Conceptual and empirical research on the concept of market orientation has long suggested that interfunctional coordination is key to achieving the main goal of marketing, the creation of superior customer value (e.g. Jaworski and Kohli, 1993 and Kohli and Jaworski, 1990). As a consequence, a stream of research on the relationship between marketing and R&D (e.g. Gupta, Raj, & Wilemon, 1986), marketing and finance (e.g. Rajendra, Srivastava, Shervani, & Fahey, 1998), marketing and engineering (Fisher, Maltz, & Jaworski, 1997) and the integration of marketing with several other functions in the formation of business strategy can be traced (e.g. Hutt et al., 1988 and Kahn and Mentzer, 1998). The overarching rationale of this research is that customer value is being created through the integration of areas that are not traditionally associated with marketing.
The relationship between different disciplines sharing the same customer focus and market commitment has always had an underlying internal competition for primacy, i.e. it is also concerned with how each of the functions add value to the company. Over the last decade, critical voices have stressed that marketing has generally not been very good at managing out-of-the-box and across boundaries (Piercy, 2002), has been complacent in its view that marketing “owns the customer” (Brady & Davis, 1993), has failed to provide the coherence to corporate organisation, operations and processes that its proponents claim (Rainbird, 2004), and, consequently, was outpaced by new models aimed at building value which originated mainly in manufacturing, operations or IT, but not in marketing (Doyle, 1996).
One of these models, which has rapidly become a strategic priority in many companies, is supply chain management (SCM). SCM has grown in importance since the early 1990s, although the approach was introduced in early 1980 (Oliver & Webber, 1982). SCM can be defined as “the management of upstream and downstream relationships with suppliers and customers in order to create enhanced value in the final market place at less cost to the supply chain as a whole” (Christopher, 1998). The synergies between SCM and marketing have been widely acknowledged (e.g. Ellinger, 2000, Martin and Grbac, 2003 and Svensson, 2002), leading some to conclude that better coordination could define competitive superiority in new ways (Piercy, 2002, p. 247).
The most recently introduced approach of demand chain management (DCM) seems to capture the proposed synergies between SCM and marketing by starting with the specific customer needs and designing the chain to satisfy these needs, instead of starting with the supplier/manufacturer and working forwards (Heikkilä, 2002). Such an integration seems mandatory in today's marketplace, where customers benefit from having real-time access to their accounts, making real-time changes in their customised product configuration and communicating their individual service requirements. While most DCM contributions to date stem from SCM 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). This paper proposes DCM as a model which can stimulate new research in marketing, and thereby leverage its contribution to value creation for the customer as well as for the company.
So far, most contributions to DCM have been based on best practice examples (e.g. Langabeer and Rose, 2002, Lee and Whang, 2001, Deloitte, 2002 and SAP, 2003) and lack a conceptual foundation. In order to develop a DCM framework and derive the roles of marketing within DCM, we conducted a co-development workshop as well as focus group discussions to generate additional practitioner input.
The objectives of our paper are firstly, to show the advantages of an integration between marketing and SCM; secondly, to demonstrate how DCM can leverage the strengths of marketing and SCM and meet the challenges of customer value creation in today's marketplace and thirdly; to suggest a conceptual framework for DCM with propositions for further research addressing the role of marketing in DCM. We draw on a literature review and compare, contrast and supplement it with our findings from a discovery-orientated co-development workshop and validating focus group discussions. The article is organised into three parts: in the first part, the benefits of the integration between marketing and supply chain management are discussed. Next, the few existing works on demand chain management are presented and the concept is defined. In the third and main part, a conceptual model for demand chain management that integrates the emerging themes from our exploratory field work with the existing literature is developed and the roles of marketing within DCM are derived.
In today's markets, understanding the customer's situation and responding effectively to differing needs through the coordination of marketing and SCM can be a source of superior customer value creation. This paper has introduced DCM as a model which combines the strengths of marketing and SCM by shifting the focus to the customer and designing customer-centred supply chains. Marketing is traditionally externally focused and creates customer value, while SCM is inwardly focused and concentrates on the efficient use of resources in implementing marketing decisions. Marketing and SCM integration is hence between those that define demand with those who fulfill it. Until today, the concept of DCM has been addressed from SCM and operations perspectives; however, despite its clear relevance, no marketing contribution can be cited. By outlining the roles of marketing in demand chains, the paper closes this gap and proposes several important new areas for future research in marketing.
Widely cited examples of successful companies following the principles of DCM, such as Dell in the computer industry or Zara in the fashion industry (Margretta, 1998 and Walker et al., 2000), lead us to believe that more companies will adopt DCM in their quest to gain competitive advantage. These companies increase profitability through product availability, delivery accuracy, responsiveness and flexibility by tightly linking customer and supply initiatives. Within DCM, marketing and SCM work together to develop suitable relationships for different customers, develop joint customer prioritisation strategies, process accurate customer information and match value requirements with operational capabilities. Our conceptual framework suggests new roles for marketing within DCM which imply new areas for research (see Table 2).
