Academic journal article ASBM Journal of Management

Supply Chain Management and Marketing Integration: Developing a Complementary Framework

Academic journal article ASBM Journal of Management

Supply Chain Management and Marketing Integration: Developing a Complementary Framework

Article excerpt

Introduction

Supply Chain Management (SCM) is "the management of upstream and downstream relationships with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole" (Christopher, 1998). According to Council of Supply Chain Management Professionals (CSCMP), the goal of SCM is the integration of supply (e.g., logistics and operations) and demand (e.g., marketing) management within and across firms. Thus, it is essential to understand the marketing perspective also instead of solely focusing on SCM decisions.

Generally, SCM seeks to optimize supply, whereas marketing seeks to optimize demand. SCM is cost focused, deals with production and distribution; whereas marketing is revenue focused, and involves identifying and responding to customer needs. The result is the SCM and marketing efforts move in adversarial directions as they often operate as self-optimizing, independent entities. Better integration of SCM and marketing provides greater flexibility to satisfy customer demand based on the needs of individual customers and their value to a company.

Literature Review

The view of the SCM as key contributor of reducing cost, improving efficiencies, and rewarding end customers with low prices, seems somewhat inappropriate to those who are influenced by the notion that marketing was the dominant corporate philosophy (Walters, 2006). As customer needs are ultimately seen spinning around lower price as a major determinant of satisfaction, supply chain efficiency is mistaken for effectiveness, with undue short-term emphasis on cost reduction at the expense of broader and long-term business goals (Walters and Rainbird, 2004).

Competitive advantage from SCM emanates primarily from the dual-edged sword of cost reduction and revenue enhancement (Green et al., 2006). SCM evolved from a traditional focus on purchasing and logistics to a broader, more integrated emphasis on value creation. According to Kampstra et al., (2006), leading firms increasingly view SCM excellence as more than just a source of cost reduction - rather, they see it as a source of competitive advantage. Martin and Grbac (2003) claimed that SCM is very critical to the responsiveness to customer needs. SCM is an integrated philosophy, spanning boundaries in the organization and crossing departments without regard to the functional silos that have existed for many years (Parente et al., 2008). Successful SCM initiatives require cross-functional integration and marketing must play a critical role. The challenge is to determine how to successfully accomplish this integration (Lambert and Cooper, 2000). Lummus et al., (2003) examined the impact of marketing initiatives on the SCM. Ryals and Rogers (2006) pointed out that substantial developments within SCM such as strategic procurement and marketing logistics (Christopher, 2005) remained largely unnoticed by marketing.

Integration of SCM and marketing decisions should be a prime concern for firms. Supply chain actions, should always be aligned with the business strategy of the firm and include upstream (i.e., order processing) and downstream (i.e., demand management and customer service) activities (Sahay and Mohan, 2003) in order to facilitate the integration of the supply chain (Lummus & Demarie, 2006). According to Ryals and Humphries (2007), many research constructs and best practices within SCM and marketing seem to be converging. Although, most of these studies have focused on importance of SCM and marketing in the value chain on a stand- alone basis, integration of SCM and marketing is not explored much. This paper works in this direction and provides framework for enhancing and evaluating integration between SCM and marketing.

SCM and Marketing Integration : Key Issues

Enhancing cross functional integration and collaboration of SCM and marketing aligns demand and supply management processes. However, research suggests that such integration is not prevalent and that collaboration between SCM and marketing areas primarily responsible for serving the firm's customers is inadequate (Esper et ah, 2010). …

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