Food value chain management

Channel 2 From one business distributer to a business customer→Channel 3

We have a difficult rearrangement because it’s easier for a consumer to go to a retail shop and buy all the things that he/she needs from there instead of going to every producer. If the manufacturer is directly in contact with consumers, that means that the number of interactions is too high (9). If there is an intermediate, the number of interactions is reduced (6) so it takes out complexity and it’s easier for both consumers and producers.

Channel member add value

It makes sense to have a middle man (intermediate) because it can help through different steps:

• The first aspect is information, the retailer can contribute to make research
• The producer wants to understand the lifestyle of clients and the intermediate could help with this.
• Retailers rearrange the supermarket and they know well how to do it in order to promote products (the manufacturer does not know how to do that).

→Communication with

costumersContact Retalis know a lot of people and have infothat producers may no they ave Contact, linking twoparties →Matching retail help to find the right products forour needs →Negotiation retailers are good to re-negotiate a dealso it could be good for a producer, dealing with otherpeople. →Physical distribution logistic providers that transport and store goods for the producers.→Financing a retail usually is big so they have a lot of money, they can provide financial resources toproducers if they need someRisk taking retail can take the risk when they buy everything from you because they’re one dealing with thecostumer. They know the market needs so they know how much to buy in order to sell the right quantity.Conventional system is 1:1 the producer deals just with the wholesaler and so on.Vertical marketing producer wholesaler and retailer collaboration between them.Horizontal marketing system is a channel arrangement in which two or more companies at

One level jointogether to follow a new marketing opportunity. Eg. Farmers work together for better marketing opportunity. [Cooperative is an example] In reality there are different channel combined all together.

How to menage the distribution channel? We have to define the changing channel organisation: Disintermediation is the cutting out of marketing channel intermediaries by product or service producers, or the displacement of traditional by radical new types of intermediaries.

Nowadays the middle-men are not existing anymore, thank to internet the producer can directly sell. They’ve disappeared or they’ve been replaced by others.

Step to menage the distribution chain

The marketing manager does mostly the marketing of goods.

Marketing channel design

I. includes designing effective marketing channels by analysing consumer needs, setting channel objectives, identifying major channel alternatives, and evaluating them.

For each costumer there is the need to understand their wants and

I. Marketing intermediaries are organizations that help the company promote, sell, and distribute its products to final buyers. The number of marketing intermediaries can vary depending on the company's needs.

II. There are three different types of distribution that a marketing manager should consider and decide which one to use and how to design it:

1. Exclusive distribution: This type of distribution involves selling the goods in exclusive places, typically with only a few intermediaries. It is commonly used for luxury goods.
2. Selective distribution: This type of distribution involves using more than one or a few, but fewer than all intermediaries. It is commonly used for electronic goods and organic products.
3. Intensive (mass) distribution: This type of distribution involves selling the goods through a large number of intermediaries, such as supermarkets. It is commonly used for mass-market products.

III. Marketing channel management involves selecting, managing, and motivating individual channel members and evaluating their performance over time. It also includes the evaluation of other partners.

IV. Marketing logistics, also known as physical distribution, involves the planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements.

Major logistic functions: warehousing, inventor management, transportation, logistic information management (computer management).

Integrated logistics management is the logistics concept that emphasises teamwork, both inside the company and among all the marketing channel organisations, to maximise the performance of the entire distribution system.

Supply chain management is the management of the collaboration among all involved parties along a supply chain with the aim to make physical good flows, information flows and financial flows as effective and efficient as possible and to maximise customer satisfaction.

Inbound logistic: sourcing of raw material, all that you need to produce (packaging, machinery etc.)

Outbound logistic: it's the end product.

Reverse logistic flow of goods that go back to the producer; products that are returned from the customers to the producer (e.g. if a computer does not work, the computer is returned and it's sent back to the retail).

Recycling system: return the goods to the producer, especially for packaging in order to reuse or dispose it (e.g. In Germany is common to bring back glass and plastic bottles).

