Inbound logistics are associated with the receiving, storing, and distributing of inputs to the product. It includes material handling, warehousing, inventory control, vehicle scheduling, and returns to suppliers. When looking at this component of the value chain, Disney has many different methods involving inbound logistics due to its wide variation in products and services. However, it can be assumed that after many years of success, the general conclusion that Disney is prosperous partially due to their efficient and effective inbound logistics. One aspect of inbound logistics that is important to Disney is the consolidation of their suppliers. In the 10K, it is mentioned that:
Competition in each area of business may increase as a result of technological
developments and changes in market structure, including consolidation of suppliers of resources and distribution channels.
Operations include all activities associated with transforming the final product form, such as machining, assembly, equipment, testing, printing, and facility operations. This is a difficult to assess because Disney’s operations involve many different processes among multiple industries. In the 10K, the major operations costs were described as follows:
The Company recorded $156 million, $53 million and $140 million of restructuring and impairment charges
in fiscal years 2016, 2015 and 2014, respectively. Charges in fiscal 2016 were primarily due to an investment impairment, asset impairments associated with shutting down certain international film production operations and severance and contract termination costs. Charges in fiscal 2015 were primarily due to a contract termination and severance. Charges in fiscal 2014 were primarily due to severance and radio FCC license impairments.
The activities of outbound logistics are associated with the collecting, storing, and distributing the product or service to buyers. They include finished goods warehousing, material handling, delivery vehicle operations, order processing, and scheduling. Delivery is probably the most complex component of outbound logistics that Disney must worry about. As technology progresses, means of distribution have changed immensely. Take their consumer products and interactive media for example. The 10K lists sources of revenue which can be looked at as ways Disney is distributing its products:
· licensing characters and content from our film, television and other properties to third parties for use on consumer merchandise, published materials and in multi-platform games
· selling merchandise through our retail stores, internet shopping sites and wholesale business
· sales of games through app distributors and online and through consumers’ in-game purchases
· charging tuition at English language learning centers in China
· advertising through the distribution of online video content
Marketing and Sales:
Marketing and sales activities are associated with purchases of products and services by end users and the inducements to get them to make purchases. They include advertising, promotion, salesforce, quoting, channel selection, channel relations, and pricing. Disney is fortunate enough to have made a name for itself over the years. The brand recognition and amount of exposure that the company has is astronomical. This component of the value chain is definitely one of Disney’s highest in value.