Mirbis Unipa Logistic Dominici

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Slide of the seminar of prof. Gandolfo Dominici on Distribution, channels, SCM and Communication for Moscow's MIRBIS students at University of Palermo (Italy) 03/03/2009 .

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Mirbis Unipa Logistic Dominici

  1. 1. DISTRIBUTION CHANNELS Distribution and SCM prof. Gandolfo DOMINICI
  2. 2. Definition of Distribution Channel ● Group of economical subjects doing the necessary activities in order to transfer a good and its property, or to deliver a service to the consumer; Distribution and SCM prof. Gandolfo DOMINICI
  3. 3. Functions of intermediaries Logistic (warehouse & transport) • Accumulation • (one shipment for many goods) Selection (information asymmetries) • Assortment (choice) • Bulk breaking • (one big in many small) Financial (delay) • Administrative simplification • Distribution and SCM prof. Gandolfo DOMINICI
  4. 4. B2C – Distribution Channels Producer Producer Producer Producer Agent Wholesaler Wholesaler Retailer Retailer Retailer Consumer Consumer Consumer Consumer Distribution and SCM prof. Gandolfo DOMINICI
  5. 5. B2B- Distribution Channels Producer Producer Producer Producer Agent Agent Industrial Industrial distributor distributor Business Business Business Business Distribution and SCM prof. Gandolfo DOMINICI
  6. 6. Distribution and SCM prof. Gandolfo DOMINICI
  7. 7. LOGISTICS AND SUPPLY CHAIN MANAGEMENT Distribution and SCM prof. Gandolfo DOMINICI
  8. 8. Logistics in business ● Logistics - ...the process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.quot; Note that this definition includes inbound, outbound, internal, and external movements, and return of materials for environmental purposes. -- (Reference: Council of Logistics Management, http://www.clm1.org/mission.html, 12 Feb 98) ● Logistics - The process of planning, implementing, and controlling the efficient, cost effective flow and storage of raw materials, in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of meeting customer requirements. -- (Reference: Canadian Association of Logistics Management, http://www.calm.org/calm/AboutCALM/AboutCALM.html, 12 Feb, 1998) Distribution and SCM prof. Gandolfo DOMINICI
  9. 9. Logistics in business ● Integrated ● Synchronized ● Purposive ● Flows ● Activity Distribution and SCM prof. Gandolfo DOMINICI
  10. 10. The term: logistics Ancient Greek: ● Λεγείν: argue, ratiocinate; ● Λογίστίκοσ: art of calculus; Medieval Latin: ● Logisticus: calculus, computation; Modern times: ● Logistique: General Baron A. H. De Jomini; ● Logistics: Admiral A.T.Mahan (**); Distribution and SCM prof. Gandolfo DOMINICI
  11. 11. Distribution and SCM prof. Gandolfo DOMINICI
  12. 12. Evolution of logistics inside the firm ● 1950 - Economic Order Quantity ● 1975 -Material Requirement Planning (MRP); ● 1980 - Just in Time - Manufacturing Resource Planning (MRPII); ● 1990 - EDI (Electronic Data Interchange); ● Nowadays: Holonic Manufacturing, Extended Enterprise Network, Agile Manufacturing, Demand driven supply chain … Distribution and SCM prof. Gandolfo DOMINICI
  13. 13. Why evolving? Why with marketing? customer Distribution and SCM prof. Gandolfo DOMINICI
  14. 14. SUPPLY CHAIN MANAGEMENT (SCM) ● Differs from firm’s logistics because it deals also outside the firm in the relation with clients and suppliers all along the value chain. Distribution and SCM prof. Gandolfo DOMINICI
  15. 15. SUPPLY CHAIN MANAGEMENT INVENTORY MANAGEMENT SUPPLIES CUSTOMER MANAGEMENT Stock of Stock of Vendors Production Distribution Finished materials goods Distribution and SCM prof. Gandolfo DOMINICI
  16. 16. Definition of SCM Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. Distribution and SCM prof. Gandolfo DOMINICI
  17. 17. Definition of SCM Supply chain management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high- performing business model. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance, and information technology. Distribution and SCM prof. Gandolfo DOMINICI
  18. 18. Flow directions in Supply chains Push ● Flow control - look ahead- Input of resources Demand Pull ● Stock control - look back - Input of resources Demand Distribution and SCM prof. Gandolfo DOMINICI
  19. 19. Demand driven supply chain and mass customization ● If is the customer to lead the chain then it is not a “supply” chain, it is a “demand” chain (Blackwell, 1999) ● Mass customization aims to produce and distribute goods and services, which can be unique and specifically made for any single customer, but keeping at the same time the high levels of speed and efficiency of standard goods and produced in line. Distribution and SCM prof. Gandolfo DOMINICI
