chapter 15 wholesaling and physical distribution

8/14/2019 Chapter 15 Wholesaling and Physical Distribution

1/27

15-Copyright 2000 by Houghton Mifflin Company. All rights reserved.

Chapter 15Wholesaling andPhysical Distribution

Text byWilliam M. Pride

O. C. Ferrell

Multimedia Slides by

Milton M. PressleyUniv. of New Orleans


2/27


Objectives To Understand the Nature of Wholesaling in the Marketing Channel

To Learn About Wholesalers' Functions

To Understand How Wholesalers Are Classified

To Be Able to Recognize How Physical Distribution Activities Are Integrated into

Marketing Channels and Overall Marketing Strategies

To Examine the Major Physical Distribution Functions of Order Processing, Inventory

Management, Materials Handling, Warehousing, and Transportation

To Discuss the Strategic Implications of Physical Distribution Systems


3/27


The Nature ofWholesalingWholesaling

Wholesaler


4/27


The Nature of WholesalingSupply Chain Management Creating long-term partnerships among

channel members

Promotion Providing a sales force, advertising, sales

promotion, and publicity

Warehousing, Shipping, Receiving, storing, and stockkeeping

and Product Handling PackagingShipping outgoing orders

Materials handling

Arranging and making local and

long-distance shipments

Inventory Control and Processing orders

Data Processing Controlling physical inventoryRecording transactions

Tracking sales data for financial analysis

Risk Taking Assuming responsibility for theft, product

obsolescence, and excess inventories

Major Wholesaling Functions


5/27


The Nature of WholesalingFinancing and Budgeting Extending credit

Borrowing

Making capital investments

Forecasting cash flow

Marketing Research Providing information about markets

and Information Systems Conducting research studies

Managing computer networks to facilitate

exchanges and relationships

Major Wholesaling Functions


6/27


The Nature ofWholesaling Extension of Producers Sales Force

Financial Assistance

Transportation

Warehousing and Inventory

Credit

Source of Working Capital

Conduits of Information

Services Provided by Wholesalers


7/2715-Copyright 2000 by Houghton Mifflin Company. All rights reserved.

The Nature ofWholesaling Extension of Producers Sales Force

Financial Assistance

Transportation

Warehousing and Inventory

Credit

Source of Working Capital

Conduits of Information

Services Provided by Wholesalers



Types of WholesalersMerchant Wholesalers

Full-Service Wholesalers

General-Merchandise WholesalersLimited-Line Wholesalers

Specialty-Line Wholesalers

Rack Jobbers

Limited-Service Wholesalers


10/2715-1Copyright 2000 by Houghton Mifflin Company. All rights reserved.

Types of Wholesalers

Physical possession of merchandise Yes Yes No YesPersonal sales calls on customers No Yes No No

Information about market conditions No Some Yes Yes

Advice to customers No Some Yes No

Stocking and maintenance of

merchandise in customers stores No No No NoCredit to customers No No Yes Some

Delivery of merchandise to customers No Yes No No

Cash-and-

Carry Truck

Drop

Shipper

Mail-

Order

Various Services That Limited-Service Merchant Wholesalers Provide



Types of WholesalersLimited Services Wholesalers

Cash-and-Carry Wholesalers

Truck Wholesalers

Drop Shippers

Mail-Order Wholesalers

Agents and Brokers



Types of Wholesalers

Physical possession of merchandise Some Some Yes No

Long-term relationship with buyers

or sellers Yes Yes Yes No

Representation of competing product

lines No No Yes Yes

Limited geographic territory Yes No No NoCredit to customers No Yes Some No

Delivery of merchandise to customers Some Yes Yes No

Manufac-

turers

Agents

Selling

Agents

Commis-

sion

Merchants Brokers

Various Services That Agents and Brokers Provide



Types of WholesalersAgents and Brokers

Manufacturers Agents

Selling Agents

Commission Merchants

Manufacturers Sales Branches and

Offices


14/27

15-1Copyright 2000 by Houghton Mifflin Company. All rights reserved.

The Nature ofPhysical DistributionPhysical Distribution

Outsourcing

Physical Distribution Objectives

Meeting Standards of Customer Service

Reducing Total Distribution Costs


15/27


The Nature ofPhysical DistributionPhysical Distribution

Outsourcing

Physical Distribution Objectives

Meeting Standards of Customer Service

Reducing Total Distribution Costs


16/27


The Nature ofPhysical Distribution

Source: Data from 1995 Physical Distribution Cost and Service Memorandum 4-

63, Herbert W. Davis and Company, Mar. 19, 1996, p. 2.

5% Order Processing

43% Transportation26%Warehousing

Inventory

Carrying 21%5% Administration


17/27


The Nature ofPhysical Distribution

Functions of Physical Distribution

Order Processing

Electronic Data Interchange (EDI)

Physical DistributionOutsourcing

Physical Distribution ObjectivesMeeting Standards of Customer Service Reducing Total Distribution Costs Reducing Cycle Time


18/27


The Nature ofPhysical DistributionFunctions of Physical Distribution

Inventory Management

Just-in-Time (JIT)

Materials Handling

Warehousing

Private Warehouses

Public Warehouses

Distribution Centers


19/27




Just-in-Time (JIT)

Materials Handling

Warehousing

Private Warehouses

Public Warehouses



20/27




Just-in-Time (JIT)

Materials Handling

Warehousing

Private Warehouses

Public Warehouses



21/27



Transportation

Transportation Modes


22/27


The Nature of PhysicalDistribution

Railroads 37.9%

26.1% Trucks

19.9% Pipelines

15.8% Waterways

0.3% Airways

0 10 20 30 40

1

2

3

4

5

Proportion of Intercity Freight Carried by Various Transportation Modes


23/27


The Nature ofPhysical DistributionCoal Clothing Petroleum Flowers Oil

Grain Paper goods Chemicals Perishable Processed

Chemicals Computers Iron ore food coal

Lumber Books Bauxite Instruments Natural gas

Automobiles Livestock Grain Emergency Water

Steel parts Chemicals

Overnight mail

Railroads Trucks Waterways Airways Pipelines


24/27


The Nature ofPhysical Distribution Choosing Transportation Modes

Coordinating Transportation Intermodal Transportation

Freight Forwarders

Megacarriers

Transportation Transportation Modes


25/27


The Nature ofPhysical Distribution Choosing Transportation Modes

Coordinating Transportation Intermodal Transportation

Freight Forwarders

Megacarriers

Transportation Transportation Modes


26/27


The Nature ofPhysical DistributionStrategic Issues in

Physical Distribution


27/27

15 2C i h 2000 b h iffli C All i h d

Understand the Nature of Wholesaling in the

Marketing Channel Know About Wholesalers' Functions

Understand How Wholesalers Are Classified Be Able to Recognize How Physical Distribution

Activities Are Integrated into Marketing Channels

and Overall Marketing Strategies Have Examined the Major Physical Distribution

Functions of Order Processing, Inventory

Management, Materials Handling, Warehousing,and Transportation

Be Able to Discuss the Strategic Implications of

Physical Distribution Systems

BY NOW, YOU

SHOULD . . .

chapter 15 wholesaling and physical distribution

Documents