The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0263-5577.htm

Demand chain
Demand chain management: management
a Swedish industrial case study
Per Hilletofth
School of Technology and Society, University of Skövde, Skövde, Sweden 1179
Dag Ericsson
School of Engineering, University of Borås, Borås, Sweden, and Received 8 June 2009
Revised 1 July 2009
Martin Christopher Accepted 13 July 2009
Cranfield School of Management, Cranfield University, Cranfield, UK

Abstract
Purpose – The purpose of this paper is to increase the understanding of demand chain
management (DCM) by investigating how it has been structured and executed in an international
manufacturing company.
Design/methodology/approach – The main emphasis has been on producing descriptive results
and the applied research strategy has been an embedded single case study. The case organization
originates from Sweden, but it has significant international presence. Empirical data have been
collected mainly from in-depth interviews with key persons representing senior management in the
case company.
Findings – This research shows that DCM is about developing synergies between the demand creation
and the demand fulfillment processes. A completely implemented DCM approach should incorporate all
the major demand creation and fulfillment processes. This kind of fully implemented approach probably
does not exist in real life today but some companies have started to develop versions including some of
the major processes, and this research provides an example of this. The ultimate goal of DCM is to gain
competitive advantages by differentiating not only the products, but also the delivery process. This is
necessary in markets characterized of intensive competition, high product variety, large amounts of
customer-adapted products, and short product life cycles. It can be concluded that DCM is not another
name for demand driven supply chains (SCs) or a fad. It is rather a way to finally benefit from decade
long marketing discussions on how to achieve customer focus. It highlights the interplay between
marketing and supply chain management (SCM) as an enabler of value creation.
Research limitations/implications – This research work is limited to one Swedish company;
however, the case company has large international presence and is in top three in their industry
measured by sales, which provides some ground for the generalization of the research.
Practical implications – This paper gives an insight for managers and practitioners to the value of
coordinating marketing and SCM to develop a truly customer-driven organization and SC.
Originality/value – Several studies have addressed the synergies between marketing and SCM but
failed to address how to in some detail realize this in practice. This paper contributes by discussing
how to realize this coordination in practice.
Keywords Supply chain management, Marketing, Demand management, Sweden
Paper type Case study

Industrial Management & Data

1. Introduction Systems
Vol. 109 No. 9, 2009
In the beginning of the globalization era companies exploited economies of scale by pp. 1179-1196
manufacturing and delivering volumes worldwide. At the time, globalization offered q Emerald Group Publishing Limited
0263-5577
means to reduce cost and increase sales (Hilletofth, 2009). More recently, the increased DOI 10.1108/02635570911002261
IMDS globalization has resulted in greater competition, both national and international, which is
109,9 spurring market developments such as increased product variety, increased amounts of
customer-adapted products, and shortening product life cycles (Christopher et al., 2004).
This implies that markets are becoming more fragmented and volatile (Christopher and
Peck, 2004), generating additional management challenges and new practices in supply
chain (SC) design and management. Today, the goal is to increase responsiveness to
1180 specific customer needs while simultaneously achieving cost-efficiency through
specialization, standardization, and centralization (Christopher et al., 2006).
Development of a differentiated SC strategy is one way to make sure that highly
varying needs of local and differing markets are met at the same time as economies of
scale are maintained (Hilletofth, 2009). It means that the company instead of employing
a traditional “one-size-fits-all” SC strategy, develops and utilizes several SC solutions,
each one appropriate to a specific product or market condition, by combining different
supply, manufacturing, and distribution strategies. By combining relatively few
strategies it is possible to develop several differentiated SC solutions. The argument in
favor is that companies nowadays usually offer a wide range of products in various
types of non-coherent business environments and there are no SC strategies that are
applicable to all types of products and markets (Payne and Peters, 2004), and this
concerns both the supply, manufacturing, and distribution parts of the SC strategy.
Normally, supply chain management (SCM) focuses on efficient supply (demand
fulfillment) and tends to be cost-orientated, whilst marketing is more concerned with
revenue (demand creation) by identifying what the customer perceives as valuable, and
how this customer-perceived value can be translated into product offerings (Juttner et al.,
2007). In such an environment, the demand creation and the demand fulfillment
processes are fairly separated; marketing sets the strategy (what to sell, where to sell,
how to sell) and SCM executes it. This implies that the mission of SCM is to build up
appropriate SC capabilities and advantages according to the marketing strategy, which
could be planned and standardized activities (lean), customized and demand-driven
activities (agile) or a combination (leagile). In this environment demand, creation and
innovation is restricted to the products.
When developing a differentiated SC strategy, SCM not only focuses on efficiencies
(how can we achieve a lower cost per item), but also on effectiveness (are we
distributing products at a profit-maxing price). Revenue generation, not cost, is the key
driver and the main goal is to develop customer-adapted SC solutions that enhance
overall customer value (Hilletofth and Ericsson, 2007). In this environment the demand
creation and the demand fulfillment processes are more intertwined and needs to be
coordinated. Additionally, demand creation and innovation is not restricted to the
products but also applied to the delivery process. This goes beyond simply creating
demand-driven SC solutions that fulfill demand cost-efficiently.
The synergies between marketing and SCM have been widely acknowledged both
in the marketing literature (Achrol, 1991, 1997; Achrol and Kotler, 1999; Flint, 2004;
Kumar et al., 2000; Sheth et al., 2000; Srivastava et al., 1999) as well as in the SCM
literature (Alvarado and Kotzab, 2001; Bechtel and Jayaram, 1997; Cooper et al., 1997;
Fisher, 1997; Lambert and Cooper, 2000; Mentzer et al., 2001; Min and Mentzer, 2000;
Svensson, 2002). It has been argued that better coordination between the two
disciplines could result in greater competitive advantages (Piercy, 2002).
 Most of this research propose coordination between certain marketing and SCM Demand chain
activities to exploit specific synergies, while a limited amount of research call for a management
combined management approach, entitled demand chain management (DCM), where
the demand creation and the demand fulfillment processes are coordinated in a more
comprehensive way (Hilletofth and Ericsson, 2007; Juttner et al., 2007; Rainbird, 2004;
Walters, 2006; Walters and Rainbird, 2004). Research that addresses how the demand
creation and the demand fulfillment processes can be coordinated on an organizational 1181
and SC level is however limited and the application of DCM is still in its infancy.
The purpose of this research is to increase the understanding of DCM by
investigating how it has been structured and executed in an international
manufacturing company. The main emphasis has been on producing descriptive
results and the applied research strategy has been an embedded single case study
(Yin, 2003), which was considered appropriate to gather in-depth data. The case
company (to maintain anonymity here called Beta) is a Swedish manufacturer
operating on an international basis in the appliance industry. Empirical data have been
collected during the three year time period of 2006-2008.
The remainder of this paper is structured as follows: in Section 2, a literature review
of DCM is presented. Thereafter, in Section 3, research approach and data collection are
described. Section 4 presents case study, while Section 5 presents research findings.
In Section 6, research is discussed and concluded and further research avenues are
proposed.

