Industrial Marketing Management 35 (2006) 989 – 1001
Demand chain alignment competence — delivering value through
product life cycle management
Uta Jüttner ⁎, Janet Godsell 1 , Martin G. Christopher 1
Centre for Logistics and Supply Chain Management, Cranfield School of Management, Cranfield University, Cranfield, Bedfordshire, MK43 0AL, UK
Received 1 September 2005; received in revised form 1 February 2006; accepted 1 March 2006
Available online 24 July 2006
Abstract
This paper endorses demand chain alignment as a competence that supports effective product life cycle (PLC) management. Demand chain
alignment integrates the demand creation (historic domain of marketing) and demand fulfilment processes (domain of supply chain management),
to develop and to deliver products that convey superior customer value while deploying resources efficiently. So far, the relationship between
demand chain alignment and PLC management has only been addressed from an operations and demand/supply chain perspective, but not from a
marketing perspective. Three research propositions, on the relationship between both concepts, are derived from a literature review and applied to
a case study from a global player in the tobacco industry. The findings do not support the current view that the product life cycle is a marketoriented classification variable for demand chain strategies. Instead, demand chain alignment needs to link customer needs-based segments with
the supply chain. Moreover, PLC management and demand chain alignment have a mutually reinforcing relationship, in which PLC management
can facilitate the competence development, ensures a dynamic perspective and, at the same time, benefits from aligned demand creation and
fulfilment processes. Based on the findings, a model integrating demand chain alignment and PLC management is proposed.
© 2006 Elsevier Inc. All rights reserved.
Keywords: Product life cycle; Supply chain and marketing integration; Process alignment
1. Introduction
Product life cycle (PLC) management as the integrated,
information-driven approach to all aspects of a product's life,
from concept to design, manufacturing, maintenance and removal
from the market, has become a strategic priority in many company's boardrooms (Teresko, 2004). For example, in the pharmaceutical industry, the development time for new drugs has
almost doubled over the last 30 years and the average drug
development costs exceed US $ 800 million. Reshaping the life
cycle curve so that profitability starts earlier and maturity ends
later is seen as a matter of survival (Daly & Kolassa, 2004). The
automotive industry is another vivid example of where success or
⁎ Corresponding author. Tel.: +44 1234 751122; fax: +44 1234 752158.
E-mail addresses: u.b.juettner@cranfield.ac.uk (U. Jüttner),
Janet.Godsell@cranfield.ac.uk (J. Godsell), m.g.christopher@cranfield.ac.uk
(M.G. Christopher).
1
Tel.: +44 1234 751122; fax: +44 1234 752158.
0019-8501/$ - see front matter © 2006 Elsevier Inc. All rights reserved.
doi:10.1016/j.indmarman.2006.03.003
failure is strongly influenced by the company's ability to proactively manage product life cycles (Korth, 2003). Increased
product complexity, greater reliance on outsourcing and a growing need for collaboration with a rapidly expanding list of business partners are the specific PLC management challenges the
industry faces (Teresko, 2004). Furthermore, in high-tech or
fashion industries, accelerated technological and design changes
explain why PLC management is at the forefront (Supply Chain
Manager Europe, 2005). PLC management confronts the need to
balance fast response to changing consumer demands with competitive pressure to seek cost reductions in sourcing, manufacturing and distribution. It needs to be based on a close alignment
between customer-facing functions (e.g. marketing, sales,
customer service) and supply functions (e.g. purchasing,
manufacturing, logistics) (Combs, 2004; Conner, 2004; Hughes,
1990; O'Marah, 2003).
A new, emerging business model, which builds on a close
alignment between marketing and supply chain competencies and
which has been related to product life cycles, is demand chain
990
U. Jüttner et al. / Industrial Marketing Management 35 (2006) 989–1001
management (e.g. Aitken, Childerhouse, Christopher, & Towill,
2005). Demand chain management links demand creation
(historic domain of marketing) and fulfilment (domain of supply
chain) processes by starting with the specific customer needs, and
designing the supply chain to satisfy these needs (Heikkilä, 2002).
While most demand chain management contributions stem from
supply chain management and operations (e.g. Childerhouse,
Aitken, & Towill, 2002; Lee, 2001; Lee & Whang, 2001;
Rainbird, 2004; Vollmann, Cordon, & Raabe, 1995), selected
citations among marketing academics can also be traced (Baker,
2003; Jüttner, Christopher, & Baker, in press). More importantly,
the link between product life cycles and demand chain
management has not yet been addressed from a marketing
perspective, but only from an operations and supply chain
perspective. Here, product life cycles are primarily understood as
a classification variable supporting the design of different demand
chain strategies. Finally, to date, no contributions have investigated the development of demand chain strategies within
organisations and this has been suggested as an important area
for research (Aitken et al., 2005). This paper aims to fill the
research gaps identified in the emerging demand chain management approach. It investigates the development of the demand
chain alignment competence and the role of PLC management for
the competence building process. The objectives of the paper are
first, to define the role of PLC management within demand chain
alignment; second, to demonstrate the advantages of a close
linkage between PLC management and demand chain alignment
and third, to explore the organisational consequences of such an
alignment. The paper is structured into three parts. In the first part,
the demand chain alignment competence is defined and three
research propositions related to the proposed linkage with PLC
management are derived from a literature review. Next, a case
study from a global tobacco company is analysed to explore the
research propositions in practice. Finally, in the third part, we
incorporate our revised theoretical propositions in a proposed
model and discuss the implications of the research.
2. An overview of the literature
Literature relating to our research focus arises in two contexts:
first, perspectives on marketing, supply chain and integrated demand chain competencies and secondly, literature linking the
product life cycle with demand or supply chain strategies.
2.1. Demand chain alignment competence
Ever since the emergence of the competence-based perspective
of the firm in the 1980s and early 1990s (e.g. Barney, 1991; Grant,
1991; Prahalad & Hamel, 1990), different disciplines have aimed
at identifying the specific functional competencies which contribute to a company's performance and competitive advantage.
In the literature, not only have marketing (e.g. Conant, Modwa, &
Varadarajan, 1990) and supply chain (e.g. Spekman, Spear, &
Kamauff, 2002) competencies been related to competitive advantage, separately, but a number of studies can be cited which
support the argument that the integration of both marketing and
supply chain competencies can leverage a combined effect (e.g.
