Judith M. Whipple
Sugar Sweets, Inc. (SSI), was considering ways to increase market coverage and sales volume on its candy and snack products. Historically, the majority of SSI products were sold to consumers through various grocery and convenience stores. Vending machines and institutional sales, such as airports, represent the remaining consumer market segments. The selling environment for candy and snack foods was becoming increasingly competitive and traditional channels of distribution were being distorted, especially in the grocery and convenience trade.
Grocery and convenience stores were traditionally serviced through distributors known as candy and tobacco jobbers. These distributors …show more content…
Two types of display units were designed as well as two reorder packages. An initial order would include two boxes shrink-wrapped together. One box would hold the product and the other would hold the display unit. Table 3 provides display and product package characteristics. Reorder packs would contain the same product weight and units as shown for the initial order.
Operating Procedures. Two logistics networks are under consideration for the new channel. Both networks facilitate direct retail customer contact: no distributors are included in the channel. One network uses three distribution centers while the other uses four. Service for the first network is estimated at 2 to 4 days, with some outlying areas serviced in 5 days. Service through the second network is estimated at 1 to 3 days and to outlying areas in 4 days. The number of outlying areas is reduced under the second network. Table 4 compares the costs of both networks.
The information flow would start with order entry at the telemarketing department. Retail orders would be transmitted to the appropriate distribution center and compiled each night. Orders would be picked and packed, then