Total Marks 100

3hr

ALL QUESTIONS TO BE ATTEMPED 1) What are the operational objectives of SCM ? what are the key advantages of VMI & RMI ? 9 marks

VMI :Definition: Vendor Managed Inventory (VMI) is a business model where the buyer of a product provides information to a vendor of that product and the vendor takes full responsibility for maintaining an agreed inventory of the material, usually at the buyer's consumption location. A third party logistics provider can also be involved to make sure that the buyer have the required level of inventory by adjusting the demand and supply gaps. VMI makes it less likely that a business will unintentionally become out of stock of a good and reduces inventory in the supply chain RMI :-

The objectives of SCM are : -Supply chain planning: Planning sets directions for the entreprise -Procurement :( Establishing what needs to be purchased, selecting suppliers & managing relations with them, reducing costs, improving possibly raw material...) -Inventory management: (Managing levels of inventory in order to satisfy internal and external customers demand....) -Packaging (Ensuring correct package design in order to encourage the recycling of packaging and reducing packages costs ) -Faicility design (This includes insuring the best design that suits the internal or external customers. Here we are concerned with the issue such as : Size, Lightning, facilities, equipment , safety and security) -Wharehousing ( This includes stock management , efficient facility operations , layouts for effective transportation, safety, storage methods and equipment) -Transportation (This includes transportation modes, costs, transportation management, terminal utilisation, and in-transit care of goods) -Reverse logistics (The reduction where possible of product errors so that reverse logistics may be reduced...) -Logistics Systems: ( This includes decision suport systems , technology and software)

-Customer service and marketing: This includes customer relationships, cusomer solicitation and retention and issues pertaining to the marketing mix variables.

2) .What functional consideration would you consider for building a channel score card of a franchises store; compare it with that of an industrial distributor ? A franchise operation is a contractual relationship between the franchisor and franchisee in which the franchisor offers or is obliged to maintain a continuing interest in the business of the franchisee in such areas as know-how and training; wherein the franchisee operates under a common trade name, format and/or procedure owned or controlled by the franchisor, and in which the franchisee has or will make a substantial capital investment in his business from his own resources.

Franchising Vs Distributorship Franchising is more than distributorship Extends to an entire operation or method of business Greater assistance, control and longer duration Distributor merely re-sells products to retailers or customers

3 main types of franchise: Product distribution franchise; Business format franchise; and Management franchise. PRODUCT DISTRIBUTION FRANCHISES A product distribution franchise model is very much like a supplier-dealer relationship. Typically, the franchisee merely sells the franchisors products. However, this type of franchise will also include some form of integration of the business activities.

BUSINESS FORMAT FRANCHISING In a business format franchise, the integration of the business is more complete. The franchisee not only distributes the franchisors products and services under the franchisors trade mark, but also implements the franchisors format and procedure of conducting the business.

Common considerations of franchisors

Developing franchise concept

Market research Familiarity with local laws and regulations Providing training and support to franchisees Criteria for choosing franchisees Control over franchisees Supply of products/materials to franchisees Intellectual property rights issues, e.g. trade mark registration Demand Profitability of franchise, and length of time required to recoup investment Track record of franchisor Support rendered to other franchisees Experience and profitability of other franchisees Existence of competition Capital required Demands of franchisor, e.g. income projections, deadline to open more franchise outlets

3) What type of distribution chanel marketing system would you suggest for educational software and why ? done 4) What is the differences between reverse logistics and reverse auction ? when is spatial convenience created by distributon channel ? REVERSE AUCTION :There are several factors that go into the decision on whether to use reverse auctions. These factors include: the specifications of the products, the structure of the supply base, the market pricing structure, projected lead times, contract status, the costs of switching vendors, the distribution complexity, the savings opportunity, the size of the purchase, and the strategic nature of the supplier relationships. This next few sections will discuss these factors in additional detail and explain the situations where these factors make reverse auctions a good choice for a purchase. Product Specifications The specifications of a product are an important factor in determining whether this product is an appropriate purchase for reverse auctions. Reverse auctions are generally more conducive to a purchase where the specifications are simple and there are not a lot of differences between supplier offerings. This is true if the items being purchased are commodities or if the specifications for the items are defined by a well accepted industry standard. In these cases, the nature of the items and supplier offerings makes them more conducive to a price based negotiation like reverse auctions. Highly engineered, branded, or unique items with complex specifications generally lend themselves to a different purchasing process (like an RFP). You also need to make sure that supplier products are really and truly similar so that you will not be disappointed in the quality, features, or other factors when a particular supplier wins. This will allow the buying organization to take into account other factors in supplier offerings and to make comparisons to determine the best value. Structure of Supply Base