Ellinger, 2000; Martin & Grbac, 2003; Piercy, 2002; Srivastava,
Shervani, & Fahey, 1999; Waller, Dabholkar, & Gentry, 2000).
These works are characterised by a broadened view looking
more comprehensively at demand creation competencies (marketing, product management, customer relationship management)
and demand fulfilment competencies (supply chain management,
logistics, operations, manufacturing). For example, Day (1994)
suggests a classification of outside-in capabilities, inside-out capabilities and spanning capabilities. Outside-in capabilities such
as market sensing, customer linking and channel bonding are
needed to sense external opportunities and to decide how to best
use inside-out capabilities such as integrated logistics, manufacturing processes or cost control. Finally, spanning capabilities like
customer order fulfilment or new product/service development
integrate the inside-out and outside-in capabilities. Waller et al.
(2000) build on this classification and propose that the concept of
market-oriented supply chain strategies captures the mutually
reinforcing relationship between these three different capability
types. Srivastava et al. (1999) develop a framework with three
core processes, supply chain management, product development
management and customer relationship management that generate value for customers as well as shareholders. The execution of
these processes will come alive as organisational capability. The
authors emphasise that exploiting the interdependencies between
these core business processes is more likely to lead to marketplace
success.
The integration of marketing and supply chain processes, the
main tenet of these earlier works, is also captured in the emerging
demand chain management concept. Demand chain management
has been defined as “an understanding of current and future
customer expectations, market characteristics, and of the available
response alternatives to meet these through deployment of
operational processes” (Rainbird, 2004, p. 242). The origins of
this approach are in supply chain management, and its proponents
claim that in today's market environment a shift in the focus of
supply chain management is needed (e.g. Holmström, Hoover,
Louhilouto, & Vasara, 2000). Many conventional supply chains
are designed from the ‘factory outwards’ rather than from the
‘customer backwards’. Underlining traditional thinking on supply
chain design has been the implicit objective of enabling the
achievement of purchasing, manufacturing and distribution efficiencies. Still, as Piercy (2002) argues, a supply chain strength
that is not linked to marketing differentiation usually limits the
company to competing on price and availability; a strategy followed, for example, by cheap generics providers. Moreover, Lee
(2001) emphasises the problems of supply chain management
acting independently of marketing management. Differentiated
demand for products and services is a key input to supply chain
management. If consistent and timely customer and demand
information does not flow, the company will not be able to respond to differentiated needs of individual customers and customer
segments. Companies which effectively link their customer and
supply chain operations gain competitive advantage by differentiating not only customer-needs based products and services, but
also the underlying delivery processes (Jüttner et al., in press). By
closely linking the supply chain with demand processes, these
companies can more proactively address emerging and changing
U. Jüttner et al. / Industrial Marketing Management 35 (2006) 989–1001
customer needs, translate those insights into marketable offers and
reduce the time-to-market (Walters & Rainbird, 2004).
In order to stress that the approach should neither be marketing
nor supply chain-driven but requires an aligned process
management approach, the term demand chain is proposed. The
demand chain focuses on the alignment of marketing and supply
chain management processes and takes a long-term, competence
development view.
To summarise, the existing bodies of knowledge identified in
the literature review suggest that the demand chain alignment
competence can be a source of competitive advantage. Thus, we
can formally state the following proposition:
Proposition 1. Demand chain alignment is an organisational
competence which integrates demand creation (marketing-led)
and demand fulfilment (supply chain-led) processes, and which
can be a source of competitive advantage.
2.2. The product life cycle and demand/supply chain strategies
There is a long history of contributions linking product types in
general, and the product life cycle specifically, with operations,
supply or demand chain management. A common thread of these
works is that they appear to suggest that product classifications,
like the life cycle, are suited to bringing the “market dimension”
into operations, supply or demand chain management (see Table 1
for an overview).
In 1979, Hayes and Wheelwright (1979a,b) first emphasised,
from a manufacturing perspective, the need to link operation
processes with products in the life cycle. They suggested that
there is an optimum manufacturing process for each stage in the
product life cycle, and proposed a two-dimensional matrix with
product and process life cycles which can support “corporate
positioning” (p. 127) along both dimensions. Together, these
dimensions ensure that the company's manufacturing competence is linked with its product and market competence which
ultimately can provide a competitive advantage. In a similar vein,
Lampel and Mintzberg (1996) propose strategies of customisation
and standardization throughout the operating process of manufacturing, the products, as well as the associated transactions by
which buyers come to agreements with sellers. They suggest that
wherever a particular process is located on the continuum of standardization and customisation, so too must the associated products and transactions (p. 27). In the late 1990s, as supply chain
management gained more momentum, the question of strategic
choice was extended from a product–process choice to one of
product–supply chain, accordingly (Fisher, 1997). Fisher (1997)
suggests a match between responsive supply chains and innovative products and efficient supply chains and functional products. His work was also the first to locate the root cause of the
problems plaguing many supply chains at the time in a mismatch
between the type of product and the type of supply chain (p. 106).
This philosophy of “one size does not fit all” (Shewchuck, 1998),
and the use of product-related classifications as a means of
differentiating supply chains, was further refined and extended.
For example, Pagh and Cooper (1998) suggest different supply
chain strategies based on the product life cycle, product design
991
Table 1
Product and PLC-based classifications of demand/supply chains or
manufacturing processes in the literature
Authors
Product (life cycle) —
related classification
Demand/supply chain or
manufacturing process
classification
Hayes and
Wheelwright
(1979a,b)
Product life cycle:
Manufacturing —
process life cycle:
▪ Low volume — low
standardization
▪ Multiple products — low
volume
▪ Few major products — higher
volume
▪ High volume — high
standardization — commodity
products
Product type:
▪Jumbled flow (job shop)
Lampel and
Mintzberg
(1996)
▪ Customization
▪ Tailored customization
▪ Customised standardization
▪ Segmented standardization
Fisher (1997)
▪ Standardization
Product demand pattern:
▪ Innovative
▪ Functional
Pagh and Cooper
(1998)
Product life cycle:
▪ Introduction
▪ Growth
▪ Maturation
▪ Maturity/decline
Lamming et al.
