Hi guys, Mark here with Wolters World, and today what we're going
to talk about is this supply chain and how information in the supply
chain can flow and how we can manage it as a firm.
Now, if you look at the supply chain in general, if you're a
marketing student, you remember those four P's of marketing:
price, product, place and promotion?
Well, place, this is where the supply chain comes in.
Trying to figure out what basically deal with all the
different ways that we have to deliver the value of our product,
okay?
Now, usually, when thinking about the supply chain, all they think
about is the logistics side of things.
Getting our product from the manufacturer to a distribution
center, or getting our product from the manufacturer to the end
customer or the retailer, whatever you want to look at.
Huys, it's a lot more than that.
Supply chain, is ne- not just logistics.
Logistics does go into it, but supply chain is managing all the
relationships with the manufacturers with the suppliers
that are up here above us with a distribution center with
retailers, customers, all these things in there, and that's why
information management is one of the key aspects of working in the
supply chain.
Okay, but overall, the supply chain is all the things we do to
have an efficient and effective system of producing our products,
procuring our products, getting it through the whole system, the
whole supply chain, from the pig farm in Podunk town, wherever to
our plate, in our homes.
So basically, it's integrating every step from concept to sales
in the business in order to help the company make more money.
That's supply chain management.
Now, supply chain can help us.
It can help us by streamlining distribution.
Some of the things they can help us with is, you know, getting our
orders filled out faster.
Um, eliminating any efficiencies that are out there.
All kinds of stuff, like helping with reducing shipping errors.
So there's, there's redu- having good supply chain management, how
to reduce some problems, therefore less problems, less cost, less
waste.
Also supply chain does come to effect in marketing because if you
think about if we're thinking about making, okay, we're wanting
to come up with a new product.
Well, supply chain helps us find those suppliers.
If we're going to make a new laptop, they help us find the
right processes that are going to work on our tablets or laptops or
whatever.
Also the supply chain, what they do is they help us figure out what
the best distribution network is, or distribution way, um,
distribution channel for our new product.
We want to go straight to the customer, or it would be best to
go to a, a retail store or somewhere else in between.
So they help with those things, too.
And also, if we're looking at shipping out our products, they'll
find the best way for that.
So yes, logistics do come into it.
But also procurement is all kinds of things that come in with supply
chain.
Now, when you look at supply chain management, you're going to deal
with a lot of people and a lot of times you call, "Oh, we're going
to deal with middlemen."
Yes, you will deal with middlemen, and you know, you don't want to do
everything on your own because the middlemen can't help you.
One, location wise. Look, if our factory here is in India, and our
customer here is in Illinois, well that's kind of a far way to go.
If we have some middleman here, like a Best Buy store in
Champaign, well, hey, that helps us get close to the customer.
So the location of our middleman can help us get in contact with
our customers better.
Another thing is they're informers.
They inform customers why our products are well, they're kind of
like a salesman, okay?
They help us sell our products, they inform them, the customers
have the benefits.
That's why when you go to a store and they ask, "Hey, wha-what do
you need?
"What are you looking for?"
So they can inform you of your options.
So middlemen can help with that.
Also, they also help with delivery.
They're deliverers.
You know, they- they help deliver our products out there, they set
up things.
I mean, think about it.
If you're buying all new furniture, does anyone like
putting together IKEA furniture?
No.
Squeak, squeak, squeak.
There's my whole weekend gone, trying to put together a bed.
The middleman, they can go out there and help our service, by
hey, they deliver it and put it together, so that can add value to
it.
Now having all these middlemen, having all these different links
to the supply chain, there's a lot of information going around, you
know, the customer here talks to the, to the actual store that
sells the product.
The customer can also contact the manufacturer, if you get your HDTV
from Sony, and it doesn't work, yeah, you can complain to BestBuy,
or you can complain to Sony in Japan.
There's all this different information flowing and these guys
talk to here, and then if you have the suppliers up there, there's
all kinds of information flowing around, and we really need to make
sure that we can manage that information because if we don't
know, if we're Sony, and we don't hear about the complaints that our
customers have, well then how can we improve them?
We can't.
That's why you want to, you know, make sure you can track the
documents, track that information and you keep all that information,
and the thing is all that informations out there they know
about you and believe me comspani- companies know a lot about you.
They use that information, they collect it all.
When they collect all of it, it's called data warehouse.
It's like a big warehouse with all the data on there, all the things
you bought, when you bought, how much you spent on it.
Um, you know, which units you like better?
Do you like the fun size stickers or the giant size stickers?