  20. 20. The 4 faces of mass customization Source: Gilmore J. H , Pine B. J., The Four Faces of Mass Customization, Harvard Business Review, 1997 Distribution and SCM prof. Gandolfo DOMINICI
  21. 21. 4R of Supply Chain ● Reactivity Ability to reduce lead-time; personalization; adaptability to demand ● Regularity Less σ = less stock; relevance of information ● Resilience Preventing bullwhip effect; ability to resist to changes with flexibility ● Relations Partnership, single or double sourcing Distribution and SCM prof. Gandolfo DOMINICI
  22. 22. Value for the customer Value for the Customer = Quality x Service Cost x Time Distribution and SCM prof. Gandolfo DOMINICI
  23. 23. What does customer do when we are out of stock? Distribution and SCM prof. Gandolfo DOMINICI
  24. 24. Service surround and product value Distribution and SCM prof. Gandolfo DOMINICI
  25. 25. How can SCM support innovation for customer satisfaction? ● Internal and external collaboration to obtain communication through the demand chain; ● Use of different sources of information: POS, e-mail, RFID (Radio frequency identification), listening to developers of existing products. ● Standardize all components ● Reduce lead-time: ● Understand all the company’s functions to achieve team-work ● Be ready to change Dominici G., “Demand Driven Supply Chain ed Innovazione: il sistema logistico-produttivo per la soddisfazione dei bisogni del cliente” ,in Purpura e Fazio , Economia e Gestione dell’innovazione nelle PMI, FrancoAngeli, 2008 Distribution and SCM prof. Gandolfo DOMINICI
  26. 26. Distribution and SCM prof. Gandolfo DOMINICI
  27. 27. Dell’s success is a combination of: ● Direct Sales ● Build-to-order ● Supplier Integration Together these allow for maximum effectiveness with minimum cost Distribution and SCM prof. Gandolfo DOMINICI
  28. 28. A direct sales system allows Dell to: ●Cut costs ●Build relationships with its customers ●Deliver exactly what the customer wants Distribution and SCM prof. Gandolfo DOMINICI
  29. 29. A build to order system allows Dell to: ●Increase inventory velocity ●Minimize inventory costs ●Build exactly the computer that its customers want ●Minimize the need for forecasting Distribution and SCM prof. Gandolfo DOMINICI
  30. 30. Supplier integration allows Dell to maximize the benefit of its other core competencies Here is how they do it: ●Location of supplier warehouses ●Extranet ●Meetings with suppliers Distribution and SCM prof. Gandolfo DOMINICI
  31. 31. The secret to Dell’s success is the synergy between all of its competencies The direct sales system both enables and relies on the build-to- order system The build to order system both enables and relies on the supplier integration system And Dell’s focus on collaboration at every level enables it all Distribution and SCM prof. Gandolfo DOMINICI
  32. 32. Manataki, Areti: A Knowledge-Based ● Analysis and Modelling of Dell’s Supply Chain Strategies ● Dave Jaffe and Todd Muirhead: Implementation Study: Dell IT Scales Supply Chain Management with Oracle 10g RAC Dell Case Study - ● http://www.oppapers.com/print/Dell-Case- Study/84223 Dell ERP - http://www.oppapers.com/print/Dell- ● Erp/74191 11/5/2008 You Zeng: Learning from Dell - the faithful ● implementer of 'Just in Time' Dell on Wikipedia - ● http://en.wikipedia.org/wiki/dell Distribution and SCM prof. Gandolfo DOMINICI
  33. 33. THE “P” OF PROMOTION THE FIRM COMMUNICATION MIX Distribution and SCM prof. Gandolfo DOMINICI
  34. 34. The P of Promotion in McCarthy’s Marketing mix: the Promotion Mix 1. Advertising- Any paid presentation of ideas, goods, or services by an identified sponsor. 2. Personal Selling - A process of helping and persuading one or more prospects to purchase a good or service or to act on any idea through the use of an oral presentation. 3. Promotions- Incentives ($) designed to stimulate the purchase or sale of a product, usually in the short term. 4. Public relations - Paid intimate stimulation of supply for a product, service, or business unit by planting significant news about it or a favorable presentation of it in the media. Distribution and SCM prof. Gandolfo DOMINICI
  35. 35. Towards enterprise communication Communication Marketing Communication Enterprise Communication Distribution and SCM prof. Gandolfo DOMINICI
  36. 36. Marketing Communication ● Aims to improve the relation between the company and the market; ● It is one of company’s functions trying to influence consumer’s demand in favor of company’s products; ● Accomplishes to affirm the company in the market by supporting it’s products. Distribution and SCM prof. Gandolfo DOMINICI
