coding agreements in the channel.
• EDI choices and channel integration
• Trusting other channel members
• Opportunism degrades the cooperation and thus ECR
  success

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SCM techniques - QR

• Rapid Response (QR)
• Originated in Fashion industry (80s)
• Consumer drives channel ship quickly on demand,
  like ECR
• Involves keeping manufacturing flexible as to
  what and how much to make.
• More common when consumers dont know what they
  need until they try it. Often needed for
  perishables (fashionables) that require consumer
  reactions vs. ECR for commodities (toothpaste).

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What is the right supply Chain?

• Physical Efficiency vs. Market Responsiveness
• Functional Brand (predictable volumes) or
  Innovative Brand (unpredictable volumes)?
• See Figure 16.4, page 521
• What enables successful Supply Chain Management
• Pressure from market changes such as NAFTA and
  EEU
• Industry EDI standardization (codes, templates,
  software...)
• Heavy IT and EDI investment
• Excellent cost accounting
• Internal management incentives for system gains
• Culture of cross-functional integration
• Effective channel management fostering trust,
  relationships, design, and judicious use of power

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Group Discussion

• P. 525,
• Question 1
• Question 2
• Question 3

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Have a Great Day!