Food is not a highly traded good. Every year, about one billion tonnes of raw and processed food commodities are traded internationally – about 14% of world food supply and 23% of its value. Just the more expensive products are traded internationally because of the shipping costs.

Cereals are the world's most traded commodity accounting for 30% of all trade by mass (wheat, rice, corn).

Stimulants (like coffee and tea) are the most intensively traded product. It is imported and then exported by several countries. Therefore, for each 100 tonnes of production, 109 tonnes are traded.

Eggs are the least traded commodity in proportion to their production.

Europe is the region most involved in international food trade: 38% of global trade by mass of which 30% take place entirely in the region.

Intra-regional trade flows are not shown in the map.

Traditional vs. Modern markets

In the modern market: hygienic conditions are better, the price is more expensive but the price and other info are displayed (country of origin), selection quality (just the best products are picked and displayed), product placed and organised in a certain order (tidy and clean), highly organised, more choice of products.

Fundamentals of food distribution

On one hand there are the farmers/producers and on the other hand there are consumers. Consumers are many more than farmers. The power is in the middle. Supermarket chains (buying desk: Carrefour, Spar) are not so many. The retail in particular has a lot of power. There aren't many retailers so they can select and decide everything. The distribution (food retail and wholesale) has the power and makes the money.

Definitions

Wholesale is the resale (sale without transformation) of new and used goods to retailers, industrial, commercial, institutional or professional users.

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or other wholesalers; alternatively, it may involve acting as an agent or broker trading (buying or selling in bulk) merchandise with such clients.

Wholesalers frequently physically assemble, sort and grade goods in large lots, break bulk, repack and redistribute in smaller lots (for example, pharmaceuticals), store, refrigerate, deliver and install goods, and engage in sales promotion or label design for their customers.

Types of wholesaler

Merchant wholesalers,

A. excluding MSBO (manufacturing sales branches and offices), also referred to as third-party wholesalers, are primarily engaged in buying groceries and related products from manufacturers or processors, and reselling these products to retailers, institutions, and other businesses.

Manufacturers' sales branches and offices,

B. (MSBO) are merchant wholesale operations maintained by grocery manufacturers to market their own products.

Brokers and agents,

C. are wholesale operators who buy or sell for a commission as representatives of others.

and typically do not own or physically handle the products.

General-line distributors, also called broad-line or full-line distributors, handle a broad line of food products.

Specialty distributors of items such as frozen foods, dairy products, meat and meat products, or fresh fruits and vegetables. They operate in niche markets where it is necessary to have specialised knowledge about the type of product being handled or type of operator being served.

Miscellaneous distributors of a narrow range of dry groceries such as canned foods, coffee, bread, or soft drinks.

Typical consumers

Importance of the customers for wholesalers: retailers are the most important consumers, second bigger are other wholesalers, then there is foodservice (McDonald's) and all other.

Someone in the middle can facilitate the exchange. Having an intermediate is a simplification of the distribution process. The cut of the middle man is called disintermediation.

Significance in the EU: fewer firms and jobs

thanretailing but higher sales and VA (added value). In EU thebiggest one retailers have a lot of firms, there are morepeople employed in manufactory and the manufacturinghas the higher VA. Competition is bad for profits: there area lot of retails that compete between them so the pricesare lower.[FOC apple coop]20% is related to food in Eu, somewhere in the middleThe modern supermarket is the most highly organised trade.

Retail and wholesale services account for 11.1% of the EU's GDP and provide around 33 million jobs (almost15% of total employment in the EU).In retail alone, there are about 3.6 million active companies representing 4.5% of value added and accountingfor almost 9% of EU jobs.Taken as a whole, the food supply chain generates value added of €715 billion per year, almost 6% of the EUGDP. The food economy is 6% of the all EU economy.

Retail context in Europe15% of the total income is spent in food. The reacher is the country and the less is the amount of