Read 14-2 below and Explain how the fourth P in marketing (place) has evolved to be labeled supply chain management. Make sure your answer is based on the reading below.
Learning 0bjective 14-2 From Distribution Channel to Supply Chain Management Explain how the fourth P in marketing (place) has evolved to become supply As the fourth P in the marketing mix, place refers to the location where products chain management. and services are provided. Technically, place is also often referred to as the distribution channel-the set of firms that facilitates the movement of goods from Place producers to consumers. In retail, the traditional channel-the in-person (physiThe location where products and cal) store-is increasingly supplemented by the new online (digital) channel. services are provided. Currently, approximately 85% of global retail is still offline using the traditional Distribution channel channel, and online sales have reached 15%. 2 This has resulted in a new term, A set of firms that facilitates omnichannel, which is defined as the integration of different channels available to the movement of goods from consumers (such as physical stores and online platforms). producers to consumers. Until the 1980s, many producers made most goods in-house and one of the key Omnichannel concerns was distribution. Since then, outsourcing has grown significantly (see Integration of different channels Chapter 4). Many firms (such as Apple) do not physically produce their branded available to consumers (such products at all. They rely on contract manufacturers (such as Foxconn) to get as physical stores and online the job done. Other firms that still produce in-house (such as Boeing, Canada platforms). Goose [see the Opening Case], Dell, and Zara) rely on their suppliers to provide an increasingly higher percentage of the value-added. Therefore, the new challenge is how to manage the longer distribution channel-more specifically, the distribution from suppliers (and contract manufacturers) all the way to consumers (Figure 14.2). Consequently, a new term, "supply chain," has been coined, and it has now almost replaced the old-fashioned "distribution channel." To be sure, the focal firm has always dealt with suppliers. Strategy guru Michael Porter labels this function as "inbound logistics" (and the traditional distribution channel as "outbound logistics"). " In a broad sense, "supply chain" is almost synonymous with "value chain," encompassing both inbound and outbound logistics. In the military, logistics is widely acknowledged as a contributor to wartime success. But no recruitment material would brag about a glamorous career in logistics in the military to attract new soldiers. Similarly, business logistics used to be tactical and lacks prestige. However, if supply chain is value chain, then supply chain management essentially handles the entire process of value creation, which is the core mission of the firm (see Chapter 4). Consequently, supply chain management has now taken on new strategic importance and gained tremendous prestige. Given that MNE value chains are now increasingly dispersed globally, global supply chains are now increasingly described as global value chains (GVCs) (see Chapter 1).". One indication that supply chain management has gained traction is that instead of being obscure players, leading supply chain management firms, such as Amazon, DHL, FedEx, and UPS, have now become household names. Instead of calling itself an "online retailer" or a "technology conglomerate," Amazon tellingly
