Demand-Supply Chain Management

Doctoral thesis, 2010

Purpose: This research aims to enhance the current understanding and knowledge of the demand-supply chain management (DSCM) concept by determining its elements, benefits, and requirements, as well as by analyzing key elements of the concept. Methodology: This research has utilized the case study strategy and the survey strategy, however, the case study strategy dominates. The case study research has involved five companies originating from Sweden and the collection of empirical data mainly from in-depth interviews with key persons representing senior and middle management. The survey research targeted the largest firms in Sweden and Finland and empirical data was collected through an online questionnaire. Findings: This research has established that the main elements of DSCM include market orientation, coordination of the demand and supply processes, viewing the demand and supply processes as being equally important, as well as value creation, differentiation, innovativeness, responsiveness, and cost-efficiency in the demand and supply processes. It has also been revealed that the main benefits of DSCM include enhanced competiveness, enhanced demand chain performance, as well as enhanced supply chain performance, while the main requirements of DSCM include organizational competences, company established principles, demand-supply chain collaboration, and information technology support. A key element of DSCM further investigated is differentiation focused supply chain design. It has been shown that these efforts can be organized into a process of five stages. In addition, it is important that this process is addressed in parallel with the new product development (NPD) process, that information is exchanged between them, and that they are directed on the basis of the same segmentation model. Another key element of DSCM further investigated is coordination between NPD and SCM. This research has identified several significant linkages between these management directions, which motivate the use of an integrative NPD process where the NPD functions are aligned with the main supply functions in the company and other sales-related functions supporting the commercialization. A final key element of DSCM further investigated is the significance of regarding the demand processes and the supply processes as being equally important. This research has revealed that logistics outsourcing can be risky, if it results in the supply processes being considered less important. Nevertheless, if senior management regards the outsourced processes as equally important as the in-house processes, the effect of logistics outsourcing on company strategies and direction in SCM could be reduced and logistics outsourcing could instead provide an opportunity to improve the design and differentiation of the supply chain. Research limitations/implications: This research has proposed, described, and further analyzed a demand-supply oriented management approach. Such a management approach stresses that the demand processes and the supply processes have to be coordinated and directed at an overlying level, in order to gain and sustain a competitive advantage in competitive and fragmented markets. This research is mainly explorative in nature, and more empirical data, from similar and other research settings, is needed to further validate the findings. Another limitation of the research is that it is essentially limited to Swedish companies (even if some Finnish companies are involved in the survey), however, many of the case companies have a large international presence and are among the top three in their industries, facts which provide some grounds for generalization. Practical implications: This research provides researchers and practitioners with insights into how to develop a demand-supply oriented business. It shows that companies should organize themselves around understanding how customer value is created and delivered, as well as how these processes and management directions can be coordinated. In order for this to occur, the demand and supply processes must be considered as being equally important and the firm needs to be managed jointly and in a coordinated manner by the demand- and supply-side of the company. It is also important that value creation is considered in both the demand and supply processes. Originality/value: Despite strong arguments from both researchers and practitioners for a demand-supply oriented management approach only a minority of companies appear to have effectively coordinated the demand and supply processes. This might be influenced by the lack of research examining how the demand and supply processes can be coordinated, what benefits can be gained by coordinating them, and what requirements are necessary to succeed. This research contributes by investigating these types of aspects further.