2. Vertical Marketing System
• A vertical marketing system (VMS) is one in
which the main members of a distribution
channel—producer, wholesaler, and retailer
work together as a unified group in order to
meet consumer needs.
3. Vertical Marketing System Explained
• A vertical marketing system tries to eliminate
competition and conflict that often arise between
companies. As a result, there’s better efficiency
and a reduction in product costs.
• This cooperation allows businesses to control all
aspects of a company, helps solve problems, and
boosts efficiency.
• Different types of businesses can use vertical
marketing systems. Whether it’s a small firm or
an enterprise, the system helps create a strong
bond with suppliers, distributors, and retailers.
5. • Corporate. This type involves a single company that has
ownership over all stages of the supply chain.
Although there’s only one business that controls all the
production and distribution processes, each organization
inside this channel continues to manage the project.
• Amway is American marketing company that manufactures
beauty, home care, and health products. The brand belongs to
a corporate vertical marketing system because it sells
products only through its authorized stores.
• Zara owns all stores, so they follow the same marketing
strategy. Complete integration of all activities removes
reasons for conflict between channels and stimulates
maximum efficiency.
6. • Contractual. In this system, every member of the
distribution channel performs as an independent
entity. They integrate their pursuits to achieve
higher efficiency and obtain value for all
companies involved in the process.
Firms sign contracts with large distributors to sell
their goods and stay competitive. Working with a
franchise is an example of a contractual type.
To open one of such stores or cafes, individuals
purchase a license. However, they have to follow
the standards, practices, and guidelines of a
franchisor.
7. • Administered. The activities of companies
involved in the production and distribution
channel are affected by the size and power of
one of them, although there’s no contract.
Simply put, a large company that has the most
influence dominates the activities of others.
8. Horizontal Marketing Systems
• A Horizontal Marketing system is a form of
distribution channel wherein two or more
companies at the same level unrelated to each
other come together to gain the economies of
scale.
• Apple, when it introduced Itunes went into an
exclusive partnership with Starbucks and allowed
Starbucks Wi fi users to browse, download and
buy songs from the Apple Itunes store.
9. Types of Horizontal Marketing
Systems
• Two or more Manufacturers- With an
objective of making optimum utilization of
scarce resources.
• Two or more Wholesalers-With the objective
of covering a larger area of the distribution of
goods and services.
• Two or more Retailers- With the objective of
providing bulk quantities in a particular area.
10. Horizontal Marketing System
• Johnson and Johnson, a reputed healthcare company
has joined hands with Google. The collaboration is
done with the aim of having a robotic-assisted surgical
platform. It will enable in enhancing the overall quality
of health-care services by integration of advanced
technologies.
• Nike and Apple, both of these big brand have
associated with each other for producing such as
advanced footwear of Nike+ in which apple iPod can be
connected. Shoe will play music and along with it
display all information such as calories burned,
distance covered and heart pace on iPod screen.
11.
12.
13. Multichannel Marketing
• Multichannel marketing refers to the practice by which
companies interact with customers via multiple
channels, both direct and indirect, to sell them goods
and services.
• Other means of reaching customers with multichannel
marketing include mobile devices, text messaging,
email, company websites, social media, search engine
optimization or GPS to track customers' proximity to
goods and services. Multichannel marketing combines
the practices of inbound and outbound marketing with
the goal of reaching customers on the channel of their
choice. In this way, the buying process is more
controlled by the customer than the marketer.
17. Advantages of Multi-channel marketing
• Expanded reach
• Increased engagement
• Reach consumers on their preferred channel
• Combined channels are more effective
18. Challenges of Multi-channel marketing
• Efficient Management
• Proper Marketing Attribution
• Leveraging Marketing Analytics
• Keeping Up With Innovations
• Targeting Messages
20. Distribution channel for services
• On-Site Consulting
• Virtual Delivery
• Third-Party Consulting
• Workshops and Seminars
• Publications
• Bookers/Referrals
• Online marketplaces
• Aggregator business model
• On-demand business model
21. Factors governing the choice of direct sale
method
• Market characteristics
• Competitor characteristics
• Resources of the firm
• Type of service: Equipment-based services Vs.
People-based services
• Geographic location
• Customer preference
• Levels of technical skills
22. Supply Chain
Supply chain management is the handling of
the entire production flow of a good or service
-starting from the raw components all the way
to delivering the final product to the
consumer.
27. Enterprise Resource Planning (ERP)
• It is a strategic software and a set of industry-
domain-specific application that build
customer and shareholder communities value
network system by enabling and optimizing
enterprise and inter-enterprise collaborative
operational and financial processes.
28. Evolution of ERP
• 1960s- With the rise in factory production demand, the need for
the management of products also increased.
• 1970s- Material Requirement Planning- The function of MRP was to
ensure material availability
• 1980s- Manufacturing Resource Planning; Work order, purchase
order etc. Manufacturing Resource Planning is an expansion of
closed loop MRP for managing an entire manufacturing
company. This system provides an information that is useful to all
functional areas and encourages cross-functional interactions.
• 1990s- Enterprise Resource Planning (ERP)
• 2000s- ERP II- It is a business strategy and set of collaborative
operational and financial processes internally and beyond
enterprise.
29.
30.
31. Quick Response
• Quick Response (QR) is both a management paradigm and a methodology
that allows supply systems to react quickly to changes while improving
their performance.
