Unit 9 Distribution

Unit 9Unit 9DistributionDistribution

DistributionDistribution How did the merchandise How did the merchandise

get to the stores?get to the stores? Where is the merchandise Where is the merchandise

kept before it goes to the kept before it goes to the store?store?

How does the owner of a How does the owner of a store know when to order store know when to order more merchandise?more merchandise?

Unit 9 VocabularyUnit 9 Vocabulary AgentsAgents Basic Stock ListBasic Stock List Blind Check MethodBlind Check Method Bonded WarehouseBonded Warehouse Brick-and-mortar RetailersBrick-and-mortar Retailers CarloadCarload Centralized BuyingCentralized Buying Channel of DistributionChannel of Distribution Common CarriersCommon Carriers Consignment BuyingConsignment Buying Contract CarriersContract Carriers Cycle CountsCycle Counts Decentralized BuyingDecentralized Buying Direct Check MethodDirect Check Method Direct DistributionDirect Distribution Distribution CenterDistribution Center Dollar ControlDollar Control

Drop ShippersDrop Shippers E-marketplaceE-marketplace E-tailingE-tailing Exclusive DistributionExclusive Distribution Exempt CarriersExempt Carriers Freight ForwardersFreight Forwarders Indirect DistributionIndirect Distribution Integrated DistributionIntegrated Distribution Intensive DistributionIntensive Distribution IntermediariesIntermediaries InventoryInventory Inventory ManagementInventory Management Inventory TurnoverInventory Turnover Just-In-Time (JIT) Inventory Just-In-Time (JIT) Inventory

SystemSystem Memorandum BuyingMemorandum Buying Model Stock ListModel Stock List

Unit 9 VocabularyUnit 9 Vocabulary Never-out ListNever-out List Organizational BuyersOrganizational Buyers Open-to-buy (OTB)Open-to-buy (OTB) Perpetual Inventory SystemPerpetual Inventory System Physical DistributionPhysical Distribution Physical Inventory SystemPhysical Inventory System Preretailing Marketing MethodPreretailing Marketing Method Private CarriersPrivate Carriers Private WarehousePrivate Warehouse Public WarehousePublic Warehouse Quality Check MethodQuality Check Method Rack JobbersRack Jobbers Real-time Inventory SystemsReal-time Inventory Systems Receiving RecordReceiving Record Retail BuyersRetail Buyers RetailersRetailers Reverse AuctionReverse Auction

Selective DistributionSelective Distribution Six-month Merchandising PlanSix-month Merchandising Plan Source MarketingSource Marketing Spot Check MethodSpot Check Method Stockkeeping unit (SKU)Stockkeeping unit (SKU) StorageStorage Ton-mileTon-mile TransportationTransportation Unit ControlUnit Control Want SlipsWant Slips Wholesale BuyersWholesale Buyers WholesalersWholesalers

Unit 9 EssentialUnit 9 EssentialQuestionQuestion

How is distribution knowledge How is distribution knowledge utilized to manage supply-chain utilized to manage supply-chain activities?activities?

What are the channels of distribution What are the channels of distribution and the factors that influence the and the factors that influence the length/width of each channel?length/width of each channel?

Essential Question 1 Essential Question 1 DistributionDistribution

Channels of Distribution

Channel of DistributionChannel of Distribution

Channel of DistributionChannel of Distribution: : The path The path a product takes from producer or a product takes from producer or manufacturer to final user.manufacturer to final user.

Direct vs. Indirect Direct vs. Indirect ChannelsChannels

Direct DistributionDirect Distribution:: channel channel that exists when the product that exists when the product is sold from the producer to is sold from the producer to the final user.the final user.

Indirect DistributionIndirect Distribution:: channels that exists when channels that exists when one or more one or more intermediariesintermediaries: : middleman, are involved.middleman, are involved.

Pg 450Pg 450

Pg 451Pg 451

How widely a product will be distributed.How widely a product will be distributed. Intensive DistributionIntensive Distribution:: Involves the use of all Involves the use of all

suitable outlets for a product.suitable outlets for a product. Selective DistributionSelective Distribution:: A limited number of A limited number of

outlets in a given geographic area used to sell outlets in a given geographic area used to sell the product.the product.

Exclusive DistributionExclusive Distribution:: Involves protected Involves protected territories for distribution of a product in a territories for distribution of a product in a given geographic area.given geographic area.

Distribution IntensityDistribution Intensity

What are the marketing activites of What are the marketing activites of transportation and storage?transportation and storage?

