SCM-chapter2.pptx

Chapter 2 Putting the end-customer first The Marketing Perspective A more current definition:Marketing is the activity,set of institutions,and processes for creating,communicating,delivering,and exchanging offerings that have value for customers,clients,partners,and society at large.(American Marketing Association,July 2013)Supply chain marketing Rising customer expectation Due to:Better levels of general education Better ability to discern between alternative products Exposure to more lifestyle issues in the media The information revolution B2C B2B Other supply chain implications(inventory,forecasts,use of assets etc.)Demand led Respond more rapidly to markets requirements Segmentation Segmentation describes how a given market might be broken up into different groups of customers with similar needs.It means describing the market as simply as possible whilst doing our best to emphasise its variety.(Millier and Palmer,2000)Market segmentation Begins with:the benefits wanted the price consumers are prepared to pay the media to which they are exposed the amount and timing of their purchases(ex.for suncreen cream and lotion)Many ways for market segmentation Demographic Geographic Technical Behavioural (for convenience stores:Main,top-up,impulse,distress,grab-and-go,habitual shoppers)(Finne and Sivonen,2009)Important characteristics of segments measurable economically viable accessible actionable Refer to Figure 2.1 After segmentation,select target segments and define differential advantages Order winning criteria(OWC)Qualifying criteria(QC)Define marketing mix(4 Ps)product price promotion place Case study 2.1(P.46)Group discussion Markets segmentation and supply chain strategy Product and service segmentation Demographic segmentation Geography Channel Case study 2.2(P.49)Demand profiling Marketing-abstract Logistics-day-to-day realities Demand uncertainty Actual demand and forecast Service quality Gaps Customer loyalty satisfaction Benefits:generate long-term revenue streams tend to buy more than new customers tend to increase spending over time may be willing to pay premium prices provide cost savings compared with attracting new customers loyalty Key drivers of customer loyalty Service quality Perceived value Price Product quality Customer loyalty Figure 2.5 Figure 2.8 Matching supply chains with products Source:Fisher,1997 Segmented supply chain strategy Do you agree?Any problems?So,how to develop segmented supply chain strategy?Demand Fulfilment(Supply Chain)Demand Creation(Marketing)Revenue maximisation:Market shareProduct proliferationChannel proliferationPromotionsEfficiency maximisation:Improving efficienciesReducing inventoriesStandardising productsRationalising suppliersTension Figure 2.9 Tension between supply chain and marketing objectives Supply chain and marketing alignment How to resolve the conflict?Some approaches:Promote integrative behaviours between marketing and SC Employ a sales and operations planning(S&OP)process Develop and implement segmented supply chain strategy Demand profile(at finished SKU level)Volume Variability Competitive profile Time(e.g.order lead time)Cost(e.g.economy product)Quality of service(e.g.delivery reliability)Quality of product(e.g.acceptable defect level)Supply chain strategy drivers(examples)Buffers in the supply chain:Capacity(production/distribution)Inventory levels(raw&finished)Lead time(production/distribution)Extent to which supply chain is customer order driven(i.e.customer order decoupling point)MTO?MTS?Implications for supply chain strategy Material flow:JIT pull or MRP push:Supplier replenishment Manufacturing Outbound logistics Product profile Customisation versus standardisation Figure 2.10 Strategy drivers and their implications for supply chain strategy Supply chain strategy drivers Customer B/Jaguar Unpredictable demand,lower volume,more customised Customer A/BMW High volume,short lead time,high delivery frequency Demand variety Demand variability Demand unpredictability Demand volume Delivery reliability Order lead time Product quality Delivery frequency Product customisation Product innovation L L L H L L*L H L L H H H L H S H L H H Core drivers Context specific 18 SKU More Efficient More Responsive Approx.average for focal company 9 SKU 100%1 car 17,760 4,524 24 day 1 day 3 cars 1/2 per week 4/5 per week 25 PPM H=high L=low S=short L*=long Figure 2.11 Supply chain strategy driver profiles for two customers of Autoco Source:Harrison et al.,2007 Select drivers for segmentation Other important factors Marketing activity Context of purchase Product life cycle stage Using customer value gap analysis for driver selection An example:Customer value is assessed by a administered questionnaire relative importance(by 100 points across the driver)performance is identified by the customers(measured on a 105 Likert scale)Figure 2.13 Customer value gap as perceived by Autocos customer during product launch and steady state Product launch Autoco perceived as pr