Demand Chain Management: Enhancing Customer Value Proposition

March 10, 2013 • Business Process, OPERATION, Supply Chain

DCM creates strategic assets for the firm in terms of the overall value creation as it enables the firm to implement and integrate marketing and SCM strategies that improve its overall performance.

The supply chain comprises all the supply processes necessary to fulfil customer demand and is managed within supply chain management (SCM). SCM focuses on the efficient matching of supply with demand but does not help the firm to find out what the customer perceives as valuable, and how this customer-perceived value can be translated into customer value propositions. Hence, SCM efficiency by itself will not increase customer value and satisfaction. Providing customer service in the value chain is largely the domain of two functional areas – marketing and SCM. Supply chains capable of implementing and executing an integrated and coordinated marketing strategy at the supply chain level focused on the ultimate customers will gain competitive advantage.1 Thus, it is essential to understand the marketing perspective also instead of solely focusing on SCM decisions. Marketing and SCM often operate as self-optimizing, independent entities. Marketing combined with dynamic SCM provides greater flexibility to satisfy customer demand based on the needs of individual customers and their value to a firm. To be successful, firm not only needs to focus on the supply chain, but also on the demand chain. The demand chain comprises all the demand processes necessary to understand, create, and stimulate customer demand and is managed within demand chain management (DCM). DCM is defined as “The alignment of demand creation and demand fulfilment processes across functional, organizational, and inter-organizational boundaries”.2 Hence, DCM can leverage the strengths of marketing and SCM and meet the challenges of customer value creation in today’s marketplace.

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