(2000)
Product design
characteristics:
▪ Standard
▪ Customised
Product range:
▪ Narrow
▪ Wide
Product type:
▪ Degree of innovation
▪ Uniqueness
▪ Complexity
Childerhouse et al. Product life cycle:
(2002)
▪ Introduction
▪ Growth
▪ Maturity
▪ Saturation
▪ Decline
▪Disconnected line
flow (batch)
▪Connected line
(assembly line)
▪Continuous flow
Process strategies:
▪Customization
▪Tailored customization
▪Customised
standardization
▪Segmented
standardization
▪Standardization
Supply chain strategies:
▪Market-responsive
supply chain
▪Physically efficient
supply chain
Supply chain
(postponement and
speculation) strategies:
▪Full speculation
strategy
▪Manufacturing
postponement strategy
▪Logistics postponement
strategy
▪Full postponement
strategy
Supply chain
network types:
▪Innovative—unique
and complex
▪Innovative—unique
and non-complex
▪Functional and complex
▪Functional and
non-complex
Demand chains:
▪Design and build
▪MRP
▪Kanban
▪Packing centre
▪MRP
992
U. Jüttner et al. / Industrial Marketing Management 35 (2006) 989–1001
characteristics and the product range. Furthermore, in their attempt to develop an initial supply network classification, Lamming,
Johnsen, Zheng, & Harland (2000) suggest that differences in
supply networks can be traced down to differences in the products' degrees of innovation, uniqueness and complexity.
From the emerging demand chain management perspective,
extended product classifications also provide the basis for the
design of demand chain strategies. For example, Childerhouse et
al. (2002) apply the product classification system with five parameters, developed by Christopher and Towill (2002) (duration of
life cycle, time window for delivery, volume, variety and variability), to the demand chain management approach of their case
company in the lighting industry. Interestingly, the product life
cycle appears to be best suited to explain the five different demand
chain strategies identified. According to the authors, the product
life cycle provides not only the basis for shaping the demand chain
to suit particular marketplaces, but it incorporates the dynamic
perspective needed in order to adapt to changing marketplace
conditions. The dynamic product routing through its product
life cycle is best supported by demand chain strategies ranging
from “design and build” in the introduction phase, via “MRP”
and “Kanban” in the growth and maturity phases, to “packaging
centre” and “MRP” in the product's saturation and decline
phases.
To summarise, the life cycle of a product seems to be a widespread dimension used to ensure customer focus within operations, supply and demand chain management. Furthermore, it is
used as a classification variable for different supply and demand
chain strategies proposed in the literature. We agree with the
compelling arguments that first, PLC management is closely
linked to demand chain alignment because the nature of the
demand of a company's products will influence the integrated
processes applied to serving the market. Secondly, we also support the reasoning that the life cycle incorporates the essential
dynamic perspective of the demand chain alignment competence.
Demand chain alignment needs to be continuously revised in
order to bring to light the coordinated changes in the underlying
demand and supply processes. These dynamics cannot be captured alone by the notion of having to run multiple parallel
“pipelines” (Aitken et al., 2005). Instead, changes over time
within the given processes need to be considered.
However, in contrast to the argument held in the literature, we
do not support the view that the product life cycle sufficiently
represents the demand creation and marketing-led perspective of
demand chain alignment. Within the marketing field, the fact that
customers buy on value and not on products is common knowledge. If “demand chains need to be engineered to match customer
requirements” (Childerhouse et al., 2002, p. 687), product characteristics can hardly be an indicator of customer requirements or
value preferences. Nor do products support the identification of
customer value segments. From a marketing perspective, Christopher, Godsell, and Jüttner (2005) even suggest that demand chain
management relies on “customer insight”. The insight includes
not only the different value preferences of the market segments
but also the emerging trends in customer requirements. In order to
gain a more refined understanding of the specific role of PLC
management for demand chain alignment, existing research on
classification-based demand chain strategies needs to be complemented by an in-depth understanding of the underlying organizational processes. Based on the literature review, we therefore
suggest the following propositions regarding the relationship
between PLC management and demand chain alignment:
Proposition 2. The demand chain alignment competence is
closely linked with PLC management.
Proposition 3. The product life cycle does not sufficiently
represent the demand creation or marketing dimension within
the demand chain alignment competence.
3. The case study
3.1. Case methodology
The three propositions were explored in a single case study of a
global tobacco company. Given that the company met the selection criteria derived from the research propositions, validity of the
choice of the case is provided (Mentzer & Flint, 1997). First, it had
a predisposition to the concept of aligning demand creation and
demand fulfilment processes. Secondly, access to the company
enabled us to explore demand chain alignment from a crossfunctional perspective using key informants, which also supports
construct validity (Ellram, 1996). Thirdly, the focus of the case
study was restricted to the company's developing presence in a
major Eastern European (EE) country, a market which is clearly
driven by product life cycles. Overall, PLC management is of
much higher relevance for the FMCG tobacco industry than
common knowledge might suggest. In the focused EE country in
particular, the important role of PLC management was explained
by the rather diverse product portfolio the company maintained.
Mature products with stable life cycles like the big international
flagship brands had to be managed simultaneously with new
products and rather unpredictable life cycles. The latter could
emerge from a variety of different sources, among them entirely
new products like snus (a form of smokeless tobacco), new blends
(menthol, local brands), new pack sizes or customer specific
graphic printing and packaging.
As noted by Mentzer and Flint (1997, p. 199), positivistic
theoretical research is inherently a process of induction from
observing real world examples, leading to deduction of specific
hypotheses to be tested and finally generalizing the results. Given
that the main purpose of our own study is to explain a heretofore
unstudied phenomenon and to eventually develop theoretical
propositions (McCutcheon & Meredith, 1993), it can be located at
the initial induction phase. In this early stage, a strong advantage of
the case study method is that we can investigate the demand chain
alignment competence without removing it from the social and
“real life” context (Bonoma, 1985). Furthermore, the richness and
depth of the case study methodology captures the complexity of
the linkage between demand alignment and PLC management–
the focus for this paper– (Yin, 1994). Still, because we agree with
those who have emphasized the need to make case study research
procedures and processes explicit, so that the soundness and
appropriateness can be judged, a case study research protocol is
listed in the Appendix (Ellram, 1996).
