This paper endorses demand chain alignment as a competence that supports effective product life cycle (PLC) management. Demand chain alignment integrates the demand creation (historic domain of marketing) and demand fulfilment processes (domain of supply chain management), to develop and to deliver products that convey superior customer value while deploying resources efficiently. So far, the relationship between demand chain alignment and PLC management has only been addressed from an operations and demand/supply chain perspective, but not from a marketing perspective. Three research propositions, on the relationship between both concepts, are derived from a literature review and applied to a case study from a global player in the tobacco industry. The findings do not support the current view that the product life cycle is a market-oriented classification variable for demand chain strategies. Instead, demand chain alignment needs to link customer needs-based segments with the supply chain. Moreover, PLC management and demand chain alignment have a mutually reinforcing relationship, in which PLC management can facilitate the competence development, ensures a dynamic perspective and, at the same time, benefits from aligned demand creation and fulfilment processes. Based on the findings, a model integrating demand chain alignment and PLC management is proposed.
Product life cycle (PLC) management as the integrated, information-driven approach to all aspects of a product's life, from concept to design, manufacturing, maintenance and removal from the market, has become a strategic priority in many company's boardrooms (Teresko, 2004). For example, in the pharmaceutical industry, the development time for new drugs has almost doubled over the last 30 years and the average drug development costs exceed US $ 800 million. Reshaping the life cycle curve so that profitability starts earlier and maturity ends later is seen as a matter of survival (Daly & Kolassa, 2004). The automotive industry is another vivid example of where success or failure is strongly influenced by the company's ability to proactively manage product life cycles (Korth, 2003). Increased product complexity, greater reliance on outsourcing and a growing need for collaboration with a rapidly expanding list of business partners are the specific PLC management challenges the industry faces (Teresko, 2004). Furthermore, in high-tech or fashion industries, accelerated technological and design changes explain why PLC management is at the forefront (Supply Chain Manager Europe, 2005). PLC management confronts the need to balance fast response to changing consumer demands with competitive pressure to seek cost reductions in sourcing, manufacturing and distribution. It needs to be based on a close alignment between customer-facing functions (e.g. marketing, sales, customer service) and supply functions (e.g. purchasing, manufacturing, logistics) (Combs, 2004, Conner, 2004, Hughes, 1990 and O'Marah, 2003).
A new, emerging business model, which builds on a close alignment between marketing and supply chain competencies and which has been related to product life cycles, is demand chain management (e.g. Aitken, Childerhouse, Christopher, & Towill, 2005). Demand chain management links demand creation (historic domain of marketing) and fulfilment (domain of supply chain) processes by starting with the specific customer needs, and designing the supply chain to satisfy these needs (Heikkilä, 2002). While most demand chain management contributions stem from supply chain management and operations (e.g. Childerhouse et al., 2002, Lee, 2001, Lee and Whang, 2001, Rainbird, 2004 and Vollmann et al., 1995), selected citations among marketing academics can also be traced (Baker, 2003 and Jüttner et al., in press). More importantly, the link between product life cycles and demand chain management has not yet been addressed from a marketing perspective, but only from an operations and supply chain perspective. Here, product life cycles are primarily understood as a classification variable supporting the design of different demand chain strategies. Finally, to date, no contributions have investigated the development of demand chain strategies within organisations and this has been suggested as an important area for research (Aitken et al., 2005). This paper aims to fill the research gaps identified in the emerging demand chain management approach. It investigates the development of the demand chain alignment competence and the role of PLC management for the competence building process. The objectives of the paper are first, to define the role of PLC management within demand chain alignment; second, to demonstrate the advantages of a close linkage between PLC management and demand chain alignment and third, to explore the organisational consequences of such an alignment. The paper is structured into three parts. In the first part, the demand chain alignment competence is defined and three research propositions related to the proposed linkage with PLC management are derived from a literature review. Next, a case study from a global tobacco company is analysed to explore the research propositions in practice. Finally, in the third part, we incorporate our revised theoretical propositions in a proposed model and discuss the implications of the research.