• Quick Response is the establishment of new business strategies, new
relationships and new procedures to speed the flow of information and
merchandise between retailers and manufacturers.
• QR is a management concept created to increase consumer satisfaction
and survive increasing competition from new competitors. It intends to
shorten the lead time from receiving an order to delivery of the products
and increase the cash flow.
• A production and distribution system for quick response to the market,
was developed for the U.S. textile industry to survive the global
competition with low-cost foreign companies.
• EDI (Electronic Data Exchange)
• ECR (Efficient Customer Response)
32.
33. Just In Time (JIT)
• IT is a Japanese management philosophy which has been
applied in practice since the early 1970s in many Japanese
manufacturing organizations. It was first developed and
perfected within the Toyota manufacturing plants by Taiichi
Ohno as a means of meeting consumer demands with
minimum delays . Taiichi Ohno is frequently referred to as the
father of JIT. JIT Principles are:
• Continuous improvement.
• Good housekeeping
• Set-up time reduction
• Leveled / mixed production
34. • Eliminating waste. There are seven types of waste:
– waste from overproduction.
– waste of waiting time.
– transportation waste.
– processing waste.
– inventory waste.
– waste of motion.
– waste from product defects.
• Kanban: The Japanese word “kanban”, meaning “visual board” or a
“sign”, has been used in the sense of a process definition since the
1950s. It was first developed and applied by Toyota as a scheduling
system for just-in-time manufacturing.
• Jidoka (Automation)
• Andon (trouble lights) - to signal
problems to initiate corrective action.
35. Accurate Response System
• Accurate response helps companies improve forecasts
and redesign planning processes to minimize the
impact of inaccurate forecasts.
• A new approach to increase the forecast accuracy by
dividing the period into two or more small periods
and making the orders after first subperiod with the
information gathered and demand estimated in that
period. Key advantages:
Reduced mismatches between supply and demand
Lower costs
Increased Profits
Lower Inventory levels
36. Supply chain planning
• Supply chain planning helps in matching
product supply with customer demand using
forecasting, pricing strategy and inventory
management techniques. It affects top line
and bottom line. The top line refers to a company's revenues or gross sales.
Therefore, when a company has "top-line growth," the
company is experiencing an increase in gross sales or
revenues.
The bottom line is a company's net income, or the "bottom"
figure on a company's income statement. More specifically,
the bottom line is a company's income after all expenses
have been deducted from revenues. These expenses include
interest charges paid on loans, general and administrative
costs, and income taxes. A company's bottom line can also
be referred to as net earnings or net profits.
37. Supply chain planning
• Supply chain planning is the process of
anticipating demand and planning materials
and components to supply that demand,
along with production, marketing,
distribution, and sales. It ensures that all parts
of the organization, from materials
purchasing, operation scheduling, to shipping
and delivery are working together.
38. Supply chain planning vs. supply
chain execution
• Supply chain planners are long-term planners.
• They analyze manufacturing, logistics and
inventory data to make their plans.
• Supply chain execution, on the other hand, is
the day-to-day implementation of that plan-
order fulfillment, transporting goods,
warehousing.
39. Supply Chain KPIs (Key Performance
Indicators)
• Delivery performance metrics: On-time delivery,
performance to commitment, fill rate, and return rates.
• Cycle-time metrics: Promised lead time, actual lead time,
and supply chain cycle time.
• Inventory and cash management metrics: Inventory days
of supply, days sales outstanding (DSO), days payables
outstanding (DPO), and cash-to-cash conversion (Cash
Cycle).
• Supply chain cost metrics: Overall supply chain costs, order
management costs, inventory carrying costs, supply chain
finance and planning costs, supply chain IT costs,
procurement department staffing, and savings etc.
40. Logistics Management
• Logistics is basically a process of transporting goods (either raw material or
finished products) from one point to another point. The two major functions of
logistics are transportation and warehousing.
• Logistics management is the part of the supply chain process that plans,
implements, and controls the efficient, effective flow and storage of goods,
services, and related information from the point of origin to the point of
consumption to meet customer requirements.
• Major types of logistics are Inbound Logistics, Outbound Logistics, Reverse Logistics
& Third-Party Logistics (3PL).
• Some of the key logistics efficiency metrics are Warehouse Capacity, Shipping
Time, Order Accuracy, On-Time Delivery, Transportation Cost, Damaged Products &
Inventory Turnover Ratio etc.
41. Supply chain benchmarking
• Supply chain operations within an organization should be constantly
reviewed to identify where improvements can be made. One method is to
perform a series of benchmarking tests for price, quality, design,
efficiency, and cost effectiveness.
• In general, companies perform two types of benchmarking: results
benchmarking, which focuses on quantitative performance measures,
and best practices benchmarking, which focuses on how well processes
are executed.
• Successful supply chain benchmarking incorporates all of the elements in
the global supply chain and focuses on product specifications, operational
performance, management practices, and software solutions.
• Although supply chain benchmarking involves three major elements—the
supplier, the distributor, and the interface of the two—customer
satisfaction should be the primary motivation for establishing a
benchmarking program.
42. Benefits of Successful Benchmarking
• Performance improvements
• Interdependencies and relationships between
key performance indicators (KPIs)
• Better business tradeoffs
• Opportunities for cross-industry best practices
• Baseline information for goal setting,
prioritization, and ongoing performance
measurements