2. Demand chain management

Although DCM is a relatively new concept, it has already been defined in several ways
in the literature. At first it was introduced as a replacement of SCM and it highlighted
issues such as customer focus, market mediation, demand driven activities and agility
by addressing development and management of demand driven SCs (Heikkilä, 2002;
Hines et al., 2002; de Treville et al., 2004; Vollmann and Cordon, 1998; Vollmann et al.,
1995). However, these types of issues were also addressed in SCM and therefore there
were no major differences between SCM and DCM at the time, and the concept never
gained approval in the academic community.
More recently, it has been introduced as an approach to capture the synergies
between marketing, and SCM (Hilletofth and Ericsson, 2007; Juttner et al., 2007;
Rainbird, 2004; Walters, 2006; Walters and Rainbird, 2004). The goal is to coordinate
the demand creation and the demand fulfillment processes to gain competitive
advantage by differentiating not only the products but also the delivery process, as
well as to exploit synergies between marketing and SCM. Thus, DCM can be defined
as: “the alignment of demand creation and demand fulfillment processes across
functional, organizational and inter-organizational boundaries” (Hilletofth and
Ericsson, 2007). The demand creation processes comprise all the activities necessary
for creating demand and are closely linked to marketing, while the demand fulfillment
processes comprise all the activities necessary for fulfilling demand and are closely
linked to SCM. This implies that a framework of DCM may be constructed based on
three interrelated parts: the market, marketing and SCM (Figure 1). Marketing focus on
demand creation towards the market, SCM on demand fulfillment towards the market,
and it is very important that processes in marketing and SCM are coordinated through
collaboration.
IMDS
109,9

Market
1182

D fillm
tio d
ea an

fu
em
n

l
cr em

an ent
D Business

d
strategy
Competitive
advantages
Marketing Supply chain
management management
1. Strategic marketing planning 1. Strategic supply chain planning
2. Market research 2. Supply chain design
3. Market segmentation Collaboration 2.1 Market research
4. Product development 2.2 Market segmentation
5. Product commercialization 2.3 Design of solutions
6. Marketing & sales 3. Supply chain operation
Figure 1. 7. Life-cycle management
DCM: a framework

It is also important that the demand creation and the demand fulfillment processes are
regarded as equally important and that innovation is not restricted to marketing
(products). This point of view also needs to be clearly expressed in the business
strategy, otherwise the traditional view, were marketing sets the strategy and SCM
executes it, with some certainty will rule.
A DCM approach should incorporate all major demand creation and fulfillment
processes within the company. As can be seen in Figure 1, examples of major demand
creation processes are strategic marketing planning, market research, market
segmentation, product development, product commercialization, marketing and sales,
and life cycle management (Kotler et al., 2009), while strategic SC planning, SC design,
and SC operations are examples of major demand fulfillment processes (Gibson et al.,
2005).
This kind of fully developed DCM approach does most likely not exist today, but
some companies have started to develop versions including some of their major
processes, e.g. Nokia has recently started to coordinate product development and SCM
by incorporating SC representatives in the product development (Hultén, 2009). The
idea of including SC-staff in the product development is not new; it has been addressed
in concurrent design for some time. The terms “design for manufacturing” and “design
for supply chain” are quite often used to imply that the design function is aligned and
integrated with other main functions in the company and in the extended enterprise
(Appelqvist et al., 2004; Ellram et al., 2007; Perks et al., 2005; Sharifi et al., 2006; Sharifi
and Pawar, 2002).
 Coordination between the demand creation and the demand fulfillment processes Demand chain
are important in all business environments; however, the required level of coordination management
to succeed differs greatly. According to Juttner et al. (2007), the different levels of
marketing and SCM coordination can be clustered into four categories (Figure 2).
While companies in the first category, market losers, have either marketing or SC
strengths, companies in the second category, SC specialists, have strength in managing
the demand fulfillment processes. This enables them to reduce time and costs in 1183
supply, manufacturing, and distribution and to improve asset turnover. Companies in
this category usually focus on activities such as strategic sourcing, collaborative
planning, forecasting and replenishment, and inventory reduction. Several studies
report major cost savings which companies have accomplished through their SC
excellence (Rainbird, 2004). Still, a SC strength that is not linked to marketing
differentiation usually limits the company to competing on price and availability
(Piercy, 2002). This implies that competition through SC excellence assumes that price
is a major determinant of competitive advantage. Moreover, companies can experience
major problems if SCM acts independently of marketing. Examples of consequences
are suboptimal product and service development, a lack of product and service
differentiation and ineffective product and service delivery (Juttner et al., 2007).
Companies in the third category, marketing specialists, have strengths in
identifying unique customer needs, managing customer relationships and/or in
developing strong brands. These companies use their extensive customer knowledge
to apply marketing instruments in a more cost-effective way. However, a marketing
strength that is not linked to SC advantage usually leads to a high cost base and slow
delivery (Piercy, 2002). These problems can only be compensated by an incredibly
strong brand since companies that are unable to deliver according to the promises
made eventually will lose credibility and customer satisfaction will decrease. Examples
of problems faced by this type of company are under-delivering and over-delivering or
Supply chain advantage
LOW HIGH
Market losers Supply chain specialists

