!!BA#244:#Supply#Chain#Management#

Reminders#

!  Next Case: Lenovo

!  LinkedIn Group: Presentation Grades for !  (1) McDonalds and Bhopal !  (2) Nike and Zara !  (3) Article 1 and Lenovo

Internal#Supply#Chain#

Procurement! Produc,on! Storage! Distribu,on! Sales!and!Marke,ng!

GOODS!

RETURNS!

Closed-Loop Supply Chain (CLSC)#

!  Incorporates!tradi,onal!forward!supply!chain!and!reverse!supply!chain!

!  due!to!environmental!regula,ons,!product!returns!and!residual!value!of!endFofFlife!products!

Philippine#Legislation#

!  Republic!Act!(RA)!9003!or!the!Ecological!Solid!Waste!Management!Act!of!2000!!  Incen,ve!scheme!for!private!organiza,ons!to!

develop!projects!or!ac,vi,es!in!reFuse,!recycling!and!reduc,on!

!  10Fyear!tax!and!duty!exemp,on!on!imported!capital!equipment,!vehicles,!legacies,!giTs!and!dona,ons!used!for!collec,on!of!solid!waste!

!  Tax!credit!equivalent!to!50%!of!the!na,onal!internal!revenue!taxes!and!custom!du,es!

Philippine#Legislation#

!  Consumer!Act!of!the!Philippines!(Republic!Act!No.!7394)!!  Enforcement!of!warranty!or!guarantee!!  Purchaser!needs!only!to!present!either!the!warranty!

card!or!the!official!receipt!along!with!the!product!to!be!serviced!or!returned!to!the!immediate!seller;!No!other!documentary!requirement!shall!be!demanded!from!the!purchaser!

Mode of Transport#

!  Road!Transport!!  Advantages:!

!  Compe,,veness!(there!are!many!third!party!operators)!

!  WellFdeveloped!road!systems!with!pricing!not!related!to!usage!(flat!rate)!

!  Disadvantages:!!  Environmental!–!traffic!conges,on,!air!pollu,on!!  Subject!to!unforeseen!delays!and!adverse!weather!!  Subject!to!pilfering!

Mode of Transport#

!  Sea!Transport!!  Refrigerated!(reefer)!ships!!  RollFon!RollFoff!(RO/RO)!ferry!ships!for!short!sea!

routes!(Road)!!  Container!ships!

!  2,000F6,000!20FT!containers!per!vessel!!  Interna,onal!Organiza,on!for!Standardiza,on!(ISO)!

container!standard!design!

Mode of Transport#

!  Sea!Transport!!  Advantages:!

!  Cost!advantage!over!air!freight!!!  Ability!to!move!large!volumes!of!bulky!or!heavy!freight!!!  More!environmentally!friendly!than!air!freight!!!  Good!road!transport!link!from!ports!!

!  Disadvantages:!!  Speed!!!  Mul,!handling!at!ports!!!  Can!be!affected!by!adverse!weather!condi,ons!!!  Increased!documenta,on!!!  Greater!Packaging!requirements!!!  May!have!affect!on!inventory!requirements!

Mode of Transport#

!  Airfreight!!  Alterna,ve!mode!for!lowFvolume,!highFvalue,!urgent!

freight!!!  Advantages:!

!  Speed!of!delivery!–!this!reduces!inventory!cost!and!investment!and!is!suitable!for!seasonable!or!perishable!items!!

!  Reliability!of!delivery!–!again!reduces!the!necessary!inventory!investment!in!safety!and!buffer!stock!

!  Environmental!condi,ons!–!there!is!less!requirement!for!packaging!and!cover!as!the!probability!of!damage!and!pilfering!is!less!

!  Comprehensive!scheduled!network!!  Close!to!good!road!networks!!

Mode of Transport#

!  Airfreight!!  Disadvantages:!

!  High!Cost!!!  Limited!Capacity!(mainly!suitable!for!goods!with!a!high!

value!to!weight!ra,o!i.e.!Small,!higherFvalue!goods)!!!  Subject!to!delays/suscep,ble!to!adverse!weather!

condi,ons!!!  Cannot!be!used!for!dangerous!substances/good!!!  There!may!be!no!airport!nearby!

Third#Party#Logistics#

!  Outsource!your!transport!issues!to!a!Logis,cs!Company!or!Forwarding!Agent!

!  Sa,sfactory!solu,on!albeit!at!a!cost!premium!

How#to#Manage#3PL#Performance#

!  OnF,me!delivery!(OTD)!

