For this assignment, read the case study, “Supply Chain Issues at Optimal Medical Parts Company,” on pages 297-298 (Attached) of your textbook. Once you have read and reviewed the case scenario, r

MBA 5871, Business -to-Business Marketing 1 Cou rse Learning Outcomes for Unit V Upon completion of this unit, students should be able to: 5. Describe the guidelines for effective marketing within the B2B sector utilizing the marketing mix. 7. Distinguish how global competition will impact B2B marketing. 7.1 Describe how global competition will impact a B2B organization with respect to their marketing efforts. Reading Assignment Chapter 10 : Managing Business Marketing Channels Chapter 11 : Supply Chain Management Unit Lesson The distribution channel consists of the path from the “manufacturer” to the final customer. Creating an efficient and innovative channel of di stribution will provide a competitive advantage to the company. Care must be taken within the B2B distribution channel to understand the needs of the final customers, and the needs of all the channel members. Hutt (2013) describes two basic forms of distri bution channels: direct channels (suggest that the company will not use intermediaries), and indirect channels (which will use a series of intermediaries). Within the direct model, the sales force typically interacts directly with the customer.

Historicall y speaking, this was utilized more with larger customers that ask for specific negotiations and direct contact with the company. As advancements in technology have prevailed, direct distribution has extended to a wider network of business models. The indir ect form of distribution tends to be used in scenarios where markets are geographically dispersed and possibly where buyers are purchasing a wide variety of different items. Within the indirect channel, there are a variety of different types of intermedi aries that a firm might use within their distribution channel. The distributor is one of the most widely used, both in the B2B and the B2C world.

Hutt (2013) describes distributors as small, independent businesses that serve narrow geographic markets.

The role that they play begins with the initial contact, which is basically reaching customers in a certain geographic area. The second role is assuring that the products are readily available to these customers, providing accessible inventory and support acti vities including JIT (just -in-time) order delivery. Another function is providing repair facilities and light manufacturing services to the customer. Distributors can take on a variety of models being a general line distributor, specialist, or a combinatio n house. The general line distributors cater to a variety of industries, while the specialist distributor will focus on a few related lines. The combination house operates in two distinctly different industries, which sometimes means two totally different customer groups. A second intermediary that could be used within the distribution channel is the manufacturer’s representatives. The role of these individuals is to serve a business market for a complex product that demands technical expertise. These indiv iduals are highly trained in the complexities of this technical product line. Additionally, manufacturer’s reps can assist with the sales responsibilities with firms that are so small that they cannot justify their own sales team. Both the distributors and the manufacturer’s representatives work towards developing a solid customer -representative relationship. Just -in-time (JIT), which is also referred to as the Toyota production system, is all about reducing flow times within the overall production of a p roduct. This involves the internal production time and response times with suppliers. The ultimate goal is decreasing overall product delivery time to the customers and the reduction of overall inventory of both raw materials and the finished product. For example, in the case of an automobile company, certain raw materials are needed during certain times of assembly. The idea is to have the raw UNIT V STUDY GUIDE Management of Distribution Channels MBA 5871 , Business -to-Business Marketing 2 UNIT x STUDY GUIDE Title materials arrive exactly as they are needed in the process instead of having large inventories of raw materials in the warehouse. Additionally, the finished products produced are aligned with the customer demands decreasing the overall inventory of finished products. As stockpiles of inventory whether in raw material form or finished product form costs the company mon ey, this is an important benefit to JIT. The obvious disadvantage is the possibility of not having adequate raw materials, which could halt production on the floor and create significant product inefficiencies. Also, this could result in not having enough finished product to fulfill demand. The importance of maintaining incredibly accurate demand forecasts and scheduling estimates assures the success of this program. Additionally, the most successful JIT programs have created solid partnerships with their s uppliers creating a team mentality. This concept was brought forward in the 1060s and 1970s in Toyota and reached the western world during the 1980s. This process was referred to as the lean manufacturing system in the 1990s. Another critical segment of establishing effective distribution channels is that of motivating channel members. Shwetanshu Gupta provides a good slideshow presentation (see link in suggested reading) of the importance of motivating channel members including the use of cooperative ar rangements as well as partnerships and strategic alliances. Additionally, manufacturers can motivate by using various types of power as explained below:  Coercive power is when a manufacturer threatens to withdraw a resource if the channel member does not cooperate. This can cause some level of resentment.  Reward power is when a manufacturer offers an extra benefit or reward if the channel member cooperates. W hile this is a solid short -term fix, the channel member may come to expect these rewards in the future.  Legitimate power is when a manufacturer requires behavior b ased upon contractual obligations.  Expert power is when a manufacturer has expert knowledge that is valued by the channel member. Another critical segment of establishing effective distribution channels is reducing overall channel conflict amongst channel members. Channel conflict results when channel members end up competing against each other in a variety of situations. This can result in overall decrease in morale and an obvious decrease in partnership and alliances between the channel members. Cunningh am (2013) explains potential situations of external channel conflict to include the following within the manufacturer :  over -abundance or shortage of products,  pricing discrepancies,  new product failures, and  poor packaging . Within the wholesaler or distr ibutor , the following potential situations could arise:  late deliveries,  pricing mark -ups that are unreasonable, and  damaged goods . Within the retailer , the following potential situations could arise:  price disparities,  poor shelf placement or discontin ued items,  merchandising is inadequate, and  poor category management . Cunningham (2013) identifies several strategies to overcome these external channel conflicts. Promoting better communication amongst all members of the channel includes: providing clear goals, expectations, defined roles, and responsibilities. Another option is to involve all members in the business planning process, providing a level of understanding of the performance metrics for all channel members. Through this process, supply chain management has emerged. This suggests that the manufacturer is linking its operations with those of its strategic suppliers, key intermediaries, and customers in order to increase overall efficiencies (Hutt, 2013). The scope of this practice is to reduce waste and increase overall supply chain performance or efficiencies. This might be accomplished by waste reduction, decreased order MBA 5871 , Business -to-Business Marketing 3 UNIT x STUDY GUIDE Title processing time, increased flexibility with respect to response, and a decreased unit cost. These benefits initially affect the members of the distribution channel but ultimately impact the end -customer. Because of the overall high distribution costs, understanding and managing the distribution channel can mean the difference between a profitable organization and an unprofita ble one. The development of efficiencies with an eye on the needs of the B2B customer is key. Reference s Cunningham, K. (2013). Reducing channel conflict. Journal of Marketing Development and Competitiveness , 7(1), 78. Hutt, M. D., & Speh, T. W. (2013). Business marketing management: B2B (11th ed.). Mason, OH: South - Western. Suggested Reading The author explains the importance of the supply information system. Essig, M., Glas, A., & Gutsmiedl, J. (2015). Procurement of a supply information system. Journal of Enterprise Information Management , 28 (3), 377. Gupta, S. (2014, March 12). Motivating the channel members [Video File]. Retrieved from http://www.slideshare.net/shwetagupta796/motivating -the -channel -members Learn the importance of value creation when working within the B2B environment. Perez, L., & Cambra -Fierro, J. (2015). Value generation in B2B contexts: The SMEs' perspective. European Business Review , 27 (3), 297 -317.