U. Jüttner et al. / Industrial Marketing Management 35 (2006) 989–1001
3.2. Data collection
The case study presented in this paper is part of a wider
government-funded research project which aimed at exploring the
paramount question of how market knowledge can drive supply
chain strategy to deliver customer responsiveness. Interestingly,
the analysis of the semi-structured interviews conducted in the
tobacco company revealed the linkage between demand chain
alignment and effective PLC management as a new and unexpected relationship. The discovery of such related yet unintended
relationships between the concepts studied has been stressed as a
further advantage of the case study methodology (e.g. Katzdin,
1980). We decided that this finding warrants further investigation
and agreed to go back to the company in order to collect further
data on the propositions developed from the literature review. A
3 day workshop and a 1 day report back meeting were conducted
with overall 25 senior managers of the tobacco company. The
workshop delegates represented supply chain, marketing and
cross-functional and support functions (see Table 2).
This specific study thus focuses on a single instrumental case
(Stake, 1998), which we will refer to as ‘TobaccoCo’. The workshops as a primary means of data collection were organised to
facilitate the investigation of the linkage between demand chain
alignment and PLC management. They took place on the company's premises and were an equal blend of:
1. Theoretical input on demand chain alignment and PLC
management provided by the research team.
2. Company input on the current strategies and processes for
marketing, supply chain management and PLC management.
3. Facilitated sessions to reflect the role of demand chain
alignment for PLC management.
The restricted focus of the workshops to the company's developing presence in the EE country did not only ensure a product
Table 2
Workshop delegates
Marketing
Supply chain
Cross-functional and
support functions
Group brand manager
Production
team coordinator
Regional manager
Programme director
Brand manager
General director—
marketing
Factory manager,
European supply
chain manager
Supply chain strategy
development manager
Procurement
project manager
Secondary supply
chain manager
Finance project manager
and head of special
projects — finance
Senior business analyst
IT business development
manager and IT systems
project manager
Project manager, project
executive and project
consultant
HR development and
resourcing manager
Change manager
Management accountant
Head of strategy and
planning
993
life cycle-driven context. In addition, it was predominantly a
‘closed loop’ supply chain, i.e. the product was made in the
country and supplied that country. This provided a level of simplicity for the study.
3.3. Findings
The results are now discussed in two sections, first, the role
of PLC management for demand chain alignment and secondly,
the development of an integrated demand chain strategy for
effective PLC management. These sections are followed by a
summarising case analysis in which the findings are compared
with the research propositions.
3.3.1. The role of PLC management for demand chain
alignment
Tobacco–Co's willingness to address the demand chain alignment competence stemmed from an acute awareness of current
problems with PLC management and the need for change. Even
as a global player with presence in countries all over the world, the
EE market was unequivocally judged as highly attractive and as
critical for a successful expansion into further EE markets. In
2004, the market volume was approximately 300 billion cigarettes
and further growth due to demographics as well as rising daily
consumption was projected. Nevertheless, despite its strategic
importance, the fact that it is was an immature market meant that
existing strategies implemented within other countries could not
be easily adapted. First, and consistent with the literature, it was
felt that the growth pattern in EE could differ dramatically from
other countries (Stremersch & Tellis, 2004). Secondly, in line with
findings from empirical studies on emerging markets, customer
requirements were changing more rapidly and competition was
fluid (Hooley, 1995). Therefore, the main strategic objective ‘to
build a focused, segmented, and differentiated product portfolio’
involved effectively managing overall 300 different products.
Within TobaccoCo, four processes specifying changes of a
product along its life cycle were distinguished: “new” products
including blend changes or packaging changes and “product
modifications” of existing blends or packaging. Whereas new
blends usually indicate the introduction of a new product, product
modifications are positioned at later phases in their life cycle.
These changes could apply to local blends sold only in the EE
market or to international blends. The complexity increased if
changes to international blends were necessary— for example in
situations where changing customer preferences in the EE market
triggered blend or packaging changes to the brands sold internationally. In the past, problems related to the implementation of
these processes impeded the proactive management of product
life cycles. Table 3 shows a summary of the salient issues identified by the workshop delegates.
Interestingly, the problems were located all along the supply
chain, from marketing functions (consumer tests, market
research) to the technical team (technology constraints) through
to production (long tooling lead time, i.e. the time it takes to
physically make the tools). This illustrates the notion of closely
aligned supply and marketing functions for PLC management
processes. Furthermore, the role of the suppliers within the
994
U. Jüttner et al. / Industrial Marketing Management 35 (2006) 989–1001
Table 3
TobaccoCo— issues with PLC Management
New blend packaging
(new product introduction)
Modification blend packaging
(changes in the maturity or
saturation phases)
International blend
Local blend
▪ Cumbersome
central approval
▪ Long consumer tests
▪ Long consumer
tests
▪ Lack of disciplined
process
▪ Long tooling
lead time
▪ Technology
constraints
▪ Lack of disciplined
process
▪ Technology
constraints
▪ Lack of supplier
flexibility
▪ Cumbersome central
approval
▪ Lack of supplier
flexibility
▪ Inefficient agency
▪ Lack of supplier
flexibility
▪ Inefficient agency
▪ Lack of disciplined
process
▪ Lack of disciplined
process
external supply chain is highlighted. Inflexible suppliers can slow
down the process substantially, even if only blend or packaging
modifications for local blends are implemented. A further common problem across all four forms was the need for a disciplined
process. An in-depth analysis revealed the bottlenecks within the
current cross-functional processes. Fig. 1 illustrates the timely and
cumbersome, company-spanning process for modifications to
current packaging, which overall took more than 25 weeks for
completion.
For any change, a product initiation brief (PIB) had to be
raised. This is a 5-stage process which has two routes depending
on whether it is a planned or reactive change. In both cases the
brief has to be approved by key personnel on the brand and
marketing side of the business. There is no supply chain involvement at this stage. Raising the paperwork alone generally takes in
the order of 2 days to 1 week. The two activities which consume
the most significant amounts of time are tooling (8 weeks) and
market research (10 weeks). Furthermore, final approval before
production was given via a cumbersome process, which involved
the product development director, the brand and marketing
directors, the operations and finance director and the general
manager. Overall, the delegates felt that the functional handovers
could not be avoided and are necessary for effective product
changes. At the same time the supply chain functions stressed that
they should be involved earlier in the process in order to have
sufficient time to cope with, for example, supplier issues. Still, a
lack of concurrency and multiple approvals led to long-lead times
and a general lack of flexibility. Everyone agreed that in order to
streamline the process, the commitment of all functions to the
critical and time sensitive steps was needed.