Viable strategy:
– Low cost products
LOW
Potential problems:
Marketing advantage

– Lack of product and service differentiation

– Ineffective product and service delivery
– Suboptimal product development

Marketing specialists Market winners

Viable strategy: Viable strategy:

– Expensive brands – Differentiation on product and process
HIGH
Potential problems: Advantage:
– Under–/overdelivery – Satisfying different customer needs with
– Lost share of customer opportunities differentiated supply chain capabilities
– Excessive supply costs of products Figure 2.
Levels of marketing
and SCM coordination
Source: Juttner et al. (2007)
IMDS lost opportunities if the company cannot capitalize on the differentiated customer
109,9 needs ( Juttner et al., 2007).
Companies in the fourth category, market winners, have effectively coordinated
their demand creation and fulfillment processes to gain competitive advantage by
differentiating not only the products, but also the delivery processes. They have the
capability to satisfy different customer needs with differentiated SC capabilities. This
1184 type of company makes service packages focused on customer needs and the value
they can provide, all based on a comprehensive understanding of the total SC. The link
between SCs and different customer segments allows these companies to proactively
address new and changing customer needs. This also enables improved product and
service lifecycle management as well as reduced time-to-market.
The ultimate goal of DCM is to become a market winner and this is necessary in
markets characterized of intensive competition, high product variety, large amounts of
customer-adapted products, and short product life cycles.

3. Research approach and data collection

In this work, the authors considered an inductive approach the most appropriate
research strategy, since the aim was to enhance current knowledge of how marketing
and SCM could be coordinated and integrated by investigating one international
manufacturing company in a qualitative manner. Moreover, due to the context-bound
nature of the studied phenomenon, case study would be an appropriate method. Thus,
this paper employs a descriptive embedded single case study (Yin, 2003). The case
company (to maintain anonymity here called Beta) is a Swedish manufacturer
operating on international basis in the appliance industry. It sells more than 40 million
products every year to consumers and professionals in 150 countries. The largest
markets are in Europe and North America and the strongest market position is in
Europe.
One advantage with case studies is the possibility to combine several data collection
techniques; in this research empirical data were collected from various sources to
enhance understanding by examining the research object from several perspectives.
First, this study is based on data gained from five in-depth interviews with persons
representing senior management in the case company; vice president, logistics
manager, customer innovation manager, IT-manager, and human resources manager.
The interviews were conducted in 2006-2007; note taking was the main interview
method (in combination with digital recording if permitted), and the lengths of
interviews were between 90 and 120 minutes. In order to find relevant information the
interviews were prepared in a structural way. Additionally, interviewees were able to
read the transcribed interview text afterwards to avoid misunderstandings. Moreover,
this study is based on several meetings and discussions with various persons in the
company, e.g. one of the authors has been involved in other projects in the company as
well as provided logistics courses. Furthermore, this study is based on secondary data
retrieved from two strategic documents produced by the company as well as its annual
report. The first document addresses how to develop and introduce products on the
market, and the second document addresses how to distribute products to the market.
The data collection has been documented (and sometimes digitally recorded), which
increases the reliability of the case study. However, it should be noted that all case
studies are unique and the companies are continuously changing, meaning that the
conditions can never be identical. Two tactics have been applied to increase the Demand chain
validity of this study. First, multiple sources of evidence have been used, and second, management
the draft case study reports have been reviewed by the respondents. As shown above
different sources have been used to answer the same questions (interviews, meetings,
documents), and therefore triangulation can be said to have been used. The use of
triangulation has contributed to improving the rigor, depth, and breadth of the results,
which can be compared to validation (Yin, 2003). However, it also enhances the 1185
investigator’s ability to achieve a more complete understanding of the studied
phenomenon (Scandura and Williams, 2000). The overall reliability and validity of the
study could have been further improved by increasing the number of informants and
extending the period of data gathering to encompass multi-points in time rather than
providing a retrospective snapshot.

