Tag Archives: logistics

Suez Canal Blockage: Big Impact on Global Supply Chains

Q: What is a marketing channel, and how important is it?

A: A marketing channel is how companies get products into the hands of consumers and the channel is absolutely critical to sales. No channel. No revenue.

But, before delving into the marketing channel, let’s back up a little and consider the enormous impacts on businesses from the full supply chain – not only moving the finished products to market, but also getting raw materials/semi-finished goods to manufacturers. If these materials don’t make it to companies on time, then there is no way to effectively keep the manufacturing operation at full-force or keep the marketing channel functioning.

Consider also that an effective supply chain is a global issue. An estimated 90 percent of global retail products move around the world in containers through oceans, seas, and canals. One of the most important of these is the Suez Canal – a 120-mile long channel in Egypt, running between the Mediterranean and Red Seas, linking shipping transportation between Africa and Asia. The Suez Canal provides a direct route between the seas and reduces the trip from the Arabian Sea to London by 5,500 miles (8 days). Eight days is a lot of time in today’s global economy, plus fuel costs for ships average $25,000/day! In 2020, more than 18,500 ships traveled the canal.

This March, a container ship named ‘Ever Given’ blocked the Suez Canal after it was knocked sideways by a strong southerly wind.  The ship, at more than one-quarter-mile long and a weight of 224,000-tons, held 20,000 containers worth $9 billion, and was stalled for nearly a week in the canal, holding up billions of dollars of international commerce! More than 400 ships were backed up to use the canal, with dozens of other vessels deciding to forego the canal and take the long way around the Horn of Africa. For those in line at the canal, it could take weeks to get all the ships clear and return to normal operations.

And, the work done to free the ship is a story unto itself. For six days tugboats and dredgers cleared away 30,000-cubic meters of sand and mud from around the ship’s bow and stern. Whew.

Supply chains are critical in marketing!

Group Activities and Discussion Questions:

  1. Discuss the importance of the supply chain and logistics in marketing.
  2. Show video of the Suez Canal blockage: https://youtu.be/8BSdmIhB9wc (Note: Make sure to look for more recent videos as the story gets updated.)
  3. What is the impact of the Suez Canal blockage on trade?
  4. Have students research how raw materials, semi-finished goods, and finished products move to market.
  5. What commodities and materials are shipped via container and the sea?
  6.  

Source:  Associated Press; CNN; New York Times; Wall Street Journal; other news sources

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Back to Basics: Toilet Paper

We consumers are a strange bunch. One minute we are buying in a predictable way, at the usual times and in the usual patterns. Then, boom! Suddenly the world changes seemingly overnight and consumers take drastic and unusual shopping actions.

In this case, what was once a stable item – toilet paper – became a hot product in high demand as the coronavirus hit the U.S. According to Nielsen, in the first week of social distancing guidelines, toilet paper demand increased 120% versus the same time last year. Customers began buying toilet paper in bulk and ratcheted up hoarding of the commodity product. This type of reaction is not uncommon during times of stress when consumers feel a need to control at least one aspect of their lives.

Why the shortage though? In part, it is because toilet paper manufacturing and distribution flows through an efficient, tightly-controlled supply chain. Since it is a bulky product to ship and shelve, retailers keep low inventory on-hand and depend on frequent shipments to replenish stock.

On average, the volume a household consumes toilet paper is about 141 rolls per year. But, during the current crisis, consumers are going through more toilet paper at home since more people are working at home and not venturing out to restaurants, retailers, and other out-of-home events.

Be kind. Share.

Group Activities and Discussion Questions:

  1. Discuss the elements in the supply chain and marketing channel.
  2. Diagram the supply chain and marketing channel for toilet paper.
  3. Show a brief video about toilet paper supply chain: https://youtu.be/By2mmIUzG-w
  4. Another video choice: https://youtu.be/NiQKvfo3l94
  5. View Cottonelle’s Web site and it’s plea for kindness and sharing: https://www.cottonelle.com/en-us/share-a-square
  6. Where are the stress points in the supply chain and marketing channel?
  7. What can be done to better produce and manage products such as toilet paper during times of crisis?

Source: Ad Week; Associated Press; Nielsen Research; Wall Street Journal; other news sources

 

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The New Vending Machine

 

 

 

 

 

 

 

 

The humble vending machine might not need to be as humble any more. Although the traditional vending machine has had declining locations and sales over the past decade, it is far from dead. New businesses using the vending machine – such as Red Box – have been popping up all over. Machines are betting set up with new, touch-screen and high tech features, and loaded with products ranging from soft drinks, electronics, movies, and live bait.

There are even vending machines that dispense prescription medicine. InstyMeds Corp., based in Minnesota, places machines in health clinics and links them to a doctors’ computer system. To dispense the prescription, the system validates the patient’s identity and prescription using unique codes.

Live bait, soft drinks, medicine – new technologies are giving a new life to an old distribution method.

Group Activities and Discussion Questions:

  1. View the video link for WSJ:
    1. http://online.wsj.com/video/the-vending-machine-evolves/107B03C4-E83F-450D-B8CB-378D7006F84F.html
    2. What are key points from the video about new products and start-ups?
    3. What are the advantages and disadvantages of vending machines for distribution and marketing?
    4. Poll students:
      1. What vending machines have you observed lately?
      2. What have you bought from a vending machine? Where? Why?
      3. Have students do a Google search for different types and uses of vending machines.
        1. Markets
        2. Products
        3. Locations
        4. Prices
        5. What products could be effectively marketed in a vending machine?
          1. Product groups?
          2. Target markets?
          3. Locations?
          4. Have students view Red Box’s Web site.
            1. http://www.redbox.com/
            2. Discuss how the site is used and its effectiveness level.
            3. How can other companies use this strategy?
            4. Have students view InstyMeds Web site.
              1. http://www.instymeds.com/
              2. What need is this solving?
              3. Video: http://www.instymeds.com/index.php?page=videos

 

Source:  Wall Street Journal, 3/22/12

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