A more in-depth analysis revealed why the current demand
and supply processes were not well equipped for managing the
products throughout their life cycles. On the marketing side,
knowledge about customer segments and buying behaviour was
still patchy. Marketers were overwhelmed by the country's geographical scale and the specifics of the external environment,
starting from a highly active grey market to tightly controlled
sales channels. Given that the information flow from the customer
facing organisation back into the supply chain was poor, supply
Fig. 1. TobaccoCo — the process for introducing new packaging.
U. Jüttner et al. / Industrial Marketing Management 35 (2006) 989–1001
995
Fig. 2. TobaccoCo — linking consumer segments to manufacturing strategy.
functions independently dealt with their own problems. Whereas
suppliers from within the EE market could in theory ensure speed
and flexibility (e.g. Christopher, 2000), supplier quality and reliability was low. In addition, production came out of the three
factories TobaccoCo had bought from government owned bodies,
therefore a large part of the existing workforce had to be taken on
board. The lack of coordination between marketing and supply
functions was amplified by a high level of distrust. Marketing was
seen as pulling towards differentiation in order to meet the market
changes and supply functions aimed at controlling (and fixing) the
situation by installing standardisation.
To summarise, TobaccoCo's situation revealed that they had
insufficient skills to support and deliver profitable PLC management in the immature EE market. The main causes identified
for the PLC management problems, were related to a lack of
alignment between marketing-led and supply chain-led processes.
Fig. 3. TobaccoCo — linking customer and supply chain strategy.
996
U. Jüttner et al. / Industrial Marketing Management 35 (2006) 989–1001
Fig. 4. TobaccoCo — linking the demand chain with PLC management.
In line with the literature, this finding supports the proposition of a
close linkage between PLC management and demand chain
alignment. Moreover, it raises the question whether PLC management can even trigger the organisational awareness for the
need to closely align demand creation and demand fulfilment
processes. As the following section shows, TobaccoCo defined
demand chain alignment as a priority for their new strategy. As a
result, the roadmap to building the demand chain alignment
competence comprised three milestones: first, the definition of a
customer strategy, second, linking the customer strategy to the
supply chain strategy and third, the application of the aligned
process to PLC management.
3.3.2. Defining an integrated demand chain strategy for
effective PLC management
The roadmap outlined in this section was the result of an
iterative process which required several reviews in order to
ensure relevance and appropriateness. As outlined above, the
company had a predisposition towards demand chain alignment
and was keen to explore a suitable strategy. The 25 key stakeholders from across the demand chain were brought together to
jointly discuss the balanced approach.
Customer strategy
The first step was to reflect on the customer strategy.
Customer strategy comprises the translation of market and
customer knowledge into clearly defined customer segments and
the development of appropriate customer value propositions. It
was important that the customer segmentation should not only be
meaningful to sales and marketing but also to the supply chain.
In the particular EE market, the delegates identified two relevant
basis for segmentation:
1. consumer segmentation — which was a matrix between five
lifestyle segments and four price segments
2. channel segmentation — which occurred at two levels. The
primary level was the difference between city and rural
channels, and then within city or rural there were four
Fig. 5. An integrated model for demand chain alignment and PLC management.
U. Jüttner et al. / Industrial Marketing Management 35 (2006) 989–1001
different retail formats (grocery, general retail, off-license,
convenience).
These forms of segmentation were found to provide a link
between market understanding and supply strategy discussed next.
Linking customer strategy to supply chain strategy
The supply chain strategy comprises the elements of procurement, manufacturing, distribution and logistics. After much
debate and discussion it was found that there was a link between
consumer segmentation and the manufacturing element of the
supply chain strategy. In fact when the customer value drivers for
the customer segmentation matrix were considered, three different
manufacturing strategies were identified as illustrated in Fig. 2.
It was found that for the high value, prestigious grouping of
segments (i.e. the ‘high end’ of the market) where there was a high
degree of demand variability (wave/surge demand) driven by a
wider range of low volume, high value products potentially
requiring a relatively higher degree of customisation, an ‘agile’
response was required from the manufacturing element of the
supply chain. Conversely, it was found that for the more traditional, lower value grouping of segments (i.e. the ‘low end’ of the
market') where demand was relatively stable (base demand),
driven by a limited range of relatively standardised products, a
‘lean’ response was most appropriate. For the middle ground, it
was considered that a hybrid leagile response may be most appropriate as this was the segment most prone to promotional
activity (see also Aitken, Christopher, & Towill, 2002).
Furthermore, this was then considered to drive the procurement element of the supply chain strategy. Two primary modes of
operation were identified from the supply base. Firstly, the use of
continual replenishment (CR) to deal with ‘base’ demand for
standard components in large predictable volumes, spanning the
pure lean and lean element of the leagile manufacturing strategy.
Secondly, a responsive mode to deal with ‘surge’ or ‘wave’
demand for more customised components in much smaller, more
unpredictable volumes, in response to the pure agile and agile
element of the leagile manufacturing strategy.
A second link was made between the channel strategy and
distribution strategy. It was felt that areas of significant population
density (cities) presented the opportunity for a different approach
to physical distribution than in rural locations. Further, refinement
of distribution would then take place depending on retail outlet
type. The links between customer and supply chain strategy are
summarised in Fig. 3.
Applying the aligned process to PLC management
In a final step, the aligned process was linked to the Boston
Consulting Grid as a way of managing products through the life
cycle. While the matrix is certainly a simplification of product life
cycle dynamics, it turned out to be well suited for the discussion.
The tool was well recognised among marketers and supply chain
managers and hence provided a common language and a visual
opportunity to feed the aligned process into products at different
stages of the life cycle. TobaccoCo decided that the key demand
chain drivers of stockholding (inventory policy), distribution
policy and approach to cost management should be altered, de-
997
pending on the product's life cycle stage. For example, for a new
product after its launch (question mark), agility should be
dominant over price, which means that a tolerance to overstocking
would apply and flexibility should become the main principle for
the distribution system. Thereby, delivery could respond to point
of sales with high demand. In the product growth phase,
stockholding, distribution and cost-oriented policies should all
support the sales growth. Thus, the distribution system could
expand through new point of sales by moving, for example, from
big cities into more rural areas. For stockholding as well as costs
moderate optimization should enable competitive pricing. For
mature products with declining sales (cash cows), optimization
and efficiency should become a primary issue for stockholding,
while the expanded distribution system remains unchanged. Tight
cost control and optimized stockholding should be facilitated by
much more predictable sales forecasts. The cost focus would give
the product management team flexibility to adjust the prices if
necessary. Finally, towards the end of the life cycle, resources for
distribution and stockholding should be withdrawn and tolerance
to out of stock situations apply (see Fig. 4 below).
