10 min readConcept sheetMCQ · drivers, bullwhip causes, selling sequence, workload sum

Logistics, supply chain, sales force and personal selling

Supply chains create value by balancing efficiency and responsiveness across six drivers; the sales force is designed for structure and size, and sells through a seven-step process.

Supply chain drivers (Chopra-Meindl)Facilities, inventory, transportation, information, sourcing, pricing

Bullwhip effectForrester (1961); Lee, Padmanabhan and Whang (1997): four causes

SCOR modelPlan, source, make, deliver, return (and enable)

Selling processProspect, pre-approach, approach, present, handle objections, close, follow up

Supply chain drivers (Chopra and Meindl)

Driver	Type	Efficiency vs responsiveness
Facilities	Logistical	A few large plants and warehouses are efficient; many local ones are responsive
Inventory	Logistical	Low stock is efficient; high stock is responsive
Transportation	Logistical	Slow bulk modes are efficient; fast modes are responsive
Information	Cross-functional	Better data improves both and links the other drivers
Sourcing	Cross-functional	Who performs each activity: in-house or outsourced
Pricing	Cross-functional	Prices shape when and how much customers buy

Value creation and supply chain design

Supply chain surplus = value of the product to the customer − total supply chain cost (Chopra and Meindl). The aim is to maximise the whole chain's surplus, not one firm's profit.
Logistics creates time and place utility: the right product at the right place and time at the lowest total cost.
Decisions come in three phases: supply chain strategy (design), planning, and operation.
Fisher (1997): functional products with stable demand need efficient chains; innovative products with uncertain demand need responsive chains.
Push systems make to forecast; pull systems make to actual orders. Postponement delays final customisation until demand is known.
The term 'supply chain management' is credited to Keith Oliver of Booz Allen (1982).
Indian examples: Amul's three-tier cooperative chain (village society → district union → state federation); HUL's Project Shakti, using rural women entrepreneurs to reach small villages; D-Mart's warehouses serving clusters of nearby stores.

The bullwhip effect

What it isSmall changes in consumer demand become larger swings in orders as you move upstream from retailer to wholesaler, manufacturer and supplier. Shown by Forrester (1961); P&G saw it in diaper orders.

Four causes (Lee, Padmanabhan and Whang, 1997)Demand-forecast updating, order batching, price fluctuation (forward buying on deals) and rationing and shortage gaming.

RemediesShare point-of-sale data, vendor-managed inventory (VMI), CPFR, everyday low pricing, smaller and more frequent orders, and shorter lead times.

Sales force design

Decision	Options
Objectives	Prospecting, targeting, communicating, selling, servicing, information gathering, allocating
Structure	Territorial, product, customer (market), complex (mixed)
Size	Workload approach (Talley, 1961)
Compensation	Straight salary, straight commission, or salary plus commission or bonus; plus expenses and benefits
Types of sales jobs	Deliverer, order taker, missionary (builds goodwill, like medical representatives), technician, demand creator, solution vendor

Worked example: workload approach to sales force size

Problem

A firm has 800 large accounts needing 24 calls a year and 2,400 small accounts needing 6 calls a year. One salesperson can make 1,200 calls a year. How many salespeople are needed?

Working

Large accounts: 800 × 24 = 19,200 calls.
Small accounts: 2,400 × 6 = 14,400 calls.
Total workload = 19,200 + 14,400 = 33,600 calls a year.
Salespeople = 33,600 ÷ 1,200 = 28.
Check: 28 × 1,200 = 33,600.

Answer

28 salespeople. Trap: dividing the 3,200 accounts by calls per person ignores call frequency.

Personal selling process

Kotler's seven steps. SPIN selling (Rackham, 1988) asks Situation, Problem, Implication and Need-payoff questions.

1
Prospecting and qualifying
find and screen likely buyers
2
Pre-approach
learn about the prospect; set call objectives
3
Approach
first meeting: greeting, opening, rapport
4
Presentation and demonstration
features, advantages, benefits and value
5
Handling objections
seek, clarify and answer resistance
6
Closing
ask for the order; trial closes
7★
Follow-up and maintenance
delivery, installation, service, repeat business

★ one-way, controls the pace

How NET asks this

NET asks you to list the supply chain drivers, name the causes and remedies of the bullwhip effect, sequence the selling process, and compute sales force size with the workload method.

Exam angle

Typical MCQ: “Which step comes between 'approach' and 'handling objections' in personal selling?” Presentation and demonstration. Trap: the pre-approach comes before the approach, not after it.

Typical MCQ: “Name the four causes of the bullwhip effect.” Demand-forecast updating, order batching, price fluctuation, and rationing and shortage gaming (Lee, Padmanabhan and Whang). Trap: VMI and shared POS data are remedies, not causes.

Remember it

Selling steps: 'Please Put All Products On Customer Files': Prospect, Pre-approach, Approach, Present, Objections, Close, Follow up. Bullwhip causes: Forecast, Batch, Price, Ration.