This review focuses on the potential impact of enhanced strategic relationships between the boundary-spanning functions in supplier organizations. Specifically, the concern is with alignment between the organizational groups managing: marketing, sales and strategic account management; purchasing and supply strategy; and, collaborations and external partnerships. The topic is framed by the organizational evolution being driven by market change, and the search for superior innovation capabilities and business agility. These changes bring new challenges in cross-boundary integration and managing complex market networks. The logic is that strategic external relationships (with customers, supplier and partners) should be mirrored in strategic internal relationships (between the functions with lead responsibilities for managing relationships with customers, supplier and partners). Approaches to enhancing this capability include process management, internal partnering strategies and internal marketing activities. The discussion identifies a number of implications for practice and new research directions.
The pressure from business-to-business customers for the delivery of seamless service from suppliers, and particularly for closer, collaborative relationships with strategic suppliers, has never been higher. For example, in 2006 automaker Ford made public its plans, as part of its downsizing and cost-saving strategy, to cut its $90 billion purchasing budget by ceasing to work with half its 2000 component suppliers, focusing business on seven “key suppliers” covering about half its parts purchasing. Ford will work more closely with the selected suppliers, consulting them earlier in the design process and giving them access to key business plans on future vehicles, to allow them to better plan their operations investments for Ford's business (Mackintosh and Simon, 2006). Similarly, in 2007 in the European aerospace industry, Airbus was looking to cut its core network of 3000 suppliers to about 500, urging its smaller suppliers to form industrial clusters to reduce costs (Hollinger, 2007).
The risks to suppliers unable to develop and maintain strategic relationships with major customers are escalating as those customers struggle to remain profitable in their own markets. However, the challenge facing executives responsible for sales and marketing processes in supplier organizations is effectiveness in managing cross-functional, cross-divisional and cross-boundary relationships around customer value and developing the capabilities to meet the requirements of strategic customers for collaborative relationships. For many companies, the strategic management of customers and customer relationships has become a higher priority than conventional marketing activities, which is evidenced by major organizations transferring resources from marketing to strategic sales and account management initiatives, to achieve better alignment and to achieve the goals of business strategy (Webster, Malter and Ganesan, 2005).
Managing strategic customer relationships effectively may in many situations be a vital component of competitive advantage, or even the only source of competitive differentiation. For example, SKF is the world's largest maker of industrial bearings — a business highly susceptible to commoditization. SKF's fight to overcome commoditization threats relies on the company's 5000 sales engineers developing close relationships with customers and liasing with technical experts deep inside their own business. The goal is to align customer needs with complex technical solutions, often involving customised products. In important ways, the sales engineer stands between the company and commoditization (Marsh, 2007).
Nonetheless, the ability of marketing executives to manage in cross-functional situations appears somewhat patchy, although this is partly as a result of the way in which organizations have traditionally been structured and controlled. Similarly, the contribution of scholarly research to developing an holistic understanding of cross-functional process management has been somewhat limited.
This short review will briefly examine the ways in which market changes are driving organizational evolution, as an important context for managing marketing processes. From this base, it is possible to consider the implications of strategic external relationships (with suppliers, partners and collaborators, and customers), and the parallel importance of strategic internal relationships inside the supplier organization. In particular, we will argue that there is an interesting potential for a new kind of internal alliance between the boundary-spanning functions in supplier organizations which are linked by market opportunity and customer value enhancement. Those functions include marketing/sales, supplier relationship managers, and those responsible for running collaborative and partnership arrangements with other companies, for example in joint research and product development initiatives.
The identification of a strategic internal relationship imperative surrounding the delivery of superior value and appropriate relationship investments in strategic customer raises both some challenging practical implications for executives, but also some research directions worth pursuit.
This review set out to underline the compelling case that one direct impact on a company's competitive strength, and particularly its ability to meet the increasingly sophisticated requirements of strategic customers for value enhancement and new types of relationship, is the capability to align strategic customer relationship management processes with supplier relationship management processes, and both of these with the management of collaborations and joint ventures with third parties. Developing such a capability rests on the development of strategic internal relationships between the groups responsible for managing customer relationships (marketing, sales strategic account management teams), for managing supplier relationships (purchasing), and collaborations (alliance management).