  37. 37. Enterprise Communication ● Marketing communication is not sufficient nowadays to cover all the needs of the modern organizations; ● Modern enterprises need to manage a complex system of communications towards different targets; ● In order to reach all the targets, the organization must use a proper mix of components in order to assure the highest efficacy of communication process. Distribution and SCM prof. Gandolfo DOMINICI
  38. 38. Systemic Approach to Communication enterprise Super-system Environment Distribution and SCM prof. Gandolfo DOMINICI
  39. 39. Data, Information, Communication ● Data: a collection of facts usually collected as the result of experience, observation or experiment, or processes within a computer system, or a set of premises. This may consist of numbers, words, or images, particularly as measurements or observations of a set of variables. ● Information: Data in a circumstance transmitted one way from a source to a recipient ● Communication: Information transmitted in a two ways process in order to obtain a feedback about it’s response. Distribution and SCM prof. Gandolfo DOMINICI
  40. 40. Lasswell’s model Distribution and SCM prof. Gandolfo DOMINICI
  41. 41. Shannon and Weaver Model Distribution and SCM prof. Gandolfo DOMINICI
  42. 42. Communication Process (as we see it in offline communication) Transmitter Feedback Receiver Communication Process Encoding Channel Message Decoding Distribution and SCM prof. Gandolfo DOMINICI
  43. 43. Enterprise communication targets External Internal Targets targets Potential employees ● Unions ● Pubblic opnion ● Employees ● External suppliers ● Sales force ● Consumers ● Vertically integrated ● suppliers Financial ● ● Vertically integrated intermediaries clients ● Competitors ● shareholders ● Financial markets Distribution and SCM prof. Gandolfo DOMINICI
  44. 44. The 4 Communication areas Marketing communication Institutional communication Organizational communication Financial Communication Distribution and SCM prof. Gandolfo DOMINICI
  45. 45. Advertising ● Advertising is the nonpersonal communication of information usually paid for and usually persuasive in nature about products, services or ideas by identified sponsors through the various media (Bovee, 1992) ● Paid, non-personal, public communication about causes, goods and services, ideas, organizations, people, and places, through means such as direct mail, telephone, print, radio, television, and internet; designed to inform and motivate and to change the thinking pattern (or buying behavior) of the recipient, so that he or she is persuaded to take the action desired by the advertiser. Distribution and SCM prof. Gandolfo DOMINICI
  46. 46. Advertising effects on Demand: Translation effect Distribution and SCM prof. Gandolfo DOMINICI
  47. 47. Communication and advertising effects on Demand: Combined effect Distribution and SCM prof. Gandolfo DOMINICI
  48. 48. Communication and advertising effects on Demand: elasticity effect Distribution and SCM prof. Gandolfo DOMINICI
  49. 49. Paradox and solution p2 Q21 Q2 Distribution and SCM prof. Gandolfo DOMINICI
  50. 50. Objectives of Advertising: The 4 Responses 1. Behavioral Response 2. Non Behavioral Response 3. Evaluative Response 4. Relational Response Distribution and SCM prof. Gandolfo DOMINICI
  51. 51. Behavioral and non Behavioral Responses Distribution and SCM prof. Gandolfo DOMINICI
  52. 52. Non Behavioral- Rational Responses Distribution and SCM prof. Gandolfo DOMINICI
  53. 53. Non behavioral- irrational ● Hedonistic ● Esthetic Distribution and SCM prof. Gandolfo DOMINICI
  54. 54. Non behavioral- ideal ● Are all the wishes and desires of the individual towards higher values, mental constructs, self-image, socio-cultural growth, etc… Distribution and SCM prof. Gandolfo DOMINICI
  55. 55. Evaluative Response ● Is the way to move towards a learning process in order to give a direction to individual preferences in an “attitude” towards the product ● It’s a mind set which describes the perdurable evaluation made by an individual on a brand, a product, an company, an idea and it includes rational, emotional and behavioral factors. Distribution and SCM prof. Gandolfo DOMINICI
  56. 56. FCB ( Foote, Cone, Belding) Model Source: Adapted from Pastore e Vernuccio, 2006, original source VAUGHN R., 1986. Distribution and SCM prof. Gandolfo DOMINICI
  57. 57. Relational Response ● Satisfaction ● Trust ● Behavioral fidelity ● Psychological fidelity ● Loyalty Distribution and SCM prof. Gandolfo DOMINICI
  58. 58. Relational objectives Evaluative objectives Behavioral objectives Non behavioral objectives Influencing Factors situational individual Distribution and SCM prof. Gandolfo DOMINICI

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