Worksheet Chapter 13

Managing Distribution Channels
MKT306
Worksheet Chapter 13
Logistics and Channel Management
Section 1: Essay Questions

1. What is the definition of logistics?
2. Discuss the role of logistics.
3. What are the components of a logistics system?
4. Discuss the four key areas of interface between logistics and channel management.
Section 2: Cases
1. Barnes & Noble introduced its electronic book reader, the Nook, in mid-October 2009.
Within days it became Barnes & Noble’s fastest selling product. In fact, sales were so good
that Barnes & Noble announced in mid-November that customers ordering the Nook
would not receive it until the first week of January at the earliest. So, a huge number of
customers looking forward to receiving or giving the Nook for Christmas would be
disappointed. Barnes & Noble’s explanation for the shortfall was that it had
underestimated demand and could not ramp up production in time to meet holiday
demand. Is Barnes & Noble’s failure to have a sufficient inventory of Nooks to meet
demand a supply chain problem? Why or why not? Discuss.
2. Timberland Company is one of the world’s best known manufacturers of casual shoes and
sports boots. For many years the company’s logistical system was geared to large orders.
Hence priority was given to major department stores and retail chains that purchased in
large quantities. But market reports were indicating that consumers were shopping in
increasing numbers at small independent retailers and boutiques for the kinds of shoes
and boots sold by Timberland. So, the problem facing Timberland was how to service the
large numbers of small retailers with their tiny orders while still maintaining high levels of
efficiency and low order processing costs. To meet this challenge, Timberland
reengineered its logistical system by using modern scanning equipment to control
inventory, track merchandise and handle all paperwork automatically. Does this situation
represent an interface between channel management and logistics management?
Explain.
3. U.S. Jaguar dealers used to wait at least one week to receive parts from England. Parts
were shipped in bulk by Jaguar to a U.S. warehouse where they were split up, repackaged
and then shipped to individual dealers. Working closely with Federal Express, Jaguar
initiated a new logistics system that shortened the time by four days. Under the new
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system, dealers order a part directly from Jaguar in England and the part is then air
expressed via Federal Express. The time between order placement and receipt at the
dealership is no longer than three days. Comment on the change in Jaguar’s logistics
system in terms of its relevance for providing customer service and the possible trade-
offs in higher costs.
4. East Coast Auto Supply, a distributor of auto parts located in the New England area,
received much of its inventory of rebuilt auto parts from a Los Angeles wholesaler that
imports the remanufactured parts from several Asian countries where labor costs are low.
East Coast Auto Supply received most of its shipments by truck, which generally took a
week to ten days to arrive. One day, an airfreight company sales representative called on
the firm to attempt to sell it on the use of airfreight. José Menedez, the owner of East
Coast, did not wait for the sales pitch. Instead he wanted to get right to the “bottom line”
by asking the sales representative for the cost per ton to ship goods by airfreight. After
learning the cost, Menedez laughed and told the airfreight representative to “get out of
the office.” It was more than double what East Coast paid for truck transportation. Might
Menedez have been too hasty in throwing the airfreight sales representative out of the
office? Explain.
5. Farouk Systems Inc. is a manufacturer of high quality, hand-held hair care products such
as hair dryers, hair irons and professional quality shampoos and hair colorings. The
company has annual sales volume in excess of $1 billion and sells its products in over 100
countries. But what is unusual about this company is that in spite of its vast and diversified
customer base spanning much of the globe, all of Farouk Systems manufacturing is done
in the U.S. at a large factory in Houston, Texas. The company had done some
manufacturing in China but decided to discontinue this overseas manufacturing to
consolidate all manufacturing in Houston. Farouk Systems believes that not only will
product quality be enhanced by not outsourcing production, but inventory costs will be
substantially less than if products were produced in multiple overseas locations. Do you
agree with Farouk Systems’s strategy? Can you make a case for confining production to
just one home plant even though products must be supplied to customers in over one
hundred countries around the world?
Reference:
Rosenbloom, B. (2013). Marketing Channels: A management View (8th ed., pp. 3-500). Canada:
South-Western, Cengage Learning.
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Managing Distribution Channels

Section 1: Essay Questions

A.L. Rehab El-Bordiny 2

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