Transcript Chapter 15 - Austin Community College

15
C H A P T E R
Wholesaling and
Logistics
Management
McGraw-Hill/Irwin
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
After studying this chapter, you should be able to:
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Understand wholesaling and describe the three basic
categories of wholesalers.
Identify and discuss the roles of different types of fullservice
and limited-function wholesalers.
Explain differences among the functions of agents, brokers,
and commission merchants.
Understand the differences between manufacturers’ sales
branches and offices.
Appreciate how slow growth rates and globalization will
affect wholesaling in the future.
Define logistics management and explain its key role in
marketing.
Understand logistics activities, including warehousing,
materials handling, inventory control, order processing, and
transporting.
Discuss how some of the key ethical and legal issues affect
logistics.
Bearden Marketing 5th Ed
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Grainer
W. W. Grainger, Inc., was founded in 1927 to meet the
needs of customers who required products faster than
manufacturers could deliver. Today Grainger is a leading
business-to-business wholesaler. The company’s vision
statement provides direction for its business: “To be a
primary source through the breadth of our offering and a
focus on the lowest total cost solution for each of our
customers.”
Bearden Marketing 5th Ed
15-3
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Wholesaling and Logistics Management
Wholesalers
Logistics
Management
Bearden Marketing 5th Ed
Wholesalers are intermediaries in the
marketing channel that sell to customers
other than individual or household
consumers.
Logistics management is the planning,
implementation, and movement of
goods, services, and related information
from point of origin to point of
consumption.
15-4
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Wholesaling
Wholesaling
Value-added
Resellers
Bearden Marketing 5th Ed
All marketing activities associated with
selling products to purchasers that resell
the products, use them to make another
product, or use them to conduct
business activities.
Value-added resellers (VARs) sell to
small and medium-sized business
customers. They add value to goods
and services as they pass through the
channel.
15-5
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Types of Wholesalers
Exhibit 15-1
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Full-Service Wholesalers
Full-service wholesalers by definition perform a wide
range of services for their customers and the parties
from which they purchase.
General
Merchandise
Limited-Line
General merchandise wholesalers
carry a wide variety of products and
provide extensive services for their
customers.
Limited-line wholesalers do not stock
as many products as general
merchandise wholesalers, but they
offer more depth in their products.
more
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Full-Service Wholesalers (con’t)
Specialty Line
Rack Jobbers
Bearden Marketing 5th Ed
Specialty-line wholesalers carry the
most narrow product assortment—
usually a single product line or part of
one.
Rack jobbers, a category of specialtyline wholesalers, sell to retail stores.
They set up and maintain attractive
store displays and stock them with goods
sold on consignment.
15-8
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Limited-Function Wholesalers
Truck jobbers are limited-service
Truck Jobbers wholesalers who deliver within a
particular geographic area to ensure
freshness of certain goods (bakery,
meat, dairy).
Drop shippers arrange for shipments
Drop Shippers directly from the factory to the customer.
Although they do not physically handle
the product, drop shippers take title and
all associated risks while the product is in
transit.
more
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Limited-Function Wholesalers (con’t)
Cash-andcarry
Catalog
Wholesalers
Cash-and-carry wholesalers do not
deliver the products they sell, nor do they
extend credit. Small businesses are the
primary customers for cash-and-carry
wholesalers.
Catalog wholesalers serve both major
population centers and remote
geographic locations and offer an
alternative to cash-and-carry
wholesalers.
more
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Limited-Function Wholesalers (con’t)
Wholesale
Clubs
Bearden Marketing 5th Ed
Wholesale clubs are a growing
phenomenon. These enterprises,
which also serve retail customers under
the same roof, are especially
popular with small business customers,
civic and social organizations,
and church groups.
15-11
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Functions Performed by Wholesalers
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15-12
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Agents
Manufactures’
Agents
Sell related but noncompeting product
lines for manufacturers.