Who knows?
Okay, they know these things.
And what you do is you have what's called data mining where you have,
imagine this big, huge cube of information, and you mine down
there to find out special things.
So they'll look and they have all this debt on you.
And so they'll mine down and then say, "Oh, what do they find out?
"Ah, when he shops and he buys milk, he's usually buying baby
formula as well.
"So he's probably has a baby?"
"Yes we do."
So what we can do is we can have offers for toddler clothes, for
toddler food because we know eventually he's going to do that.
So we can tailor the coupons that come on the back of your, of your,
uh, receipts at a grocery store, they can tailor that for you
because they have that information on you, okay?
So as supply chain people, we want to keep all that information and
figure out what it says.
So we can see the trends that are out there, we can see buying
patterns and all this kind of stuff, and it isn't very hard
work, but you want to keep all the information, the data warehousing
stuff, and then do data mining to figure out those trends and, and
buying patterns out there, okay?
Now, one of the things that really helps with the data transfer and
the data warehouse and all these things is if you have an
electronic data interchange, okay?
And be- or EDI, and basically what this does is all the documents you
see- we send around in business in our supply chain.
If it's computerized, you know, you have a formula that if it's a
computer's form, then I can track and I can see the trends, I can
add the menu, say, "Is this for services?
"Is this for, you know, product problems?
"What is it?"
We can track all these things, and therefore, it gives us a way to
monitor the data, analyze the data, which is awesome, because
then we can find things.
And by having these EDI's out there, you get a lot of benefits.
One thing is you reduce cycle time, the time it takes from
ordering to delivery shrinks down, because everything's in a
standardized form.
I mean, think about it, when you go to the ATM, it doesn't matter
who's the ATM, it's going to go pretty fast.
There's only so many things you can do.
If you go to the, to the window and ter- or the-the teller, well,
it could take forever because maybe you want pennies or nickels
or dimes or whatever, and the ATM optimization, boom.
In and out.
Same thing with ED's.
It makes it so there's not a lot of errors that can go into it.
So things get done faster.
Also, what's nice about that is it improves the quality of, um, our
communication because now it's all standardized.
So there's no more, I can't read, was that Illinois or Indiana where
it's supposed to go?
Is it IL or IN?
Hey, it's in the system.
They have to call it, so you put it in, and you've been 61822.
Wait 61822 is an Illinois address, are you sure you have the right
thing?
So it helps us correct those mistakes.
Other things it can do for us, I mean, like I said, it puts the
data set in readable form, computer form, so we can analyze
it, which is very helpful out there.
And sometimes when you look at your supply chain information, so
it's because all this information is going around, sometimes you
find it better than maybe inventory management is better
done by somebody else.
So you have vendor managed inventory, and here you want to be
sharing a lot of information with them.
So they know when you're out of Frito Lay's, you know, potato
chips so they can get those Frito lays on their shipments and get
them out to you, and well, for companies, for retailers, this is
nice because they do all the work for you, so I don't have to hire a
stock boy for the Coca-Cola aisle or a stock girl for the Frito-Lay
out.
They come do it for me.
But I have to share a lot of information and a supply chain.
A lot of companies don't like to share that information out there.
So you have to have a very good tru- very good trusting
relationship with your supply, suppliers, and in your supply
chain in order for these things to work.
And another thing is when you have collaborative planning,
forecasting, and replenishment, okay?
Basically, you're working with your suppliers in order to figure
out what is the best way to do things, and you want to plan these
things out because if you call Coca-Cola today, it's adding
50,000 cans right now, they might not be able to do it.
I mean, think about it.
It's like pizza.
If I call up Domino's right now and say, "I need 100 pizzas for
this party in 30 minutes or less," they can't do it.
But if I call them and say, "Hey, next week, I need 100 pizzas,"
they can get it done because then they can arrange the supply chain,
have the ovens ready, have all the pizzas ready, getting ready to pop
out there, have the Domino's all over the state of Illinois making
pizzas.
They can get it done, okay?
But we have to work together with it, all right?
So I hope that gives you an idea of the what's the supply chain
does and also, you know, that it's more than just logistics.
Yes, logistics go into it, but all these things kind of integrate
together and how information is important there, all kinds of
stuff.
If you want to learn more about supply chain and marketing, please
check us out on our website at www.WoltersWorld.com.
Bye.
Ans sometimes we look [stutters] uh, and sometimes, you know, your
supply chain and- and... planning together.
So you say, "What we're looking to do, um..." [Marimba classic ring
tone plays]