4. Case study
The case company is a Swedish manufacturer operating on an international basis in
the appliance industry. This industry is increasingly characterized by intense
competition, increased global product standardization, and shorter product life cycles.
To survive in this environment the case company needs to create a consumer-driven
organization by focusing on consumer-oriented product development and branding as
well as supply materials and products on demand. To realize this, the case company
has begun to transform from a production-focused company towards an innovative,
market-driven company. They focus on developing innovative products and services
that consumers’ are willing to pay a premium for. The company regards the three
above mentioned focus areas as the most important to realize this transformation.
Hence, they have defined brand, product flow, and demand flow as their major
business processes and these constitutes their DCM approach, all three processes are
described in detail below.

4.1 Brand management

The case company has made the assumption that they can sell more products for more
money at lower cost, if more consumers know, trust, and like their brand. To realize
this it needs to have a never-ending commitment to creating, defending, and
strengthening the brand. In order to realize this, they have created a brand process
with common tools and principles. The iterative brand process consists of four steps
and focuses on creating strong brands that consumers prefer:
(1) Situation analysis. Answers the question “where is the company now” by
analyzing the current situation.
(2) Planning. Answers the question “where does the company want to be” by
analyzing and planning the future.
(3) Implementation. Answers the question “how the company will implement the
plan” by determining forthcoming actions.
(4) Evaluation. Answers the question “how the company will measure progress”
and focuses on evaluating the plan.

When the case company first launched the brand process they identified that they had,
thanks to a history of acquisitions, a large portfolio of strong local brands.
IMDS Furthermore, each brand was communicated separately with different messages.
109,9 The company realized that to create a strong, global and leading brand they needed to
focus on fewer brands so that these can grow larger and stronger, and in particular
focus on the main brand as their most important consumer brand across all consumer
sectors. Furthermore, they realized that they needed to communicate only one message
across every product category and in every geographical market to create a uniform
1186 image of the company. The consumers must always recognize the values that the
brand stands for, irrespective of which product or service they purchase. To realize
this, the case company has developed global communication platforms; the latest
platform was launched in 2006.
Investments in market communications in 2006 amounted to 1.5 percent of net sales
and over the next few years this figure is predicted to rise to more than 2 percent.
Investment in the main brand accounted for approximately 70 percent of resources for
market communication in 2006. The share of products sold under the main brand,
inclusive of double-branded products, rose from 18 percent in 2000 to approximately
45 percent in 2006. The main brand is now established as the largest brand, and its
share of sales is increasing in Europe, Latin America, and Asia.

4.2 Product management flow

The case company has developed a process for consumer-focused product
development entitled product management flow (PMF). The PMF is a global and
holistic process for managing products – from the cradle to the grave – and it
describes all areas of creating and selling products. The purpose of the process is to
develop products that are adapted to local needs together with products that can be
sold world wide on the basis of common global needs. Employees from several
functions are involved, at this time there are no logisticians involved. The PMF is run
by the product line manager with support from the consumer innovation program.
It was introduced in 2004 and over the next couple of years it will be implemented in all
product lines. The PMF includes a structured working method, with check and
decision points to make sure that no activities are omitted. It consists of three phases
(Figure 3):
(1) intent;
(2) product creation; and
(3) commercial launch.

Phase 1: Intent Phase 2: Product creation Phase 3: Commercial launch

Executed on product line level

Primary Product
development development
Strategic Consumer Launch Range
Phase-out
market plan opportunities Commercial execution management
Concept
launch
development
preparation

Figure 3. Product line manager

Product management flow Consumer innovation program
The objective with the intent phase is to ensure clear identification and prioritization of Demand chain
opportunity areas and express this in a strategic market plan. The plan is built on management
corporate prerequisites (e.g. product innovation strategy, brand and design strategy as
well as global needs) along with industry analyses. It also includes tools that together
with the analyses allow the product line manager to set priorities and take strategic
decisions and translate these into a strategic road map and a corresponding
product generation plan. This is intended to provide a good frontloading of the product 1187
development as well as ensures clear directions for product development and market
communication. Examples of questions that are interesting in this phase are: on which
areas should we focus our innovation work, which changes in consumer behavior can
create business opportunities, where are the growth markets, and what can we do that
our competitors have not done?
The objective with the product creation phase is to define and develop consumer
relevant and innovative products addressing well-understood consumer needs. It
involves four steps:
(1) consumer opportunities;
(2) concept development;
(3) primary development; and
(4) product development.

During the consumer opportunity step an understanding of consumer needs in

prioritized areas is developed. The consumer understanding and insight is the
foundation for a successful concept and product development, as well as for the
commercial launch. Through the concept development step a feasible product idea
addressing the identified consumer needs is developed, with a distinct positioning,
consumer value based pricing and a solid business case. The consumer opportunity and
the concept development steps constitute the spark process (Figure 4).
The first activity in the spark-process is to identify consumer opportunities by
exploring a chosen target group. The case company has developed a need-based
segment model based on the finding that all their customers purchase products
according to four different underlying demand patterns. Nowadays products are
developed to meet needs that have been identified within a specific target group within
the segmentation model. When a consumer opportunity is identified, the next activity is
to gather consumer insight regarding the identified opportunity. The case company uses
several techniques to gather these, such as observations, surveys, and evaluations.
However, observations are preferred, as observed behavior is richer than described
behavior. The case company is in touch with tens of thousands of consumers’ world wide
every year. After some insights are identified the next activity is to group them into a few
product concepts. Some insights perhaps originate from the same problem or in some
other way belong together and therefore could be satisfied with the same solution. Next
the identified product concepts are analyzed and prioritized resulting in a winning
product concept. Then different product prototypes are developed based on the product
concept and later tested on the target group leading to a winning product idea. Finally,
the case company makes a decision regarding if the product idea is good enough to
develop further, and whether it should go to the primary and/or product development
phase.
IMDS Description Illustration
109,9
(1) Explore chosen target group to Consumer opportunities in
find consumer opportunities target group X