One of the most important elements needed in a purchase for conducting a reverse auction is a large an competitive supply base. As a general rule, if you do not have at least 3 strong, qualified, and competitive suppliers that will participate, you should not conduct a reverse auction to make the purchase. Without enough competitive suppliers, the force of competitive bidding may not be sufficient to drive pricing lower and produce the desired result for the buyers. It is also helpful if the suppliers have excess capacity since they will be more incentized to bid lower in order to fill their capacity. To use reverse auctions, you would also want to see suppliers that are somewhat equal in pricing power and ability to lower the price. Pricing Structure This is not as important as some of the other factors, but it should still not be overlooked. Reverse auctions work well as a means of price discovery. However, you should not use reverse auctions when there is limited supply or at a time when the price is fluctuating rapidly. In these cases, suppliers may be hesitant to lower the price since they may think they could sell the product for more tomorrow. You generally want to use reverse auctions when the pricing trends are somewhat stable and suppliers can actually make forecasts and pricing projections for the value of inventory that they hold or plan to produce. Lead Times The lead time required for the product or service is important for determining whether the item is an appropriate purchase for reverse auctions. If the lead time is very short, the organization will probably not have the chance to organize and conduct a reverse auction. If a product or service is needed yesterday, a spot purchase or another type of purchasing tool would be better. Reverse auctions are suitable if there is a lead time long enough to conduct the purchase within the allotted time frame. Contract Status Another important consideration for reverse auctions is the contract status. Companies generally do not want to run a reverse auction involving a strategic, long term supplier. These relationships often involve long term contracts that entail a good deal of collaboration. All other things equal, reverse auctions are generally used for contracts that will be shorter term in duration. Reverse auctions are also useful for contracts that may be expiring in the near future since this is the time to review purchasing options. Cost of Switching The cost of switching vendors is also a very important consideration. Reverse auctions would generally be used only if there is little or no cost associated with switching to another qualified supplier. For example, if a company has significant vertical integration with the supplier or has complex tooling or production practices already in place that involve the current supplier's part or product, the costs associated with redoing these processes should be included in switching considerations. Reverse auctions are probably not the best vehicle to choose if there are large switching costs since any cost savings from the reverse auction would need to be greater than the costs of switching from an incumbent supplier. Delivery or Distribution The type of delivery schedules or distribution requirements associated with the purchase should also play a role in the decision to use reverse auctions. For purchases with an irregular and complex

delivery requirements or where logistics is a substantial portion of the purchase, reverse auctions may not be the best option or should be used in conjunction with other purchasing tools. The reverse auction process is more conducive to purchases that have simple distribution requirements as well as a predictable and easy to understand delivery schedule. Savings Opportunity In order to use reverse auctions, there should be an opportunity for actual savings over other purchasing methods and tools. This sounds obvious, but it can sometimes be overlooked. The possible level of savings will be dictated by many factors that range from the effectiveness of current sourcing efforts to the amount of pricing flexibility that suppliers have. The savings opportunity needs to greater than the cost in time and resources needed to organize and run the reverse auction event. Strategic Importance Another important consideration for reverse auctions is the level of the relationship with the prospective supplier. If contract with the supplier will be for a highly strategic and important relationship, reverse auctions may not be the best option. For highly collaborative, long-term relationships it often makes more sense to use another tool. This is because the level of risk with these types of relationships is too high and the supplier will be designated as "strategic." A strategic supplier is one where there will be a high degree of collaboration over the long term. An organization should rarely run a reverse auction with a strategic supplier unless it is between several other "strategic." suppliers. Reverse auctions are more appropriate where the relationship with the supplier is more transactional ranther than collaborative. Market Structure The structure of the market is also very important. You would also probably not want to run a reverse auction if the market was composed of a few tightly-knit suppliers. This is because these suppliers might be more likely to collude and communicate among themselves to keep the prices high in the event of a reverse auction. A reverse auction also may not be effective if the organization that is purchasing the products is the largest purchaser of the item on the market or if there is only one or two major suppliers. In these situations, the power of competitive bidding, and consequently the use of reverse auctions is greatly diminished. Purchasing Process Reverse auctions are best used as part of a centralized purchasing process. In this way requirements from different parts of the company are aggregated in an attempt to maximize a company's purchasing power. While reverse auctions can be used in a decentralized approach, they are more commonly used in a centralized one. A centralized approach often realizes the maximum benefit from reverse auctions since purchases from many areas are grouped together. Size of Purchase The size and dollar value of the purchase is also an important determinant of whether or not to use reverse auctions. Reverse auctions are often suited for higher dollar purchases because they do take time to set up and organize. For smaller purchases, it may be easier and more cost effective to negotiate directly with the suppliers or to use another tool. If the purchasing organization has a reverse auction process in place that is set up to run periodic reverse auctions already for these suppliers, then reverse auctions could be used for lower dollar purchases.

