Demand chain effectiveness – supply chain efficiencies

Abstract

Purpose The purpose of this research is to argue that a number of organisations focused their efforts on developing sophisticated supply chains such that their managerial focus became myopic, and many lost sight of their markets and their customers, missing the fact that the customers, failing to realise their expectations, switched their loyalties. Thus it is argued here that it is essential to understand the demand chain prior to making supply chain structure decisions. Design/methodology/approach The first step is to reinforce the point that both supply chain management and demand chain management are about process management. The second step is to re‐validate the notion of the demand chain as a separate entity from the supply chain. Findings It is interesting to postulate that the differences between the demand chain‐led organization and the supply chain‐led organisation are based on emphasis. The paper attempts to make this point by suggesting that, while supply chain management is to a degree customer‐focused, the emphasis is on efficiency. Management concern is cost‐led and attempts to provide an adequate level of service. The danger here is that customers may be “aggregated” or fitted into categories that appear to be nearly relevant. Thus the link between supplier relationship management and customer relationship management is tenuous. By contrast the demand chain approach is a broader view of relationship management, taking a view that supplier and customer relationship management overlap, and that effective management is to integrate the two. If this is achieved, it results in bringing often conflicting objectives more closely together. Research limitations/implications Contrasting the demand chain approach as a broader view of relationship management, and taking the view that effective management is to integrate the two. The view is that, if this is achieved, it results in bringing often conflicting objectives more closely together. Clearly more research is needed before such a view can be held with conviction. Practical implications This paper argues that a number of organisations focused their efforts on developing sophisticated supply chains such that their managerial focus became myopic, and many lost sight of their markets and their customers, missing the fact that the customers, failing to realise their expectations, switched their loyalties. Originality/value It is argued here that it is essential to understand the demand chain prior to making supply chain structure decisions.

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