Marketing versus Supply Chain and some contemporary issues�

Generally the global business scenario alternates between boom and recession. Years ago, we witnessed a severe global business downturn that affected many global companies negatively, forcing some of them to collapse. In addition to this, the core business processes are getting more complex day by day. So I think a better understanding of and a crystal clear idea about various business functions are of the utmost importance to us regardless of whether we do businesses or work at businesses. Such business insights can allow us to successfully harness the growing opportunities around us through identifying and tackling various business nuisances, such as marketing missteps, technological stagnations, and managerial blunders. If someone is an entrepreneur, s/he needs to survive in the harsh economic condition; if someone is a paid manager, s/he has to find ways to manage such business catastrophes.

As always the terms “supply chain” and “marketing” have widely been used throughout the globe. Bangladesh is no exception to this trend. It is very easy, however, to confuse between these two business functions, since both of them share one common role which is distribution. Moreover, it might not be unusual to discover the fact that those who think they do not confuse these two terms may tend to be misled into thinking that marketing means sales, and supply chain management means supplier management or distribution. If you observe the current trend of recruitment policies at various corporate houses in our country, you may see the justification of my claim. Here almost all MBAs with major in marketing start their occupational journeys as sales executives, unless otherwise they are entrepreneurs or sons/daughters of an industrialist.

So what is marketing all about? According to Philip Kotler, the living legend in the field of marketing, it is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchange that satisfy individual and organizational goals. This definition of marketing is closely associated with the marketing mix encompassing product, price, promotion and place. Thus, marketing is the process of planning and executing the conception of ideas, goods and services. Here comes another question to our mind; what is planning and executing the conception? In simple words, it is all about doing research to develop new or existing products or ideas. The best way to do so is to conduct an extensive market research or business intelligence as it is sometimes called. Ask yourself – why people will buy your product? In the existing offering find out the missing feature that you fruitfully can offer to the marketplace. In business, it is called USP (Unique Selling Point) that a new offering should have. However, in today’s fiercely competitive environment, it might seem next to impossible to find any USP for any product. Nevertheless, I strongly believe that the option to create needs is always open to businesses of any kind. Notably, many successful entrepreneurs on earth did so quite successfully. The need for a smart phone was created by Steven Jobs; the need for a private car was created by Gottlieb Daimler. We all know that products ranging from wristwatches, calculators, refrigerators, and televisions to computers were all products new to the world once upon a time in the past. However, it may be argued that scientists rather than businesses invented such products. If we delve into the invention process of computer, we can see that to create digital computers Harvard University and International Business Machine (IBM) worked together to materialize the conceptual theory of Charles Babbage, a British mathematician known as father of computer. Later IBM and other companies began to produce and market the digital computers commercially. What I want to say is that businesses in our country should invest sufficient money in the research and development purpose, and that businesses and scientists should closely work together to bring new product to the world. We should keep in mind and must be aware of that such initiative is the core function of marketing.               

Unfortunately, this most important function of marketing called ‘research and development’ to introduce new offering to the world is absolutely ignored in our country. What we usually do is simply copy or import the existing offerings introduced by foreign producers, even though we have immense potentiality to launch new products to the world. Frequently, we watch news and views reported by the mass media in our country regarding appealing inventions carried out by our local young researchers, but regrettably almost all such wits go unnoticed and thus are nipped in the bud because of lack of proper funding to put those attractive concepts into action. I think our indifference to such acumens can cost us billions. Professor Philip Kotler was once quoted as saying that: “Companies pay too much attention to the cost of doing something. They should worry more about the cost of not doing it.”

However, it is not always unethical to imitate the product or to pick the product-features pioneered by competitors; it’s a part of business. Many giants on earth do so very often. However, it is not always businesslike, and it is indeed less prestigious, if the only thing producers can do is imitating their rivals. The business that only imitates is considered a poor kind of business. We should not forget that the present war among nations is not in terms of military power, but rather in terms of knowledge that comes in the form of unveiling new product to the world. Perhaps this ability to innovate things is one of the main reasons why leading countries are leading the world. I think we should pay special attention to this function of marketing.

Among the next three functions of marketing – pricing, promotion, and distribution – probably promotional activities have widely been practiced in our country, a trend that makes the assumption true that we consider marketing to be sales. Typically promotional activities include, advertising, personal selling, sales promotion, and building and maintaining long term relationships with customers.