(2) Gather consumer insights

1188 regarding the identified
opportunities and group them into
product concepts
BUSINESS CASE

(3) Analyse and prioritize procuct

concept A(60%) B(30%) C(10%) D(5%)

(4) Winning product concept

(5) Develop products based on the

winning product concept, create
prototypes and test on target group

(6) Winning product idea

Figure 4. (7) Continue to primary and/or To primary development

product development or put down? Close project
The spark process To product development

All the activities in the spark process are conducted from a market strategic
perspective and one important output is a business case describing how to ensure
long-term profitability by answering the following questions: “What to sell?”, “Where
to sell?”, and “How to sell?”. In the primary development step, technical solutions
within targeted innovation themes are developed producing verified ideas or hardware
solutions that can be applied to relevant concepts in product development. In the
product development step, the product idea is specified, designed and verified as cost
efficiently as possible as well as prepared for launch on the market.
The objective of the commercial launch phase is to ensure that developed products
are properly introduced on the market with a consistent and consumer relevant
message – as identified earlier during the concept development – based on true
consumer needs or problems. Another objective of the commercial launch phase is to
ensure that the product assortment is updated accordingly to products life cycles and
that obsolete products are properly out-phased. Both these objectives rely on a
consistent follow-up period.
A considerable share of investment is devoted to the early phases of the PMF, prior
to large investments in production, to ensure that the product is successful. The
number of new products created through consumer-focused product development is
increasing rapidly and leading to a better product offering, and thus to an increasing
number of more successful launches. During a five-year period, the case company has
increased the number of successful product introductions from one per year to five per Demand chain
year with similar amount of total introductions. In 2006, products that had been management
launched during the two previous years accounted for more than 40 percent of sales;
thus, the increased investment in product development is very likely to have generated
positive results. Since 2002, investments in product development have increased from
approximately 1 percent of sales to 1.8 percent in 2006. At the same time, development
has become more efficient through global cooperation and coordination of launches 1189
between different product categories. The focus is on developing products in profitable
segments and high-growth areas, simultaneously making launches more accurate.

4.3 Demand management flow

The most important factor to supply materials and products on demand is keeping the
end-user in focus. It is also vital that the total SC (i.e. supply, production, and
distribution) is managed in a competitive way. To a large extent, success depends on
whether the case company and their SC are as good as, or better than, the competitors.
This requires collaboration, first internally then with the retailers and suppliers. To
realize the above, the case company has created a demand management flow (DMF)
including common goals and principles. The DMF has three major aims:
(1) Make sure that the company delivers on time, which is the first priority.
However, it is also supposed to reduce unnecessary time in doing so, thus the
aim is to deliver on time in less time.
(2) Contribute significantly towards improving value creation, e.g. it aims to
increase sales by making products available on time and to decrease costs and
waste in the SC.
(3) Contribute significantly towards improving innovation. Innovation is critical to
the success of new products, without new features the company will not succeed
in the market. However, innovation should not only be restricted to the
products, it should also be applied in other areas as well, such as customer
service.
The DMF can be separated into three sub-processes, strategic planning, SC design and
SC operations, and focus on meeting consumer needs while minimizing both the capital
tied up in operations and the cost required to fulfill demand. The case company has
developed a SC design process consisting of three steps. First the case company
identify how their end-users via retailers would like to acquire their products
(i.e. understand the market they serve). This is achieved through consumer insight
where important information that can affect their service to the retailers is collected.
Retailers have a number of characteristics that need to be considered before deciding
how to serve them, such as product range, required lead-time, location, and volumes.
Second, they have to understand their capabilities to serve the market via the
retailers. This implies definition of their production system and delivery system
capabilities. It is very important to understand the capability of the production system
to produce according to demand as well as to understand the capability of the
distribution system to deliver the output. In addition, it is important to recognize the
capability of the suppliers to supply the production system.
Finally, when those steps have been completed the case company can design
various approaches to serve the end-users via the retailers, commonly referred to as SC
IMDS solutions. They may even have more than one solution for each retailer, for example in
109,9 the case of supplying both their own labeled products and the retailers branded
products (also known as original equipment manufacturer products or “private
labels”). A SC solution is a combination of a supply method (manufacturing strategy)
reflecting the production system capabilities, and a delivery method (delivery strategy)
reflecting the delivery system capabilities. The case company thinks that combinations
1190 of supply methods and delivery methods into various SC solutions creates freedom of
choice, while at the same time maintaining the efficiency of operations in the
production and delivery system, Figure 5 shows some possible combinations.
As can be noted in Figure 5 one applied SC solution combines the supply method
make-to-stock with the delivery method called self collect. This implies that the case
company produces in advance according to a demand plan and stock-keeping until the
retailer collects the goods themselves from one of their regional distribution centers.
Self-collection needs to be implemented carefully to maintain loading efficiency in the
distribution centers.
In another applied SC solution, the case company combines the supply method
make-to-order with the delivery method factory direct. This solution is used when
retailers order a number of weeks in advance, which enables the case company to
produce and deliver to a specified date and time. Orders are normally in the form of full
truckloads dispatched direct from the factory to a retailer (i.e. deliver method factory
direct).
The case company also combines the supply method deliver-to-order with the
delivery method home delivery. This solution implies that the case company on
the retailers’ request just bypassing their distribution network and delivers directly to
the consumer’s home. This delivery method is normally combined with other services,
such as installation and removal of old products.
In a final applied SC solution, the case company combines the supply method
vendor-managed-inventory with the delivery method of factory delivery. This implies
that the case company is responsible for the inventory of their products within the
retailer’s warehouses, i.e. responsible for calculation of delivery dates and quantities.
Deliveries are normally in the form of full truckloads dispatched directly from the