Essential Question 2 Essential Question 2 DistributionDistribution

Most frequently used form Most frequently used form of transportation.of transportation.

Used primarily for Used primarily for lightweight shipments over lightweight shipments over moderate distances.moderate distances.

Accounts for 80% of Accounts for 80% of shipments weighing less shipments weighing less than 1000 pounds.than 1000 pounds.

Modes of TransportationModes of TransportationTruckingTrucking

Major type of transportation in the Major type of transportation in the United States.United States.

Used for moving heavy and bulky Used for moving heavy and bulky freight.freight.

Modes of TransportationModes of TransportationRail TransportationRail Transportation

One of the oldest forms of One of the oldest forms of transportation.transportation.

Primary means ofPrimary means of international international distribution. distribution.

Modes of TransportationModes of Transportation

Water TransportationWater Transportation

Normally owned by the company Normally owned by the company using them. using them.

Most frequently used to transport Most frequently used to transport oil and natural gas.oil and natural gas.

Modes of TransportationModes of Transportation

PipelinesPipelines

Used to ship high-value low-weight Used to ship high-value low-weight items. items.

Greatest advantage isGreatest advantage is speed. speed.

Greatest disadvantageGreatest disadvantage is cost.is cost.

Modes of TransportationModes of TransportationAir TransportationAir Transportation

Private WarehousePrivate Warehouse: : Facility designed to meet Facility designed to meet the needs of its owner.the needs of its owner.

Public WarehousePublic Warehouse: : Storage and handling Storage and handling facilities to any individual or company that will pay facilities to any individual or company that will pay for its use.for its use.

Distribution CenterDistribution Center: : Warehouse designed to Warehouse designed to speed delivery of goods and to minimize storage speed delivery of goods and to minimize storage costs.costs.

Bonded WarehouseBonded Warehouse: : Stores products that Stores products that require the payment of a federal tax. Products require the payment of a federal tax. Products may not be moved until the tax is paid.may not be moved until the tax is paid.

StorageStorageWarehousingWarehousing

What are the common terms What are the common terms associated with buying and associated with buying and shipping?shipping?

Essential Question 3 Essential Question 3 DistributionDistribution

BuyersBuyers: : Purchase goods for resale.Purchase goods for resale. Consignment BuyingConsignment Buying: : Goods are paid for only Goods are paid for only

after the final customer purchases them.after the final customer purchases them. Memorandum BuyingMemorandum Buying: : Occurs when the Occurs when the

supplier agrees to take back any unsold goods by supplier agrees to take back any unsold goods by a certain pre-established date.a certain pre-established date.

Reverse AuctionReverse Auction: : Companies post what they Companies post what they want to buy and suppliers bid for the contract.want to buy and suppliers bid for the contract.

BuyingBuying

Common CarriersCommon Carriers: : Provides transportation Provides transportation services to any business in their operating area.services to any business in their operating area.

Contract CarrierContract Carrier: : For-hire carriers that provide For-hire carriers that provide equipment and drivers for specific routes.equipment and drivers for specific routes.

Private CarrierPrivate Carrier: : Transport goods for an Transport goods for an individual business.individual business.

Ton-mileTon-mile: : The movement of one ton of freight The movement of one ton of freight one mile.one mile.

Freight ForwarderFreight Forwarder: : Private companies that Private companies that combine less-than-carload or less-than-truckload combine less-than-carload or less-than-truckload shipments from several different businesses and shipments from several different businesses and deliver them to their destinations.deliver them to their destinations.

ShippingShipping

What is the receiving process?What is the receiving process?

Essential Question 4 Essential Question 4 DistributionDistribution

The receiving process:The receiving process:1.1. Receive the goodsReceive the goods

2.2. Check the goodsCheck the goods

3.3. Mark the goods (if necessary)Mark the goods (if necessary)

4.4. Deliver the goods for use, storage, or saleDeliver the goods for use, storage, or sale

Receiving ProcessReceiving Process

What is the purpose of inventory What is the purpose of inventory management and how is management and how is inventory controlled?inventory controlled?

Essential Question 5 Essential Question 5 DistributionDistribution

Inventory ManagementInventory Management

The purpose of inventory management The purpose of inventory management is to find and maintain inventory levels is to find and maintain inventory levels that are neither too small nor too large.that are neither too small nor too large.

Tracking InventoryTracking Inventory

Keeping tabs on how much inventory Keeping tabs on how much inventory you have is the first step in controlling you have is the first step in controlling inventory levels.inventory levels.