The case for devoting more management attention to this internal partnering between the boundary-spanning functions that have direct impact on customer value delivery has several areas of support. First, market change is driving the evolution of traditional organizations from vertically-oriented functional structures toward more horizontal structures and hybrid forms with different kinds of overlay across vertical structures, and an emphasis on managing process rather than simply structure. These shifts facilitate innovation and agility, but are also bringing new challenges in organizational diversity and managing complex external relationships. These organizational shifts are creating a new scenario in which marketing faces the challenge of developing new models to enhance customer value and strategic customer relationships.
Increasingly the imperative has become not simply cross-functional integration, but cross-boundary integration. Closer relationships between the seller and the supply base and partnerships that drive customer value bring new responsibilities for marketing as the integrator of customer value. The mandate for collaboration is creating additional complexity of several kinds in the route to market. In particular, new business models and collaborative value generation underline the need for enhanced collaboration between the internal boundary-spanners whose efforts impact directly on customer relationships.
Approaches which may support the management of strategic internal relationships include process-based organizational models which explicitly link supplier relationship management to customer relationship management; partnering marketing, purchasing and alliance executives in joint projects and cross-memberships of important planning groups; and, internal marketing models which underline the growing role for marketing and sales inside their own companies as well as externally with customers.
The issue of strategic relationships between boundary-spanning functions to align customer relationship management with supplier relationship management is concerned with presenting a unified face to the customer, which reflects all the resources and capabilities in marketing and sales, purchasing and collaborations. The topic has several implications for practice, and also identified a number of interesting research directions.
6.1. Implications for management practice
Perhaps the most important implication identified by this review is the importance of understanding the value chain as a complex market network — involving first and second tier suppliers, collaborators and partner organizations and customer organizations. Indeed, in some technical markets it will be increasingly common that the same external organization may be our supplier, collaborator, customer and competitor.
The nature of the market network mandates a focus on strategic relationships. One set of these relationships relates externally to our suppliers and collaborators. However, a second set concerns the links and integration between the management groups tasked separately with customer relationship management, supplier relationship management and the management of collaborations, alliances and joint ventures. Observation suggests that the integration of these critical boundary-spanning responsibilities is rarely addressed as a priority, if at all. Nonetheless, the logic for the strategic relationship inside the company is their joint impact on customer value.
Once the internal network of linkages between these boundary-spanning functions is made explicit, then attention can be given to making integration more effective. The armoury for addressing integration problems in marketing is well-known (Hulbert, Capon & Piercy, 2003). Approaches span the formal use of liaison and joint decision making mechanisms, and the informal focus on internal communications and networking between related groups. However, the first priority must be to carefully identify the internal boundary-spanning activities that shape customer value, and how they can be better managed to deliver and sustain superior customer value.
6.2. Research directions
Interestingly, while there is an extensive research literature addressing cross-functional dyads, for example, relationships between marketing and R&D, between marketing and operations, and so on, there are two important gaps in our research coverage. The first relates to the relationships between marketing, sales and strategic account management executives, and the groups managing supplier relationships or those managing external collaborations. The second is that the research has rarely extended beyond dyads to consider networks of cross-functional and cross-unit relationships. There would be considerable interest in research which adopted the focus of customer value-creating boundary-spanning activities and examined the ways in which internal network relationships operate and can be made more effective where this is desirable.
In addition, as marketing becomes more closely aligned to managing strategic relationships – internally and externally – it would be interesting for scholars to examine the conditions under which these networks are effective and those under which they are more likely to perform poorly (from at least some network participants' perspective). It would also be insightful to evaluate the links between internal and external networks – both formal and informal – to better understand the relationship between network linkages and business performance in different situations. Much can be learned by applying models developed in studying strategic alliances to the strategic relationship networks on which marketing and sales is focusing. This would be particularly insight regarding approaches to governance and opportunistic behaviour in market networks.