Supply method

Vendor managed
Make to stock Deliver to order Make to order
inventory
Factory direct X X X
Delivery method

Bulk X X

Small drop X X

Self collect X X X

Home delivery X

Figure 5.
Supply chain solutions
factory to a retailer (i.e. delivery method factory direct). It is an advanced SC solution Demand chain
that involves a great deal of close partnering and collaboration, including total sharing management
of data and regular communication.
Each SC solution has different cost implications for the case company and the
retailer. One solution might be more expensive for them, but cheaper for the retailer
and vice versa. It is also important to appreciate the cost to serve for a particular
retailer when judging its profitability. 1191
5. Analysis
The case company has realized that it needs to focus basically all its resources on
customer demand and the fulfillment of this, as a result of the competitive situation on
the market. As a result the company has begun to develop its own approach of DCM,
this analysis will start to compare the case company’s DCM approach with the
framework presented in the literature review.
The company’s DCM approach is based on both demand creation and fulfillment
processes as presented in the framework; however, the coordination between these
types of processes is limited (Figure 6). In the literature review seven demand creation
processes were highlighted as important to include in a DCM approach: strategic
marketing planning, market research, segmentation, product development,
commercialization, marketing and sales, and life cycle management. All these

Market
D fillm
tio d
ea n

em e
fu
cr ema
n

l
an nt
D

Business
strategy

Marketing Competitive Supply chain

management
1. Branding (marketing and sales)
2. Product management flow
2.1 Strategic marketing planning
2.2 Market research
2.3 Market segmentation
2.4 Product development
2.5 Commercialization
2.6 Range management
advantages management
1. Demand management flow
1.1 Strategic supply chain planning
Directives 1.2 Supply chain design
1.2.1 Market research
1.2.2 Market segmentation
1.2.3 Design of solutions
Limited 1.3 Supply chain operation Figure 6.
collaboration
The case company’s
DCM approach
IMDS processes are incorporated in the case company’s DCM approach; however, these
109,9 processes, except marketing and sales, have been integrated into a PMF. Moreover, the
marketing and sales process is restricted to branding. The case company’s DCM
approach also includes the demand fulfillment processes highlighted in the literature
review: strategic SC planning, SC design, and SC operations. However, these processes
have been grouped into a DMF.
1192 In essence, there are three important issues that need to be address properly to
implement DCM successfully: demand creation, demand fulfillment and coordination
between demand creation and fulfillment. The case company has addressed demand
creation and fulfillment separately and failed to address coordination between them
through collaboration. It is important to note that the case company has come a long
way in developing the demand creation and fulfillment processes and this is the major
advantage of its DCM approach. On the demand creation side, the case company has
succeeded in integrating several of the processes into one flow. This most certainly
reduces lead-times and focus all resources on customer demand. On the demand
fulfillment side, the case company has begun developing something similar but there is
still much work remaining.
The major disadvantage of the case company’s DCM approach is the lack of
coordination between demand creation and fulfillment through collaboration. To fully
exploit the benefits of DCM the company needs to coordinate the demand creation and
the demand fulfillment processes in an efficient and effective way and this requires
collaboration between marketing and SCM. It is also important that demand creation
and fulfillment is regarded as equally important and that innovation is not restricted
only to products. The case company has started to realize that it is important to
differentiate the delivery process to create customer value. However, currently the
business is heavily influenced by the marketing department, which more or less gives
directives to SCM. This implies that the delivery process differentiation is quite
restricted and that there is not so much collaboration. For this to change, the senior
management needs to initiate a cultural change, and change the business strategy.
However, this can be difficult since a potential development of the company, according
to some representatives, is that it can outsource all demand fulfillment processes if it
becomes outstanding in demand creation. Currently the company can be classified as
both a marketing and SC specialist: however, the marketers are in charge. The case
company needs to decide whether it aspires to be a marketing specialist or a market
winner capable of satisfying different customer needs with differentiated SC
capabilities.
A number of improvements areas, related to the lack of coordination and
collaboration between marketing and SCM, have been identified:
.
Market research. The demand creation and fulfillment processes should be
managed based on market and customer knowledge gathered through market
research. The specific information used in the different processes may differ;
however, much of the information is the same, e.g. type of markets, type of
customers and customer demand and requirement. Based on the fact that
marketers are experts in these types of tasks, two approaches would be
sufficient: either one market research unit serves both types of processes or that
the logisticians, in their market research, are supported by marketers. The first
approach implies that the marketers when gathering information regarding
 needs of new products or product features, also collect information regarding Demand chain
logistics service needs. This is not the situation in the case company; logisticians management
perform marketing research in the DMF and marketers in the PMF.
.
Market segmentation. To manage the demand creation and the demand
fulfillment processes in an efficient and effective way requires meaningful and
actionable market segmentation. Based on the fact that all processes should have
the same goal, fulfill customer demand, it can be argued that it would be most 1193
sufficient with one segmentation model serving both types of processes. This is
not the situation in the case company since the PMF and the DMF uses different
segmentation models. The segmentation model used in the DMF has been
developed by logisticians and the model used in the PMF by marketers.
.
Links between marketing and SCM. The departments of marketing and SCM
affect each other in numerous ways. Some examples are: SC solutions probably
affect image and brand, the type of product developed may affect possible SC
solutions, performed marketing and sales activities most certainly affect SC
operation and product life cycles probably affect SC operation. Thus, there exist
numerous of linkages between marketing and SCM that needs to be addressed in
DCM. This is not the situation in the case company’s DCM approach since all
these links are neglected.

