Supply Side Channel Analysis: Chapter 3

Marketing Flow Represented Physical Possession Storage and delivery cost (transportation) Ownership Inventory carrying costs Promotion Personal Selling, advertising, etc... CHECK BOOK FOR REST CHECK BOOK FOR REST

Why Inventories Exist?

Demand outstrip production capacity: Stock pile goods to take advantage of manufacturer promotion. The result is high inventory carrying costs, including costs of obsolescence (Out of Date)?

Transportation: Hold inventory until a shipment arrives.

Lead Time: How long it takes to be re-supplied (the longer it takes the more inventory we have).

Inventory exists because of batch processing orders to make long production run or from stock piling to fill containers, trucks, ships and planes. (economies of scale)

THE CDW CASE STUDY (GHECK BOOK FOR IT):

Channel Flow CDW's Investment in Flow Physical Possession (a) CDW has a 400,000 sq. ft. warehouse. (b) CDW ships 99% of orders the day they are received. c) For CDW's government buyers, CDW has instituted an “asset tagging” system that lets buyer track what product is going where; product is scanned into both buyer and CDW database, for later ease in backing products (e.g. service calls) (d) CDW buys product in large volumes from mfgrs., taking in approximately eight-loads of product from various suppliers every day. Loads are received in bulk, with few added services. Promotion a) CDW devoted a salesperson to every account (even small, new ones!), so that an end-user can talk to a real person about technology needs, system configuration, post-sale service, etc. b) Salespeople go through 6.5 weeks of basic training, then 6 months of on-the-job coaching, then a year of monthly training sessions. c) New hires are assigned to small-business accounts to get more opportunities to close sales. d) Salespeople contant clients not through in- person sales calls (too expensive), but through phone/e-mail. e) CDW has longer-tenured (permanent status) salesperson than its competitors. Check Book For Rest Check Book For Rest