TobaccoCo was aware that while products in different phases
of their life cycle needed a different approach, the identification of
the products' life cycle development was difficult. The business
unit had even experienced situations when promising products
had to be removed soon after their launch because of sluggish
sales. In order to react to these unpredictable developments and to
manage the product life cycles effectively, visibility of information across all functions involved was seen as pivotal. The business unit had a Customer Relationship Management (CRM)
system which so far had been limited to the market interface. It
was decided that it should be extended to include the supply
functions and to serve as the information platform necessary to
drive the critical processes.
3.4. Case analysis
The purpose of the case study was to explore the three propositions derived from the literature review in practice. Regarding
the first proposition, that the demand chain alignment competence
can be a source of competitive advantage, the findings from
TobaccoCo do not provide clear evidence. At the time of the study,
TobaccoCo was still in the development phase and not yet in a
position to materialise the full market potential of the competence.
TobaccoCo's target was to become number one in the EE market
by the year 2010 and they felt comfortable that their demand chain
alignment approach would support the achievement of this
objective. Furthermore, the findings reveal that the demand chain
alignment competence appears to have the potential to meet the
criteria for competitive advantages. First, the competence seems to
contribute to perceived customer value by enabling the company
to focus on the needs of the customer segments identified and
deduce the necessary internal activities for value delivery (see Fig.
3). Second, the findings show, that it is based on a complex
coordination of skills and processes which are deeply embedded in
TobaccoCo's social relationships (Barney, 1991; Peteraf, 1993).
Still, given the premature state of TobaccoCo's development
process, we believe that to formerly maintain this theoretical
998
U. Jüttner et al. / Industrial Marketing Management 35 (2006) 989–1001
proposition, more research into the causal relationship between
demand chain alignment and a firm's competitive advantage is
needed.
Proposition 2 states that, at a minimum, PLC management is
related to demand chain alignment. The case study shows that
these concepts covary, and, furthermore, it suggests that PLC
management is not only supported by demand chain alignment,
but can trigger the development of the competence. As with
many companies today, for TobaccoCo, a strong portfolio of
brands nurtured by PLC management is a strategic priority. It
was through the analysis of current problems with PLC management that the need to link demand creation and demand
fulfilment processes became evident. Also, the analysis provided focus when TobaccoCo identified exactly what needed to
be done (i.e. which activities had to be aligned), and how. The
facilitating role of PLC management is distinctly different from
the classification-based approaches discussed in the literature. It
would not have been feasible for TobaccoCo to start by “clustering products so that demand chain strategy judgments could
be made” (Aitken et al., 2005). Furthermore, a corporate positioning, along a continuum of “product–process” choices, was
equally impractical (Hayes & Wheelwright, 1979a,b). Instead,
PLC management facilitated TobaccoCo's discussion on
demand chain alignment as a macro-level process which links
customer and supply chain strategy (Jüttner et al., in press).
Only when the relationship between customer and supply chain
strategy was defined, could TobaccoCo apply the aligned process to the products in the different phases of their life cycle and,
thereby, ensure the necessary dynamics of the approach.
The third proposition that the product life cycle does not
sufficiently represent the marketing dimension within the
demand chain alignment competence is also supported by the
case findings. As expected, customer behaviour and customer
segmentation approaches applied within TobaccoCo were a
central aspect of the discussion on the demand chain strategy.
There was an awareness that the customer segments and product
life cycle supporting processes could overlap. For example, it
was expected that new product introductions with more rapid
cycles would occur more often in the high end segments
(prestigious male and female, premium end). Moreover,
throughout their life cycle, these products might at a later
stage target the lower value segments. Managing the matrix of
target customer segments and product life cycles would imply a
continuous exchange of information via the CRM system. Still,
despite these overlaps, TobaccoCo was convinced that it needed
to align the supply chain directly to the customer segments.
Therefore, customer needs identification and segmentation are
necessary aspects of demand chain alignment.
4. Summary — towards a model integrating PLC
management and demand chain alignment
Based on the propositions derived from the literature review,
as well as the findings from the case study, we can now revise
our theoretical propositions for further research and combine
those in a model integrating demand chain alignment and PLC
management (see Fig. 5).
Proposition 1. Demand chain alignment links customer and
supply chain strategy.
Proposition 2. PLC management and demand chain alignment
have a mutually reinforcing relationship— PLC management
can facilitate the development of demand chain alignment, PLC
management ensures a dynamic approach to demand chain
alignment and PLC management can benefit from aligned
demand creation and fulfilment processes.
On the one hand, the model and the theoretical propositions
contribute to the ongoing— but so far rather static and classification-based— debate on product–process relationships. On
the other hand, they raise a range of questions regarding the
managerial and organizational implications, for which the alignment theory, proposed by Gottorna and Walters (1996), could
provide a useful theoretical basis.
The findings advance our understanding of the dynamics
involved in a company's product–process choices. As the model
shows, these cannot be sufficiently captured from a configurational perspective, where the main question is how a company
best chooses the right product–process combinations and runs a
set of parallel strategies. Instead, the configurations are based on
aligned customer and supply chain strategies which in turn need
continuous monitoring, appraisals and changes, in order to support the dynamic product routing. The following example from
the case company illustrates the point. In order to support continuous new product introductions for the customer segment of
high prestigious males/females, TobaccoCo figured out that a
process aligning a quick response procurement approach, an
agile manufacturing system and a city-oriented distribution
strategy was best suited. Still, continuous monitoring is essential
in order to identify when a specific product, supported by this
process, routes to a growth or saturation phase, where the current
process would be too costly. Furthermore, a parallel, yet more
lean, process might feed mature, international brands into the
same segment. Thus, rather than maintaining a configuration of
defined product–process strategies, a company will have to
monitor and dynamically adapt a web of aligned demand chain
processes with products at different stages of the life cycle.
While our model and theoretical propositions are a starting point,
and provide directions on the relationships between the main
concepts, more research is needed to develop hypotheses which
specify the causal links further.