From our perspective there exist possible linkages between the PMF and DMF since
where and how to sell products (addressed in PMF) is clearly connected to DMF.
However, today this kind of analysis is made by marketers. If logisticians were
involved the case company could probably define and develop more efficient and
effective SC solutions faster, which would imply shorter time-to-market. Moreover, it is
not only important to carefully specify, design and verify new products, but it is also
necessary to highlight the SC processes since some of the new products could require
new processes. The move from commodities to innovative products requires a change
also of the SC design and operation. To shorten time-to-market, SC representatives
should be involved early in the product development phase. Furthermore, to
successfully launch new products on the market requires logistics capabilities. The
commercial launch process ensures that the developed products are properly
introduced on the market with a consistent and consumer relevant message; however,
if the right products are not delivered in right quantities, at the right time and place,
this is very unlikely to be successful.

6. Discussion and conclusion

The purpose of this research is to increase the understanding of DCM by investigating
how the concept has been structured and executed in an international manufacturing
company. This research shows that DCM is about developing synergies between the
demand creation and the demand fulfillment processes. The demand creation
processes comprise all the activities necessary for creating demand and is closely
linked to the marketing discipline, whilst the demand fulfillment processes comprise all
the activities necessary for fulfilling demand and is closely linked to SCM. A fully
developed DCM approach should incorporate all the major demand creation and
fulfillment processes. This kind of fully implemented DCM approach does most likely
not exist today but some companies have started to develop initial versions including
IMDS only some of the major processes, and this research provides an example of that. The
109,9 challenge appears to be to include most of the major processes in both disciplines, and
to achieve a high degree of coordination between them. Previous cases show companies
succeeding with one of these challenges, as does the case company. For instance
several studies address coordination of product development and SC design by
including SC coworkers in the product development process. This issue has been
1194 addressed in concurrent design for some time. The terms “design for manufacturing”
and “design for supply chain” are often used to imply that product development is
aligned with other main functions in the company (Appelqvist et al., 2004; Ellram et al.,
2007; Perks et al., 2005; Sharifi et al., 2006; Sharifi and Pawar, 2002).
The ultimate goal of DCM is to gain competitive advantages by differentiating not
only the products, but also the delivery process as well as to exploit the linkages
between marketing and SCM. This is necessary in markets characterized of intensive
competition, high product variety, large amounts of customer-adapted products, and
short product life cycles. It is unnecessarily limiting to restrict innovation to the
products; it should also be applied to other areas such as the delivery process. This is
particularly the case in environments characterized by commoditization resulting in
customers perceiving little difference between products. This implies that brand
loyalty dwindles and competition through differentiated delivery processes can
become a major determinant of success. Consequently, companies to stay competitive
must enhance customer value by making the product worth more in the eyes of the
customer by adding value to the core product through inclusion of customer desired
delivery processes.
It can be concluded that DCM is not another name for demand driven SCs or a fad.
It is more a way for companies to reach a leveraged benefit from decade long
marketing discussions on how to achieve customer focus. It highlights the interplay
between marketing and SCM as an enabler of value creation. However, it is important
to note that the application of DCM is still in its infancy and needs to be researched
further, both from a marketing and SCM perspective.
An interesting aspect for further research would be to study possible linkages
between product development and SCM. Another interesting aspect for further
research would to study how DCM can be used to get out of the “silo trap” and into a
true customer oriented approach. Two major issues should be addressed in such a
research approach:
(1) How do we define and develop innovative, value adding products? The answer
to this question requires that we investigate how the customer insight process is
performed and integrated in the design and development of products.
(2) How do we design, develop, and manage responsive SCs with the design and
development function as an integral starting point? It would also be interesting
to enlarge the current study to incorporate more companies, industries and
countries.

