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© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15- 15-1 McGraw-Hill/Irwin Chapter Chapter Fifteen Fifteen Distributing Products Distributing Products ficiently and Competitivel ficiently and Competitivel Supply Chain Management Supply Chain Management

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Transcript of McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15-1 ChapterFifteen...

Page 1: McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15-1 ChapterFifteen Distributing Products Efficiently and Competitively:

© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.

15-15-11McGraw-Hill/Irwin

ChapterChapterFifteenFifteen

Distributing ProductsDistributing ProductsEfficiently and Competitively:Efficiently and Competitively:

Supply Chain ManagementSupply Chain Management

Page 2: McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15-1 ChapterFifteen Distributing Products Efficiently and Competitively:

© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.

15-15-22McGraw-Hill/Irwin

Channel of Channel of DistributionDistribution

Marketing IntermediariesMarketing Intermediaries WholesalerWholesaler RetailerRetailer BrokersBrokers

Role of IntermediariesRole of Intermediaries Create EfficiencyCreate Efficiency Value vs. CostValue vs. Cost

Page 3: McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15-1 ChapterFifteen Distributing Products Efficiently and Competitively:

© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.

15-15-33McGraw-Hill/Irwin

The Supply ChainThe Supply Chain(Figure 15.6)(Figure 15.6)

Page 4: McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15-1 ChapterFifteen Distributing Products Efficiently and Competitively:

© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.

15-15-44McGraw-Hill/Irwin

UtilityUtilityFormForm

TimeTime

PlacePlace

PossessionPossession

InformationInformation

ServiceService

OPEN 24 HRSOPEN 24 HRS

Page 5: McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15-1 ChapterFifteen Distributing Products Efficiently and Competitively:

© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.

15-15-55McGraw-Hill/Irwin

Wholesale Wholesale IntermediariesIntermediaries

Merchant Merchant WholesalersWholesalers Rack JobbersRack Jobbers Cash-and-CarryCash-and-Carry Drop ShippersDrop Shippers

Business to Business to Business (B2B)Business (B2B)

XYZ XYZ WarehouseWarehouse

Page 6: McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15-1 ChapterFifteen Distributing Products Efficiently and Competitively:

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15-15-66McGraw-Hill/Irwin

Percent of B2B Percent of B2B Commerce from Commerce from

InternetInternet

0.2% 0.4%1.0%

2.1%

4.0%

6.3%

9.4%

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%

8.0%9.0%

10.0%

1997 1998 1999 2000 2001 2002 2003

*Excludes Service Industries*Excludes Service Industries

Source:Source: Forrester Research Inc.

Page 7: McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15-1 ChapterFifteen Distributing Products Efficiently and Competitively:

© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.

15-15-77McGraw-Hill/Irwin

Retail Retail CompetitionCompetition

PricePrice ServiceService LocationLocation SelectionSelection EntertainmeEntertainme

ntnt

Page 8: McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15-1 ChapterFifteen Distributing Products Efficiently and Competitively:

© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.

15-15-88McGraw-Hill/Irwin

Is it Becoming aIs it Becoming aWal-Mart World?Wal-Mart World?

050

100150200250300350400450500

Number of Wal-Mart

Stores

Mex

ico

Can

ada

Pue

rto

Ric

o

Uni

ted

Kin

gdom

Arg

enti

na

Chi

na

Ger

man

y

*There are 2,985 *There are 2,985 stores in the stores in the

U.S.U.S.

Source: Source: Wal-Mart Annual Report 2000

Page 9: McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15-1 ChapterFifteen Distributing Products Efficiently and Competitively:

© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.

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Retail Store Retail Store DistributionDistribution

IntensiveIntensive

SelectivSelectiveeExclusiveExclusive

Page 10: McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15-1 ChapterFifteen Distributing Products Efficiently and Competitively:

© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.

15-15-1010McGraw-Hill/Irwin

Identify a Retailer Identify a Retailer in Your Areain Your Area

SupermarketSupermarket Convenience Convenience

StoreStore Discount StoreDiscount Store Department Department

StoreStore Category KillerCategory Killer

Specialty Specialty StoreStore

Factory Factory OutletOutlet

SuperstoresSuperstores Catalog Catalog

ShowroomShowroom

Page 11: McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15-1 ChapterFifteen Distributing Products Efficiently and Competitively:

© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.