!  Delivery!accuracy!

!  Loss!or!damage!

!  Failure!to!deliver!

!  Delivery!delays!

Future#Trends#

!  Longer!trucks!with!extra!trailers!will!become!more!common!in!order!to!reduce!costs.!Use!of!road!trains!(‘biFtrens’)!is!increasing!in!Brazil!!

!  The!growth!of!internet!purchases!by!consumers!with!direct!delivery!to!homes!will!have!an!impact!on!companies'!logis,cs!strategies!!

Internal#Supply#Chain#

Procurement! Produc,on! Storage! Distribu,on! Sales!and!Marke,ng!

Philippine Distribution Channels#Supplier!

Distributors! Key!Accounts!

Wholesalers!/!Supermarkets!/!Groceries!

Retailers!

Consumers!

Distributor!Specialists!

Key!Account!Specialists!

Types of Trade Channels#

Supermarkets#

!  Large!retails!stores!selling!various!products!such!as!food,!household!wares!and!personal!items,!arranges!in!sec,ons!

!  Must:!!  Have!at!least!3!permanent!and!func,onal!check!out!

counters!(COC)!with!cash!registers!!  Be!selfFservice!(push!carts!/!baskets!are!provided)!!  Have!at!least!50%!of!display!area!devote!to!grocery!

items!!  Have!gondolas!and!mass!displays!

Grocery#Stores#

!  Smaller!than!supermarkets!but!generally!sells!the!same!line!of!products!

!  Sells!more!food!than!nonFfood!items!

!  Presence!of!1!or!2!cash!registers!

Convenience Store Chains#

!  Similar!to!Grocery!Store!in!terms!of:!!  Number!of!COC!!  Selling!area!of!Grocery!Store!(GSA)!!  Product!lines!being!carried!

!  Difference:!!  Must!be!opera,onal!at!least!21!hours!per!day!!  Usually!airFcondi,oned!!  Usually!under!franchise!!  Sells!goods!at!rela,vely!higher!prices!–!Why?!!  Has!uniformed!sales!staff!!  Has!limited!parking!space!for!customers!

Sari-Sari Stores#

!  Small!neighborhood!store!selling!a!wide!variety!of!food!and!nonFfood!by!piece!and!oTen!by!the!lowest!possible!quan,ty!(“,ngi”)!

!  Does!not!issue!receipts!

!  Does!not!allow!customers!to!pick!things!they!want!to!buy:!goods!in!display!are!beyond!customer’s!reach!

!  Usually!sells!reFpacked!items!

Department#Stores#

!  NonFfood!products!

!  Features!include:!!  Products!are!separated!by!sec,ons!/!departments!!  At!least!3!cash!registers!

Drug#Store#Chain#

!  Primarily!engaged!in!the!retail!sales!of!drugs!and!medicines,!toiletries,!and!novelty!items!

!  With!3!or!more!outlets!!  Mercury!outlet!!  NonFMercury!outlet!

Wholesalers#

!  Displays!include!loose!and!boxed!items!intended!for!wholesale!and!retail!

!  Prices!are!generally!lower!than!most!supermarkets!

!  Usually!have!large!number!of!regular!buyers!to!whom!he!extends!credit!terms!for!short!periods!

Distributors#

!  Strategic!business!partner!that!delivers!sales!fundamentals!for!the!Principal’s!products!within!a!specific!geography!and!channel!

!  Provides!a!costFefficient!and!costFeffec,ve!means!of!reaching!the!consumers!

!  Ensure!market!coverage!and!product!availability!

!  Essen,al!link!between!Principal!and!its!consumers!

!!Merchandising#

Merchandising#

!  Conducted!at!the!point!of!purchase!to!influence!the!shoppers!to!buy!the!product!

!  Moving!stocks!away!from!the!shelves!towards!the!shoppers’!bags!

!  Cri,cal!link!in!the!SC!–!func,on!between!distribu,on!and!marke,ng!

Merchandising#

!  Marke,ng!at!the!point!of!purchase!

Merchandising#

!  Types!of!Purchases!!  Planned!Purchase!

!  Take!careful!planning!!  Normally!listed!down!

!  Impulse!Purchase!!  The!more!displays!you!have,!the!beoer!for!your!

product!!  e.g.!cashier!display!items!

Merchandising#

!  Is!the!final!link!in!the!total!company’s!product!supply!chain!

Internal#Supply#Chain#

Procurement! Produc,on! Storage! Distribu,on! Sales!and!Marke,ng!

GOODS!

RETURNS!

!!End#