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8.6 Marketing Channels versus Supply Chains

Learning Objectives

  1. Understand how supply chains differ from marketing channels.
  2. Describe the types of organizations that are part of supply chains.

In the past few decades, organizations have begun taking a more holistic look at their marketing channels. Instead of looking at only the firms that sell and promote their products, they have begun looking at all the organizations that figure into any part of the process of producing, promoting, and delivering an offering to its user. All these organizations are considered part of the offering’s supply chainAll the organizations that participate in the production, promotion, and delivery of a product or service from the producer to the end consumer..

For instance, the supply chain includes producers of the raw materials that go into a product. If it’s a food product, the supply chain extends back through the distributors all the way to the farmers who grew the ingredients and the companies from which the farmers purchased the seeds, fertilizer, or animals. A product’s supply chain also includes transportation companies such as railroads that help physically move the product and companies that build Web sites for other companies. If a software maker hires a company in India to help it write a computer program, the Indian company is part of the partner’s supply chain. These types of firms aren’t considered channel partners because it’s not their job to actively sell the products being produced. Nonetheless, they all contribute to a product’s success or failure.

Firms are constantly monitoring their supply chains and tinkering with them so they’re as efficient as possible. This process is called supply chain managementThe process of managing and refining supply chains so as to make them as efficient as possible.. Supply chain management is challenging. Done well, it’s practically an art. We’ll talk more about supply chains in the next chapter and what companies can do to improve them to better satisfy customers and gain a competitive edge.

Key Takeaway

All of the organizations that figure into any part of the process of producing, promoting, and delivering an offering to its user are part of the offering’s supply chain. In recent decades, firms have begun looking at these organizations in addition to the organizations that sell and promote their products. The process of managing and improving supply chains is called supply chain management.

Review Question

  1. What are the benefits of looking at all of the organizations that contribute to the production of a product versus just the organizations that sell them?