15-15-1111McGraw-Hill/Irwin

The Wheel of The Wheel of RetailingRetailing

PassagPassagee

ofof

TimeTime

2. Retail 2. Retail OutletOutlet2. Retail 2. Retail OutletOutlet

1. Retail 1. Retail Outlet StartsOutlet Starts

1. Retail 1. Retail Outlet StartsOutlet Starts

3. Retail 3. Retail OutletOutlet3. Retail 3. Retail OutletOutlet

4. New Outlet 4. New Outlet EntersEnters

4. New Outlet 4. New Outlet EntersEnters

Adds ServiceAdds Service

Raises PricesRaises Prices

Better Better LocationLocation

Adds ServiceAdds Service

Raises PricesRaises Prices

Better Better LocationLocation

Low PriceLow Price

Limited ServiceLimited Service

Out-of-way Out-of-way LocationLocation

Low PriceLow Price

Limited ServiceLimited Service

Out-of-way Out-of-way LocationLocation

Higher Higher PricesPrices

Higher Higher StatusStatus

Higher Higher PricesPrices

Higher Higher StatusStatus

Low PriceLow Price

Limited Limited ServiceService

Low PriceLow Price

Limited Limited ServiceService

Page 12: McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15-1 ChapterFifteen Distributing Products Efficiently and Competitively:

© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.

15-15-1212McGraw-Hill/Irwin

Non-Store Non-Store DistributionDistribution

E-tailingE-tailing TelemarketingTelemarketing Vending Machines, Vending Machines,

Kiosks, CartsKiosks, Carts InternetInternet Direct SellingDirect Selling Multilevel MarketingMultilevel Marketing Direct MarketingDirect Marketing

Page 13: McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15-1 ChapterFifteen Distributing Products Efficiently and Competitively:

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15-15-1313McGraw-Hill/Irwin

E-Business E-Business ExpectationsExpectations

05

10152025303540

% Companies Responding

None 1-5% 6-10% 11-20% 20%+ Don’tKnow

Now In 5 Years

Share of company revenues CEOs say Share of company revenues CEOs say come from e-business Now vs. In 5 come from e-business Now vs. In 5

yearsyears

Source:Source: USA Today

Page 14: McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15-1 ChapterFifteen Distributing Products Efficiently and Competitively:

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15-15-1414McGraw-Hill/Irwin

Has The Internet Has The Internet Changed Your Shopping Changed Your Shopping

Habits?Habits?

41% 37%

24% 38%

35%25%

0%10%20%30%40%50%60%70%80%90%

100%

High Use Low Use

Undecided

No

Yes

Survey of Americans who Survey of Americans who have high* Internet use have high* Internet use vs. those with low usevs. those with low use

* high use = 15+ hours * high use = 15+ hours per weekper week

Source: Source: USA Today

Page 15: McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15-1 ChapterFifteen Distributing Products Efficiently and Competitively:

© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.

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What Online Shoppers What Online Shoppers Bought* Per Month in Bought* Per Month in

20002000

$0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000

Airline Tickets

Computer Hardware

Apparel

Hotel Reserv.

Books

Software

Health & Beauty

Toys/Video Games

*In thousands of dollars*In thousands of dollars

Source: Source: Forrester Research

Page 16: McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15-1 ChapterFifteen Distributing Products Efficiently and Competitively:

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What does it take to What does it take to persuade persuade consumers to buy consumers to buy

online?online?

0

10

20

30

40

50

60

70

Percent

Assurance ofPrivacy

PriceDiscounts

Ability toReturn toBrick-and-

Mortar Store

**Survey of 1,944 Web Survey of 1,944 Web users that had users that had notnot made made

an online purchasean online purchase

Source: Source: CIO Web Business, 10/1/1999

Page 17: McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15-1 ChapterFifteen Distributing Products Efficiently and Competitively:

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Channel Channel CooperationCooperation

Corporate Corporate DistributionDistribution

Contractual Contractual DistributionDistribution

Administered Administered DistributionDistribution

Supply Chain Supply Chain ManagementManagement

Page 18: McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15-1 ChapterFifteen Distributing Products Efficiently and Competitively:

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Contractual Contractual DistributionDistribution

Franchise SystemsFranchise Systems

Wholesaler-Wholesaler-Sponsored ChainsSponsored Chains

Retail CooperativesRetail Cooperatives

Page 19: McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 15-1 ChapterFifteen Distributing Products Efficiently and Competitively:

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Distribution/Storage Distribution/Storage ModeMode

RailroadRailroad Motor Motor

VehiclesVehicles WaterWater PipelinePipeline

AirAir IntermodalIntermodal StorageStorage Materials Materials

HandlingHandling


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