Supply chain management on the other hand is concerned with especially three areas – procurement, operation, and distribution. The procurement is all about collecting raw-materials for the production department or purchasing materials for the businesses. If a certain concern, however, is not involved in manufacturing activities, it might be a trading company; in a case such as this one the business usually procures products for resale. Noticeably, it can be seen that both marketing and supply chain management have one function in common that is distribution. Most producers here distribute their own products themselves. However, several local and foreign distribution companies in Bangladesh are running their businesses quite successfully, conforming to reasonable standards.

Most importantly, one of the most successful and effective supply chain management techniques, ever devised on earth is known as ‘just-in-time (JIT)’ developed by Toyota Motor Corporation between 1948 and about 1975. JIT migrated to the western industry in 1980s. This principle is also known as Toyota Production System (TPS). However, in the years 1990s, another management philosophy that got recognition is known as lean manufacturing, which in fact is greatly derived from JIT methodology. Following the invention of JIT methodology, Toyota was able to charge relatively lower prices for its products than its rivals were able to, enabling the company to take business from many of its worldwide competitors. So what is JIT (just-in time)?

There have been many new ideas and concepts in business management over the last centuries, some of which have endured and others soon discarded. However, as I mentioned earlier, perhaps one of the most significant principles to become widely adopted and practiced is that of just-in-time. Truth be told, just-in-time is a philosophy as much as it is a technique. It is based upon a simple idea that wherever possible no activity should take place in a system until there is a need for it. Thus no product should be made, no component ordered, until there is a downstream requirement. It is essentially a pull concept, where demand at the end of the pipeline pulls products towards the market. Applying this philosophy, JIT principle holds that there is no need for inventory until it is needed, resulting in businesses maintaining no inventory. So how is that possible?

For JIT principle to work, every raw material must be on time for the production process, and all finished products must be produced in accordance with the actual demand, no more or less. For example, if there is an order or demand for 100 cars, the company must be producing exactly 100 cars. Thus, if used properly this technique can remarkably maximize the return on investment (ROI) in businesses of any kind in Bangladesh, reducing drastically the huge amount of holding cost of processed or unprocessed inventory.

Another pull concept, called vendor managed inventory (VMI) is a process in which suppliers rather than customers manage the flow of products into the customer’s operations. This flow is driven by frequent exchange of information especially through enterprise resource planning (ERP) about the actual consumptions of the products by the customers. With this information, the suppliers are able to take account of current inventories at each level in the chain as well as goods in transit, enabling themselves to determine what quantity to ship and when to ship. Thus, in a VMI environment there are no customer orders; instead the suppliers make decisions on shipping quantities based upon the information they receive from ERP. In Bangladesh, a leading super shop has adopted this principle quite successfully.

Well, let’s think back to JIT philosophy. In Bangladesh, I know a reputed trading IT company that has fruitfully utilized this technique. It imports a certain product for its customers by the same quantity as it has demand for and then just directs those products to its customers without having to maintain any inventory. However, what if the company is not a trading company? Is it possible to implement JIT in a manufacturing concern?

The straightforward answer to this question is no! As I mentioned earlier, for the JIT principle to work for a manufacturing company, the raw materials must be on time for the production process for smooth operation. Now let’s think, is it possible to get raw materials on time for manufacturing concerns in our country? From our everyday experience, it can be said that the delivery of supplies shall be delayed because of heavy traffic, thus it goes without saying that the production officer must end up waiting the whole day for the raw materials to arrive, a condition that seriously will cause harm to the production department of the business. So to avoid this problem businesses in our country must resort to maintaining inventory. However, Japan has developed and implemented JIT philosophy successfully, because the country is devoid of traffic problem.

Almost always we assert that we have cheap labor. It is true, but we never speak about our transportation problem. It is faulty and expensive. I did not get any report on transportation cost, but from my personal experience, I can say that the transportation cost borne by the people of our country for a certain amount of distance is much higher in comparison to that of our neighboring country India for a certain amount of distance.    

