SSI Guide to answering questions

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Conestoga College *

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3170

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Marketing

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Feb 20, 2024

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QUESTION #1 What are the characteristics of SSI’s product lines? How do these influence the choice of Logistics alternatives? Some of the characteristics of Sugar Sweets Inc. (SSI) product lines are: -product variety -packaging requirements -Innovation -convenience These may influence the choice of Logistic alternatives since they are considering the move to Direct Distribution as they will now be establishing a direct relationship with their customers. As such SSI will have to align distribution strategies with the characteristics. Since they have a variety of sweets, they may require different transportation method of storage since some sweets for example candies are stored in cool and dry spaces to prevent them from spoiling or melting and other like hard candies and gummies are stored at room temperature. The proper storage and transportation are chosen to ensure quality products are delivered. During this process of transportation, the packaging also will require special handling as these need to have an attractive appearance to catch the eyes of customers. For the products to be always available to the customers the delivery networks must be reliable, as such, convenience is a main characteristic. Speed and efficiency are important to ensure that the products are delivered in a timely manner and that the demands of customers are met. QUESTION #2 Who are SSI’S current customers, how does this influence the supply chain? Their present customers are vending machines and institutional sales such as airports. This The present customers of vending machines and institutional sales have a significant impact on the supply chain. Let's break it down: 1. Vending Machines: Vending machines are a popular way for customers to access snacks and beverages conveniently. The demand from vending machine customers affects the supply chain in terms of inventory management and replenishment. Suppliers need to ensure that vending machines are well-stocked with the right products to meet customer preferences and demand. This requires efficient logistics and distribution to regularly restock vending machines with fresh inventory. 2. Institutional Sales: Institutional sales refer to supplying snacks and beverages to places like schools, offices, hospitals, and other organizations. These customers often have specific requirements and volume needs. Meeting these demands requires careful supply chain management. From production and packaging to transportation and delivery, the supply chain

must be able to handle large quantities and ensure timely distribution to meet institutional customers' needs. Grocery and Convenience Stores: Historically, most SSI products were sold at a range of grocery and convenience stores. These businesses are significant SSI retail sites that attract a wide range of customers looking for snacks and candy. How does this influence the supply chain? Distribution Challenges: Large-scale purchases of confectionery and tobacco items by jobbers, who then distribute them to convenience and grocery stores, are the conventional distribution channel for SSI. This distribution paradigm is challenged by the declining number of jobbers brought about by industry consolidation. Warehouse Club Store Competition: SSI's conventional distribution channels are under jeopardy due to the growing popularity of warehouse club shops. With a wider selection of goods at affordable costs, these club stores give customers a one-stop shopping experience. Because of this, SSI is forced to reevaluate its distribution strategy and the competitive environment. Product Servicing Issues: One major aspect impacting the supply chain is SSI's concerns around product servicing. Although distributors—particularly those in the confectionery and tobacco industries—offer a marketing service by guaranteeing that retailers have a wide selection of fresh goods, the competition from warehouse clubs makes it uncertain if distributors can continue to provide this kind of service. Both vending machine customers and institutional sales customers influence the supply chain by driving demand and requiring efficient logistics and distribution processes. Companies in the candy and snack industry must carefully manage their supply chains to meet the needs of these customers, ensuring that products are available, delivered on time, and meet quality standards. QUESTION #3 What is SSI current distribution channel What are SSI's current distribution channels 1. Distributors: Many companies work with distributors who specialize in delivering products to vending machine operators and institutional customers. These distributors have established networks and logistics capabilities to efficiently distribute products to various locations.

2. Retailers: In some cases, candy and snack products for vending machines and institutional sales may be sold through traditional retailers. These retailers may have dedicated sections or partnerships with vending machine operators and institutions to supply their snack and beverage needs. 3. Candy and Tobacco Jobbers: Traditionally, distributors known as candy and tobacco jobbers provided services to grocery and convenience stores. These middlemen bought SSI goods in bulk and then sold them to retail establishments so that customers could buy them. The conventional distribution route was distorted as a result of the jobbers' declining numbers. QUESTION #4 To evaluate a foray into direct distribution, you would need to gather specific information such as: 1. Cost Analysis: Determine the costs associated with establishing and maintaining a direct distribution network. This includes expenses for transportation, warehousing, personnel, technology, and any other resources required for the distribution process. 2. Market Research: Understand the target market for direct distribution. Analyze the demand for candy and snack products from vending machine operators and institutional customers. Identify the potential volume of sales and growth opportunities in this market segment. 3. Competitive Analysis: Assess the competitive landscape and identify other candy and snack companies that are already using direct distribution. Understand their strategies, strengths, and weaknesses to determine potential advantages and challenges for your company. 4. Customer Relationships: Evaluate the existing relationships with vending machine operators and institutional customers. Determine if there is a strong customer base willing to engage in direct distribution arrangements. Identify any potential risks or challenges in transitioning from existing distribution channels to direct distribution. 5. Operational Capabilities: Assess your company's operational capabilities to handle direct distribution. Evaluate the resources, infrastructure, and expertise needed to effectively manage the distribution process. Consider factors such as inventory management, order fulfillment, delivery logistics, and customer service.

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6. Financial Analysis: Conduct a thorough financial analysis to determine the potential profitability of direct distribution. Consider factors such as revenue projections, cost structure, return on investment, and cash flow implications. Evaluate the impact of direct distribution on overall profitability and business sustainability. QUESTION #5 Some issues that can arise from the channel of direct distribution include: 1. Increased Costs: Direct distribution may require significant investments in infrastructure, personnel, technology, and logistics. These upfront costs can impact profitability, especially if the sales volume does not meet expectations. 2. Operational Complexity: Managing a direct distribution channel can be complex and time- consuming. It involves tasks such as inventory management, order fulfillment, delivery logistics, and customer service. Without proper systems and processes in place, operational inefficiencies and errors can occur. 3. Limited Reach: Direct distribution may have limitations in terms of geographic reach. If your company's distribution network is not extensive, it may be challenging to reach customers in remote or distant locations. This can result in missed sales opportunities and potential customer dissatisfaction. 4. Customer Relationships: Shifting to direct distribution may disrupt existing relationships with intermediaries such as distributors or retailers. Some customers may prefer the convenience and support provided by these intermediaries, and they may be hesitant to switch to a direct purchasing model. 5. Increased Competition: Direct distribution can expose your company to increased competition. By bypassing intermediaries, you may encounter more direct competition from other candy and snack companies that also adopt direct distribution strategies. This can intensify price competition and put pressure on profit margins. 6. Service Requirements: Direct distribution requires your company to handle all aspects of the customer experience, including order processing, delivery, and customer support. Meeting customer expectations for timely and accurate deliveries, as well as addressing any issues or inquiries, can be demanding. 7.Logistical difficulties: the use of telemarketing for direct shop shipping and small bundle shipping can offer logistical difficulties, specifically while running with a wide variety of retail institutions. A complex logistics system can be needed to plot timely materials to several websites with numerous requirements.

8.Restricted advertising offerings: The exchange method couldn't provide shops with the identical diploma of advertising and marketing assistance as jobbers of candy and tobacco, who typically furnished advertising services. This can influence how well-known and promoted SSI gadgets are within the new stores. These are some of the issues that can arise from the channel of direct distribution. It's important to carefully evaluate these factors and develop strategies to mitigate risks and maximize the benefits of direct distribution.

SSI Guide to answering questions

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