The managerial and organizational implications of the
proposed model are far reaching. Back in 1979, Hayes and
Wheelwright (1979a) sensed that to accommodate the specific
requirements of running several product–process strategies at
the same time, a company might have to develop separate
facilities for them. Only if companies are large enough, might
such an approach of specialized units be successful. Unfortunately, the more recent works do not elaborate on the managerial
skills and organizational formats needed to support multiple,
parallel demand chain strategies (Aitken et al., 2005). However,
they do point out that this is an important area for further
research. We share this view and propose the alignment theory as
a suitable theoretical framework (Gottorna & Walters, 1996).
The alignment theory uses the principle of strategic ‘fit’, which
U. Jüttner et al. / Industrial Marketing Management 35 (2006) 989–1001
considers the degree of alignment that exists between competitive situation, strategy, culture and leadership style. The authors
assume that the appropriateness of the various elements relative
to another can be described through a combination of ‘logics’.
Moreover, they consider that a company might have to produce
different logics at the same time. These are primarily triggered
by different customer logics (customer service logics) that a
company has to adapt to. The customer service logics form a
basis for segmentation that subsequently needs to be aligned
with the company's logics. To summarise, the alignment theory
might be well suited to further investigate the organizational
consequences of our model, because it captures not only the
strategies, but links those with management style, culture and
leadership style.
Appendix A. Case study research protocol
Research questions/issues covered in the workshops.
1. Understand the relationship between demand chain alignment and product life cycle management
2. What are the single biggest opportunities/threats facing the
business in the EE market?
3. How is the realization of the opportunities “enabled” or
“inhibited” by current processes, systems, organization?
4. What processes, systems, organization, does the business
need to “maintain” or “change” in the future?
5. What does this (see question 4) mean to you? To your department? What do you may have to do differently?
6. Syndicate Group Work:
Group A
Identify the buying behaviours in the market and discuss the
impact of these on segmentation and customer value delivery.
Group B
Select a car, domestic appliance or sport that best describes the
business' supply chain of the future for defined market segments.
Derive the main characteristics of the supply chain and discuss the
impact on organisational structure — internal/external.
Group C
Identify the business' Order Winners/Order Qualifying in the
EE market and discuss the impact on: marketing/supply chain/
cross-function processes
7. Syndicate Group Work:
Pick one of the supply chain flows. Produce an educational
role play for new graduates, explaining the supply chain
flow from the perspective of the different supply chain
players e.g. “The cigarette”, “Plan”, “Source”, “Make”,
“Deliver”, “Customer”.
8. Think about an integration of marketing and the supply
chain along the following dimensions: Plan — Sell —
Deliver — Make — Source. Now consider the operational implications of the re-design.
What does this mean to you/to your department?
9. How can the integration be linked to the business'
product/brand portfolio?
999
10. How can the integration support the development of
individual products/the product/brand portfolio?
11. How can the integration support the achievement of the
business objectives?
II. Methodology/case study design
A. Single case study design
— case study workshops organized as co-development
discussions
— propositions will be explored from a practitioner
perspective
— a creative problem solving process will be applied
— different mindsets of functional representatives will be
captured but then convergence will be sought
— process based on brainstorming techniques, leveraging
present knowledge and future potential
— structure with rigorous projective exercises, tools and
techniques.
B. Case study selection
Company meets the relevant validity criteria of the
research:
— predisposition to the concept of aligning demand creation
and demand fulfilment processes
— access ensures that demand chain alignment can be
explored from a cross-functional perspective using key
informants
— focused business in the EE market is a product life cycledriven context.
III. Data collection — sources of evidence
1. Documentation
— internal videos, reports, training documents
— product and market reports
— flip charts, Powerpoint Presentations with workshop results
2. Workshops — key source of information
—
—
—
—
—
—
direct unstructured observation
participant observation
self-reporting
probing questions
syndicate assignments
facilitated discussions
IV. Data Analysis
1. Associations/Pattern building
— associations with PLC management
— associations with marketing and supply chain management alignment
— associations based on how PLC management is related to
marketing and supply chain management alignment
— assessment of inter-judge reliability
1000
U. Jüttner et al. / Industrial Marketing Management 35 (2006) 989–1001
2. Explanation building
— single case study — risk of misrepresenting the associated findings
— no intention to generalize the findings — but — to
unpack and describe the causal powers
between the concepts investigated.
References
Aitken, J., Childerhouse, P., Christopher, M., & Towill, D. (2005). Designing
and managing multiple pipelines. Journal of Business Logistics, 26(2),
73−95.
Aitken, J., Christopher, M., & Towill, D. (2002). Understanding and exploiting
agility and leanness. International Journal of Logistics: Research and
Applications, 5(1), 59−74.
Baker, S. (2003). New consumer marketing. Chicester: John Wiley & Sons.
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal
of Management, 17(1), 99−120.
Bonoma, T. (1985). Case research in marketing: Opportunities, problems, and a
process. Journal of Marketing Research, 22, 199−208.
Childerhouse, P., Aitken, J., & Towill, D. (2002). Analysis and design of focused
demand chains. Journal of Operations Management, 20, 675−689.
Christopher, M. (2000). The agile supply chain. Competing in volatile markets.
Industrial Marketing Management, 29, 37−44.
Christopher, M., Godsell, J., & Jüttner, U. (2005). Transforming the supply
chain into a demand chain. Proceedings of the Annual Logistics Research
Network Conference, Plymouth, England.
Christopher, M., & Towill, D. (2002). Developing market specific supply
chain strategies. International Journal of Logistics Management, 13(1),
1−14.
Combs, L. (2004). The right channel at the right time. Industrial Management,
46(4), 8−16.
Conant, J., Modwa, M., & Varadarajan, R. (1990). Strategic types, distinctive
marketing competencies and organizational performance: A multiple
measures based study. Strategic Management Journal, 11(5), 365−383.
Conner, M. (2004). The supply chain's role in leveraging PLM. Supply Chain
Management Review, 8(2), 36−43.
Day, G. (1994). The capabilities of market-driven organizations. Journal of
Marketing, 58(4), 37−52.
Daly, R., & Kolassa, M. (2004). Start earlier, sell more, sell longer. Parmaceutical
Executive, 1(8), 30−38.
Ellinger, A. E. (2000). Improving marketing/logistics cross-functional
collaboration in the supply chain. Industrial Marketing Management,
29, 1−6.