So before we implement JIT philosophy in our country, first we need to solve our traffic problem. So how can we solve this problem? Many a time, we have seen the government and law enforcing agencies adopting several measures to keep the traffic problem under control. However, virtually no significant improvement has been realized up until now. However, I believe this problem can be resolved if we take three simple steps. First, imposing tolls on driving inside main city. This can be done by setting up check-posts in important locations in Dhaka city to sticker those cars that have given tolls for twenty four hours. In every twenty four-hour car owners will pay a certain amount of toll if they want to drive inside the main city. This measure undoubtedly will reduce many unnecessary uses of private cars. Second, replacing all existing buses and minibuses with beautiful double-deckers. While occupying the same amount of road surface as conventional buses do, double-deckers will accommodate twice as many passengers as existing buses can hold. Thus, if implemented I think this measure will remarkably allow for much road space. Finally, restricting the encroachment of rickshaws to only on link roads and in residential areas. Doing so will allow fast-moving vehicles to move freely across the busy roads and highways. Almost always it is found that slow-moving rickshaws obstruct the busy roads, causing traffic congestion. What is more, another point bears mention: we should make sure whether cars are properly parked in the right place. Thus, the execution of all these three steps altogether will I believe facilitate the application of JIT philosophy to our businesses.

However, we have already the reputation for being low cost provider of goods and services as we have cheap labor. Moreover, if we can apply JIT philosophy effectively to our country, we can be even more cost effective nation than ever before in comparison to many other cost effective nations across the globe, the ability that can make us world’s number one country in terms of delivering the lowest priced products, conforming to reasonable quality standards. We should keep in mind that even though the price of labor in Japan and in other developed countries is much higher, in the year 2012, its car producers, especially Toyota made all of its local and global competitors fall behind the company in terms of number of cars produced and sold to its customers, especially through the proper use of JIT, accompanied by the uses of other business principles in its manufacturing plants. Thus, I think the combination of cheap labor and employment of JIT philosophy in our country can make us even more thriving country than Japan, China, Taiwan, and India and can help us in attracting foreign investors in the areas we are less advanced, such as automobiles. Side by side we should also be attentive in creating new products to emerge as a new leading country of the world. If we can bring huge improvement in cricket, then why cannot we bring such improvement in our country through implementing marketing and supply chain principles?