Tracking InventoryTracking Inventory Visual Inventory SystemsVisual Inventory Systems: Looks at how much : Looks at how much

inventory is on hand and compares it to what is inventory is on hand and compares it to what is wanted on hand.wanted on hand.

Perpetual Inventory SystemsPerpetual Inventory Systems: As inventory is sold, : As inventory is sold, it is subtracted from the inventory list. As new it is subtracted from the inventory list. As new inventory arrives, it is added.inventory arrives, it is added.

Partial Inventory SystemsPartial Inventory Systems: A combination of : A combination of systems. A perpetual system is used only for those systems. A perpetual system is used only for those items that account for a large share of sales.items that account for a large share of sales.

Just-in-time (JIT) Inventory SystemsJust-in-time (JIT) Inventory Systems: The : The responsibility of inventory is shifted to the vendor responsibility of inventory is shifted to the vendor and is delivered just before it is used.and is delivered just before it is used.

Inventory CostsInventory Costs Financing CostsFinancing Costs: The interest you pay to : The interest you pay to

borrow money to purchase inventory.borrow money to purchase inventory. Opportunity CostOpportunity Cost: Loss of the use of : Loss of the use of

money tied up in inventory.money tied up in inventory. Storage CostsStorage Costs: The amount of money : The amount of money

spent on renting or buying the space spent on renting or buying the space needed to store the inventory.needed to store the inventory.

Inventory CostsInventory Costs Insurance CostsInsurance Costs: The amount spent to : The amount spent to

insure the inventory on hand against loss.insure the inventory on hand against loss. Shrinkage CostsShrinkage Costs: Money lost when : Money lost when

inventory items are broken, damaged, inventory items are broken, damaged, spoiled, or stolen.spoiled, or stolen.

Obsolescence CostsObsolescence Costs: Money lost when : Money lost when products or materials become obsolete products or materials become obsolete while in inventory.while in inventory.

How does distribution affect the How does distribution affect the cost of products?cost of products?

Essential Question 6 Essential Question 6 DistributionDistribution

Distribution CostsDistribution Costs Many factors go into determining the Many factors go into determining the

distribution costs of a product:distribution costs of a product: Channel or channels usedChannel or channels used Transportation method usedTransportation method used Intensity of distributionIntensity of distribution Inventory costsInventory costs Who does the sellingWho does the selling Buying and shippingBuying and shipping Economic issuesEconomic issues

What are the distinguishing What are the distinguishing characteristics of retailers, characteristics of retailers, wholesalers, agents, and wholesalers, agents, and brokers?brokers?

Essential Question 7 Essential Question 7 DistributionDistribution

Channel MembersChannel Members RetailersRetailers: : Sell products to the final Sell products to the final

consumer for personal use.consumer for personal use. Brick-and-mortar retailersBrick-and-mortar retailers:: Sell products to Sell products to

the consumer from their own physical store.the consumer from their own physical store. E-tailingE-tailing: : Involves retailers selling products Involves retailers selling products

to the consumer over the internet.to the consumer over the internet.

Channel MembersChannel Members WholesalersWholesalers: : Businesses that buy large Businesses that buy large

quantities of goods from manufacturers, quantities of goods from manufacturers, store the goods, and then resell them to store the goods, and then resell them to other businesses – also referred to as other businesses – also referred to as distributors.distributors. Rack jobbersRack jobbers:: Manage inventory and Manage inventory and

merchandising for retailers by counting stock, merchandising for retailers by counting stock, filling it in when needed, and maintaining store filling it in when needed, and maintaining store displays.displays.

Drop shippersDrop shippers: : Own the goods they sell but Own the goods they sell but do not physically handle the actual products.do not physically handle the actual products.

Channel MembersChannel Members AgentsAgents: : Act as intermediaries by Act as intermediaries by

bringing buyers and sellers together.bringing buyers and sellers together. Independent Manufacturers’ Independent Manufacturers’

RepresentativesRepresentatives:: Works with several Works with several related (but not competing) manufactures in related (but not competing) manufactures in a specific industry. They are paid a specific industry. They are paid commissions based on what they sell.commissions based on what they sell.

BrokersBrokers:: Brings buyers and sellers together Brings buyers and sellers together in order to make a sale. They negotiate the in order to make a sale. They negotiate the sale, are paid a commission, and then look sale, are paid a commission, and then look for other customers.for other customers.