REVERSE LOGISTICS Reverse logistics stands for all operations related to the reuse of products and materials. It is "the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal. More precisely, reverse logistics is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. Remanufacturing and refurbishing activities also may be included in the definition of reverse logistics. The reverse logistics process includes the management and the sale of surplus as well as returned equipment and machines from the hardware leasing business. Normally, logistics deal with events that bring the product towards the customer. In the case of reverse, the resource goes at least one step back in the supply chain. For instance, goods move from the customer to the distributor or to the manufacturer

Handling product returns back through the pipeline - in an effective and cost-efficient manner -helps manufacturers to enhance customer satisfaction, achieve greater cost reductions, and when possible, recover some of the products' value. Reverse Logistics activities include: Transportation of returned product back to distribution centre Processing returned merchandise for reasons such as damage, seasonal, restock, salvage, recall, or excess inventory Disposing of returned goods Recycling packaging materials and reusing containers Reconditioning, remanufacturing, and refurbishing products Hazardous material programs Asset recovery

5) Draw a neat flow chat of channel design process ? explain each steps illustrating with an example ? 13 marks Analyzing customer needs Establishing channel objectives Identifying major channel alternatives Evaluating major channel alternatives

Analyzing customer needs The marketer must understand the service output levels desired by the target customer. Channel produce 5 service outputs: 1.Lot Size 2.Waiting & Delivery time 3.Spatial convenience 4.Product variety 5.Service backup Establishing channel objectives Channel objective vary with the product characteristics. Identifying major channel alternatives a. the types of available business intermediaries b. the no. of intermediaries needed- Exclusive distribution, Selective distribution, Intensive distribution c. the terms & responsibility of each channel members-price policies, conditions of sale, territorial rights Evaluating the major alternatives a. Economic criteria b. Control & adaptive criteria

6) How would handle / approach differently while managing vertical channel conflict v/s horizontal channel conflict ? How would you measure channel conflict ?

Channel Conflict & Cooperation Channel conflict is generated when one channel members action prevent the channel from achieving its goal. Channel coordination occurs when channel members are brought together to advance the goals of the channel as opposed to their individual goal.

Types of Channel conflict: Vertical channel conflict: Between diff. levels within the same channel. Horizontal channel conflict: Between members at the same level within the channel. Multi-channel conflict: It exists when the manufacturer established two or more channels that sell to the same market. Causes of Channel conflict: Goal Incompatibility Unclear roles and rights Difference in Perception Intermediaries dependence on Manufacturer Managing Channel conflict:(Constructive vs. Dysfunctional conflict) Adoption of Subordinate goals( common interest) Exchange persons between two channel levels Co-optation to win support of the leaders of other orgn by including them in advisory councils. When conflict is acute- Diplomacy, mediation, arbitration Diplomacy- When each side sends a person or group to meet with its counterpart to resolve the conflict. Mediation- Resorting to a neutral third party who is skilled in conciliating both the parties interest. Arbitration- When both parties agree to present their argument to one or more arbitrator and accept the arbitration decision.

7) The effective use of technology has created new channel formats which please describe in with example ?

done

8) The dealers and retailers of pharmaceutical industry are faced with various risks as channel partners to this industry. Explain your understanding of these risks , categorize them and submit your recommendations to pharmaceutical dealers & retailers in order to overcome the risks ?