Ellram, L. (1996). The use of case study method in logistics research. Journal of
Business Logistics, 17(2), 93−138.
Fisher, M. L. (1997). What is the Right Supply Chain for your Product. Harvard
Business Review, 75, 105−116.
Gottorna, J. L., & Walters, D. W. (1996). Managing the Supply Chain: A Strategic
Perspective. Basingstoke: Palgrave.
Grant, R. (1991). The competence-based theory of competitive advantage:
Implications for strategy formulation. California Management Review, 33(3),
114−135.
Hayes, R. H., & Wheelwright, S. C. (1979a). Link manufacturing process
and product lifecycles: Focusing on the process gives a new dimension
to strategy. Harvard Business Review, 57, 133−140.
Hayes, R. H., & Wheelwright, S. C. (1979b, March/April). The dynamics
of process–product life cycles. Harvard Business Review, 57, 127−136.
Heikkilä, J. (2002). From supply to demand chain management: Efficiency
and customer satisfaction. Journal of Operations Management, 20,
747−767.
Holmström, J., Hoover, E., Jr., Louhiluoto, P., & Vasara, A. (2000). The
other end of the supply chain. The McKinsey Quarterly, 1, 63−71.
Hooley, G. (1995). The lifecycle concept revisited: aid or albatross? Journal of
Strategic Marketing, 23, 3−39.
Hughes, D. (1990). Managing high-tech product cycles. The Executive, 4(2),
44−56.
Jüttner, U., Christopher, M., & Baker, S. (in press). Demand chain management —
Integrating marketing and supply chain management. Industrial Marketing
Management.
Katzdin, A. (1980). Research Design and Clinical Psychology. New York: Harper
and Row.
Korth, K. (2003, June). Learning to compete in the current environment, AD and P.
Lamming, R., Johnsen, T., Zheng, J., & Harland, C. (2000). An initial
classification of supply networks. International Journal of Operations and
Production Management, 20(6), 675−691.
Lampel, J., & Mintzberg, H. (1996). Customizing Customization. Sloan
Management Review, 38(1), 21−30.
Lee, H. L. (2001). Demand-based management. A white paper for the Stanford
Global Supply Chain Management Forum, September 2001.
Lee, H. L., & Whang, S. (2001, March/April). Demand chain excellence.
Supply Chain Management Review, 41−46.
Martin, J., & Grbac, B. (2003). Using supply chain management to leverage
a firm's market orientation. Industrial Marketing Management, 32,
25−38.
McCutcheon, D., & Meredith, J. (1993, September). Conducting case research
in operations management. Journal of Operations Management, 11,
239−256.
Mentzer, J., & Flint, D. (1997). Validity in logistics research. Journal of Business
Logistics, 18(1), 199−216.
O'Marah, K. (2003). The business case for PLM. Supply Chain Management
Review, 7(6), 16−18.
Pagh, J., & Cooper, M. (1998). Supply chain postponement and speculation
strategy: How to choose the right strategy. Journal of Business Logistics, 19
(2), 13−33.
Peteraf, M. (1993). The cornerstones of competitive advantage: A resourcebased view. Strategic Management Journal, 14(3), 179−191.
Piercy, N. (2002). Market-led strategic change, 3rd edition Oxford: Butterworth–Heinemann.
Prahalad, C., & Hamel, G. (1990, May–June). The core competence of the
corporation. Harvard Business Review, 68, 79−91.
Rainbird, M. (2004). Demand and supply chains: The value catalyst. International
Journal of Physical Distribution and Logistics Management, 34(3,4),
230−251.
Spekman, R., Spear, J., & Kamauff, J. (2002). Supply chain competency:
Learning as a key component. Supply Chain Management, 7(1),
41−55.
Shewchuck, P. (1998). Agile manufacturing: One size does not fit all. Process
Integration Conference on Manufacturing Value Chains, Troon (pp.
143−150).
Srivastava, R., Shervani, T., & Fahey, L. (1999). Marketing, business processes,
and shareholder value: an organizational embedded view of marketing
activities and the discipline of marketing. Journal of Marketing, 63,
168−179 (Special Issue).
Stake, R. (1998). Strategies of Qualitative Inquiry. In N. Denzin, & Y. Lincoln
(Eds.), California: Sage.
Stremersch, S., & Tellis, G. (2004). Understanding and managing
international growth of new products. Journal of Research in Marketing,
21, 421−438.
Supply Chain Manager Europe (2005, February). Air freight attractive for
Hugo Boss.
Teresko, J. (2004). The PLM Revolution. Industry Week, 253(2), 32−36.
Vollmann, T., Cordon, C., & Raabe, H. (1995, November). From supply chain
management to demand chain management. IMD Perspectives for
Managers.
Waller, M., Dabholkar, P., & Gentry, J. (2000). Postponement, product
customization, and market-oriented supply chain management. Journal of
Business Logistics, 21(2), 133−159.
Walters, D., & Rainbird, M. (2004). The demand chain as an integral
component of the value chain. Journal of Consumer Marketing, 21(7),
465−475.
Yin, R. K. (1994). Case Study Research: Design and Methods. Thousand Oaks:
Sage.
U. Jüttner et al. / Industrial Marketing Management 35 (2006) 989–1001
Uta Jüttner is a part-time Senior Research Fellow in the Demand Chain Management Group at Cranfield School of Management, England. Her main research
areas are in supply chain and network relationships and the integration between
marketing and supply chain management. She has published widely in Logistics
and Marketing journals, among them the International Journal of Research in
Marketing, Long Range Planning, International Journal of Logistics Management
and the European Journal of Purchasing and Supply Management.
Janet Godsell joined the Cranfield faculty in 2001, having completed her
Executive MBA. Prior to this she was at Dyson Ltd where she undertook a
number of operational and process improvement roles in functions spanning the
breadth of the supply chain, including R&D, customer logistics, purchasing and
manufacturing. Janet's origins are in engineering and she spent her early career
working for ICI and Zeneca Pharmaceuticals. She is a chartered mechanical
engineer and a member of the Institution of Mechanical Engineers.
1001
Martin Christopher is Professor of Marketing and Logistics at Cranfield
School of Management, England, where he is Director of the Demand Chain
Management Group. He has published widely in the field of supply chain
management and his recent book Logistics and Supply Chain Management has
become a standard text.