Auctions
Sell merchandise at a given time and
place to the highest bidder. Increase in
online auctions such as eBay.
Import Agents
Find products in foreign countries to sell
in their home countries.
Export Agents
Locate and develop markets abroad for
products manufactured in their home
countries.
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15-13
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Brokers & Commission Merchants
Brokers
Brokers are intermediaries that bring
buyers and sellers together.
Commission
Merchants
Commission merchants provide a
wider range of services than agents or
brokers.
Maintain inventory and perform
Manufactures’
a wide range of functions for the
Sales Branch parent company
Do not maintain inventory, but they
Manufactures’
perform a limited range of functions for
Sales Office products sold.
Bearden Marketing 5th Ed
15-14
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Developments in Wholesaling
Globalization
Developments
Deserving Special
Attention
Building
Slow Growth
Relationships
Bearden Marketing 5th Ed
15-15
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Logistics Management
Customer Expectations of Suppliers’ Logistics
Systems:
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Timely pickups for outgoing orders.
On-time delivery.
Prompt claim settlement for lost or damaged goods.
Accurate invoicing.
Interactive Website for tracking & customer service.
Well-trained drivers and customer support staff.
Process for analyzing and correcting service failures.
Centralized, accessible customer service.
Good communication with customers.
Responsiveness form all supplier departments.
Bearden Marketing 5th Ed
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Key Activities in Logistics
Warehousing
Material
Handling
Inventory
Control
Order
Processing
Transportation
Companies can choose private or public
warehouses or distribution centers:
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Private warehouses are operated by the company
using the warehouse.
Public warehouses are for-hire facilities available
to any business requiring storage or handling of
goods.
Distribution centers are super warehouses that
serve a large geographic area.
Bearden Marketing 5th Ed
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Key Activities in Logistics
Warehousing
Material
Handling
Inventory
Control
Order
Processing
Transportation
Materials-handling activities include:
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Receiving, identifying, sorting, and storing products
Retrieving the goods for shipment.
Bar coding is used in a variety of logistics functions.
Radio frequency identification (RFID) may
eventually replace bar codes.
Bearden Marketing 5th Ed
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Key Activities in Logistics
Warehousing
Material
Handling
Inventory
Control
Order
Processing
Transportation
Inventory control attempts to ensure adequate
inventory to meet customer needs without incurring
additional costs for carrying excess stock.
Two such inventory control systems are in place in
many industries:
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just-in-time
quick-response systems.
Bearden Marketing 5th Ed
15-19
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Key Activities in Logistics
Warehousing
Material
Handling
Inventory
Control
Order
Processing
Transportation
Order-processing activities are critical to ensure that
customers get what they order, when they want it,
properly billed, and with appropriate service to support
its use or installation.
Accuracy and timeliness are key goals of order entry
processes.
Bearden Marketing 5th Ed
15-20
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Key Activities in Logistics
Warehousing
Material
Handling
Inventory
Control
Order
Processing
Transportation
The final logistics activity we consider in this chapter
is transporting, which starts with selecting modes of
transportation for delivery of products or materials.
Shippers have five basic ways to move products and
materials from one point to another—rail, truck, air,
pipeline, and water transport—and each has
advantages and disadvantages.
Bearden Marketing 5th Ed
15-21
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Summary
After studying this chapter, you should be able to:








Understand wholesaling and describe the three basic
categories of wholesalers.
Identify and discuss the roles of different types of fullservice
and limited-function wholesalers.
Explain differences among the functions of agents, brokers,
and commission merchants.
Understand the differences between manufacturers’ sales
branches and offices.
Appreciate how slow growth rates and globalization will
affect wholesaling in the future.
Define logistics management and explain its key role in
marketing.
Understand logistics activities, including warehousing,
materials handling, inventory control, order processing, and
transporting.
Discuss how some of the key ethical and legal issues affect
logistics.
Bearden Marketing 5th Ed
15-22
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.