Marketing versus Supply Chain and some contemporary issues�

Generally the global business scenario alternates between boom and recession. Years ago, we witnessed a severe global business downturn that affected many global companies negatively, forcing some of them to collapse. In addition to this, the core business processes are getting more complex day by day. So I think a better understanding of and a crystal clear idea about various business functions are of the utmost importance to us regardless of whether we do businesses or work at businesses. Such business insights can allow us to successfully harness the growing opportunities around us through identifying and tackling various business nuisances, such as marketing missteps, technological stagnations, and managerial blunders. If someone is an entrepreneur, s/he needs to survive in the harsh economic condition; if someone is a paid manager, s/he has to find ways to manage such business catastrophes. As always the terms supply chain and marketing have widely been used throughout the globe. Bangladesh is no exception to this trend. It is very easy, however, to confuse between these two business functions, since both of them share one common role which is distribution. Moreover, it might not be unusual to discover the fact that those who think they do not confuse these two terms may tend to be misled into thinking that marketing means sales, and supply chain management means supplier management or distribution. If you observe the current trend of recruitment policies at various corporate houses in our country, you may see the justification of my claim. Here almost all MBAs with major in marketing start their occupational journeys as sales executives, unless otherwise they are entrepreneurs or sons/daughters of an industrialist. So what is marketing all about? According to Philip Kotler, the living legend in the field of marketing, it is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchange that satisfy individual and organizational goals. This definition of marketing is closely associated with the marketing mix encompassing product, price, promotion and place. Thus, marketing is the process of planning and executing the conception of ideas, goods and services. Here comes another question to our mind; what is planning and executing the conception? In simple words, it is all about doing research to develop new or existing products or ideas. The best way to do so is to conduct an extensive market research or business intelligence as it is sometimes called. Ask yourself why people will buy your product? In the existing offering find out the missing feature that you fruitfully can offer to the marketplace. In business, it is called USP (Unique Selling Point) that a new offering should have. However, in todays fiercely competitive environment, it might seem next to impossible to find any USP for any product. Nevertheless, I strongly believe that the option to create needs is always open to businesses of any kind. Notably, many successful entrepreneurs on earth did so quite successfully. The need for a smart phone was created by Steven Jobs; the need for a private car was created by Gottlieb Daimler. We all know that products ranging from wristwatches, calculators, refrigerators, and televisions to computers were all products new to the world once upon a time in the past. However, it may be argued that scientists rather than businesses invented such products. If we delve into the invention process of computer, we can see that to create digital computers Harvard University and International Business Machine (IBM) worked together to materialize the conceptual theory of Charles Babbage, a British mathematician known as father of computer. Later IBM and other companies began to produce and market the digital computers commercially. What I want to say is that businesses in our country should invest sufficient money in the research and development purpose, and that businesses and scientists should closely work together to bring new product to the world. We should keep in mind and must be aware of that such initiative is the core function of marketing. Unfortunately, this most important function of marketing called research and development to introduce new offering to the world is absolutely ignored in our country. What we usually do is simply copy or import the existing offerings introduced by foreign producers, even though we have immense potentiality to launch new products to the world. Frequently, we watch news and views reported by the mass media in our country regarding appealing inventions carried out by our local young researchers, but regrettably almost all such wits go unnoticed and thus are nipped in the bud because of lack of proper funding to put those attractive concepts into action. I think our indifference to such acumens can cost us billions. Professor Philip Kotler was once quoted as saying that: Companies pay too much attention to the cost of doing something. They should worry more about the cost of not doing it. However, it is not always unethical to imitate the product or to pick the product-features pioneered by competitors; its a part of business. Many giants on earth do so very often. However, it is not always businesslike, and it is indeed less prestigious, if the only thing producers can do is imitating their rivals. The business that only imitates is considered a poor kind of business. We should not forget that the present war among nations is not in terms of military power, but rather in terms of knowledge that comes in the form of unveiling new product to the world. Perhaps this ability to innovate things is one of the main reasons why leading countries are leading the world. I think we should pay special attention to this function of marketing. Among the next three functions of marketing pricing, promotion, and distribution probably promotional activities have widely been practiced in our country, a trend that makes the assumption true that we consider marketing to be sales. Typically promotional activities include, advertising, personal selling, sales promotion, and building and maintaining long term relationships with customers. Supply chain management on the other hand is concerned with especially three areas procurement, operation, and distribution. The procurement is all about collecting raw-materials for the production department or purchasing materials for the businesses. If a certain concern, however, is not involved in manufacturing activities, it might be a trading company; in a case such as this one the business usually procures products for resale. Noticeably, it can be seen that both marketing and supply chain management have one function in common that is distribution. Most producers here distribute their own products themselves. However, several local and foreign distribution companies in Bangladesh are running their businesses quite successfully, conforming to reasonable standards. Most importantly, one of the most successful and effective supply chain management techniques, ever devised on earth is known as just-in-time (JIT) developed by Toyota Motor Corporation between 1948 and about 1975. JIT migrated to the western industry in 1980s. This principle is also known as Toyota Production System (TPS). However, in the years 1990s, another management philosophy that got recognition is known as lean manufacturing, which in fact is greatly derived from JIT methodology. Following the invention of JIT methodology, Toyota was able to charge relatively lower prices for its products than its rivals were able to, enabling the company to take business from many of its worldwide competitors. So what is JIT (just-in time)? There have been many new ideas and concepts in business management over the last centuries, some of which have endured and others soon discarded. However, as I mentioned earlier, perhaps one of the most significant principles to become widely adopted and practiced is that of just-in-time. Truth be told, just-in-time is a philosophy as much as it is a technique. It is based upon a simple idea that wherever possible no activity should take place in a system until there is a need for it. Thus no product should be made, no component ordered, until there is a downstream requirement. It is essentially a pull concept, where demand at the end of the pipeline pulls products towards the market. Applying this philosophy, JIT principle holds that there is no need for inventory until it is needed, resulting in businesses maintaining no inventory. So how is that possible? For JIT principle to work, every raw material must be on time for the production process, and all finished products must be produced in accordance with the actual demand, no more or less. For example, if there is an order or demand for 100 cars, the company must be producing exactly 100 cars. Thus, if used properly this technique can remarkably maximize the return on investment (ROI) in businesses of any kind in Bangladesh, reducing drastically the huge amount of holding cost of processed or unprocessed inventory. Another pull concept, called vendor managed inventory (VMI) is a process in which suppliers rather than customers manage the flow of products into the customers operations. This flow is driven by frequent exchange of information especially through enterprise resource planning (ERP) about the actual consumptions of the products by the customers. With this information, the suppliers are able to take account of current inventories at each level in the chain as well as goods in transit, enabling themselves to determine what quantity to ship and when to ship. Thus, in a VMI environment there are no customer orders; instead the suppliers make decisions on shipping quantities based upon the information they receive from ERP. In Bangladesh, a leading super shop has adopted this principle quite successfully. Well, lets think back to JIT philosophy. In Bangladesh, I know a reputed trading IT company that has fruitfully utilized this technique. It imports a certain product for its customers by the same quantity as it has demand for and then just directs those products to its customers without having to maintain any inventory. However, what if the company is not a trading company? Is it possible to implement JIT in a manufacturing concern? The straightforward answer to this question is no! As I mentioned earlier, for the JIT principle to work for a manufacturing company, the raw materials must be on time for the production process for smooth operation. Now lets think, is it possible to get raw materials on time for manufacturing concerns in our country? From our everyday experience, it can be said that the delivery of supplies shall be delayed because of heavy traffic, thus it goes without saying that the production officer must end up waiting the whole day for the raw materials to arrive, a condition that seriously will cause harm to the production department of the business. So to avoid this problem businesses in our country must resort to maintaining inventory. However, Japan has developed and implemented JIT philosophy successfully, because the country is devoid of traffic problem. Almost always we assert that we have cheap labor. It is true, but we never speak about our transportation problem. It is faulty and expensive. I did not get any report on transportation cost, but from my personal experience, I can say that the transportation cost borne by the people of our country for a certain amount of distance is much higher in comparison to that of our neighboring country India for a certain amount of distance. So before we implement JIT philosophy in our country, first we need to solve our traffic problem. So how can we solve this problem? Many a time, we have seen the government and law enforcing agencies adopting several measures to keep the traffic problem under control. However, virtually no significant improvement has been realized up until now. However, I believe this problem can be resolved if we take three simple steps. First, imposing tolls on driving inside main city. This can be done by setting up check-posts in important locations in Dhaka city to sticker those cars that have given tolls for twenty four hours. In every twenty four-hour car owners will pay a certain amount of toll if they want to drive inside the main city. This measure undoubtedly will reduce many unnecessary uses of private cars. Second, replacing all existing buses and minibuses with beautiful double-deckers. While occupying the same amount of road surface as conventional buses do, double-deckers will accommodate twice as many passengers as existing buses can hold. Thus, if implemented I think this measure will remarkably allow for much road space. Finally, restricting the encroachment of rickshaws to only on link roads and in residential areas. Doing so will allow fast-moving vehicles to move freely across the busy roads and highways. Almost always it is found that slow-moving rickshaws obstruct the busy roads, causing traffic congestion. What is more, another point bears mention: we should make sure whether cars are properly parked in the right place. Thus, the execution of all these three steps altogether will I believe facilitate the application of JIT philosophy to our businesses. However, we have already the reputation for being low cost provider of goods and services as we have cheap labor. Moreover, if we can apply JIT philosophy effectively to our country, we can be even more cost effective nation than ever before in comparison to many other cost effective nations across the globe, the ability that can make us worlds number one country in terms of delivering the lowest priced products, conforming to reasonable quality standards. We should keep in mind that even though the price of labor in Japan and in other developed countries is much higher, in the year 2012, its car producers, especially Toyota made all of its local and global competitors fall behind the company in terms of number of cars produced and sold to its customers, especially through the proper use of JIT, accompanied by the uses of other business principles in its manufacturing plants. Thus, I think the combination of cheap labor and employment of JIT philosophy in our country can make us even more thriving country than Japan, China, Taiwan, and India and can help us in attracting foreign investors in the areas we are less advanced, such as automobiles. Side by side we should also be attentive in creating new products to emerge as a new leading country of the world. If we can bring huge improvement in cricket, then why cannot we bring such improvement in our country through implementing marketing and supply chain principles?