References
Achrol, R. (1991), “Evolution of the marketing organization: new forms for dynamic
environments”, Journal of Marketing, Vol. 55 No. 4, pp. 77-93.
Achrol, R. (1997), “Chances in the theory of inter-organizational relations in marketing: toward a
network paradigm”, Journal of the Academy of Marketing Science, Vol. 25 No. 1, pp. 56-71.
Achrol, R. and Kotler, P. (1999), “Marketing in the network economy”, Journal of Marketing, Demand chain
Vol. 63, pp. 146-63.
management
Alvarado, U. and Kotzab, H. (2001), “Supply chain management: the integration of logistics in
marketing”, Industrial Marketing Management, Vol. 30 No. 2, pp. 183-98.
Appelqvist, P., Lehtonen, J.M. and Kokkonen, J. (2004), “Modelling in product and supply chain
design: literature survey and case study”, Journal of Manufacturing Technology
Management, Vol. 15 No. 7, pp. 675-86. 1195
Bechtel, C. and Jayaram, J. (1997), “Supply chain management: a strategic perspective”,
International Journal of Logistics Management, Vol. 8 No. 1, pp. 15-34.
Christopher, M.C. and Peck, H. (2004), Marketing Logistics, Elsevier, New York, NY.
Christopher, M.C., Lowson, R. and Peck, H. (2004), “Creating agile supply chains in the fashion
industry”, International Journal of Retail & Distribution Management, Vol. 32 No. 8,
pp. 367-76.
Christopher, M.C., Peck, H. and Towill, D.R. (2006), “A taxonomy for selecting global supply
chain strategies”, International Journal of Logistics Management, Vol. 17 No. 2, pp. 277-87.
Cooper, M.C., Lambert, D.M. and Pagh, J.D. (1997), “Supply chain management: more than a new
name for logistics”, International Journal of Logistics Management, Vol. 8 No. 1, pp. 1-14.
de Treville, S., Shapiro, R.D. and Hameri, A.P. (2004), “From supply chain to demand chain:
the role of lead-time reduction in improving demand chain performance”, Journal of
Operations Management, Vol. 21 No. 6, pp. 613-27.
Ellram, L.M., Tate, W.L. and Carter, C.R. (2007), “Product-process-supply chain: an integrative
approach to three-dimensional concurrent engineering”, International Journal of Physical
Distribution & Logistics Management, Vol. 37 No. 4, pp. 305-30.
Fisher, M.L. (1997), “What is the right supply chain for your product?”, Harvard Business Review,
Vol. 75 No. 2, pp. 105-16.
Flint, D. (2004), “Strategic marketing in global supply chains: four challenges”, Industrial
Marketing Management, Vol. 33 No. 1, pp. 45-50.
Gibson, B.J., Mentzer, J.T. and Cook, R.L. (2005), “Supply chain management: the pursuit of a
consensus definition”, Journal of Business Logistics, Vol. 26 No. 2, pp. 17-25.
Heikkilä, J. (2002), “From supply to demand chain management: efficiency and customer
satisfaction”, Journal of Operations Management, Vol. 20 No. 6, pp. 747-67.
Hilletofth, P. (2009), “How to develop a differentiated supply chain strategy”, Industrial
Management & Data Systems, Vol. 109 No. 1, pp. 16-33.
Hilletofth, P. and Ericsson, D. (2007), “Demand chain management: next generation of logistics
management”, Conradi Research Review, Vol. 4 No. 2, pp. 1-17.
Hines, P., Silvi, R. and Bartolini, M. (2002), “Demand chain management: an integrative approach
in automotive retailing”, Journal of Operations Management, Vol. 20 No. 6, pp. 707-28.
Hultén, G. (2009), “Nokia går ni för demand hela vägen”, Intelligent logistik, No. 4.
Juttner, U., Christopher, M.C. and Baker, S. (2007), “Demand chain management – integrating
marketing and supply chain management”, Industrial Marketing Management, Vol. 36
No. 3, pp. 377-92.
Kotler, P., Keller, K.L., Brady, M., Goodman, M. and Hansen, T. (2009), Marketing Management,
Pearson Education, Harlow.
Kumar, N., Scheer, L. and Kotler, P. (2000), “From market driven to market driving”, European
Management Journal, Vol. 18 No. 2, pp. 129-42.
IMDS Lambert, D.M. and Cooper, M.C. (2000), “Issues in supply chain management”, Industrial
Marketing Management, Vol. 29 No. 1, pp. 65-83.
109,9 Mentzer, J., DeWitt, W., Keebler, J., Min, S., Nix, N. and Smith, C. (2001), “Defining supply chain
management”, Journal of Business Logistics, Vol. 22 No. 2, pp. 1-25.
Min, S. and Mentzer, J. (2000), “The role of marketing in supply chain management”,
International Journal of Physical Distribution & Logistics Management, Vol. 30 No. 9,
1196 pp. 766-87.
Payne, T. and Peters, M.J. (2004), “What is the right supply chain for your products”,
International Journal of Logistics Management, Vol. 15 No. 2, pp. 77-92.
Perks, H., Cooper, R. and Jones, C. (2005), “Characterizing the role of design in new product
development: an empirically derived taxonomy”, Journal of Product Innovation
Management, Vol. 22 No. 2, pp. 111-27.
Piercy, N. (2002), Market-Led Strategic Change, Butterworth-Heinemann, Oxford.
Rainbird, M. (2004), “Demand and supply chains: the value catalyst”, International Journal of
Physical Distribution & Logistics Management, Vol. 34 Nos 3/4, pp. 230-51.
Scandura, T.A. and Williams, E.A. (2000), “Research methodology in management: current
practices, trends, and implications for future research”, Academy of Management Journal,
Vol. 43 No. 6, pp. 1248-64.
Sharifi, S. and Pawar, K.S. (2002), “Virtually co-located teams sharing teaming experiences after
the event?”, International Journal of Operations & Production Management, Vol. 22 No. 6,
pp. 656-79.
Sharifi, H., Ismail, H.S. and Reid, I. (2006), “Achieving agility in supply chain through
simultaneous ‘design of’ and ‘design for’ the supply chain”, Journal of Manufacturing
Technology, Vol. 17 No. 8, pp. 1078-98.
Sheth, J., Sisodia, R. and Sharan, A. (2000), “The antecedents and consequences of customer-centric
marketing”, Journal of the Academy of Marketing Science, Vol. 28 No. 1, pp. 55-66.
Srivastava, R., Shervani, T. and Fahey, L. (1999), “Marketing, business processes, and
shareholder value: an organizational embedded view of marketing activities and the
discipline of marketing”, Journal of Marketing, Vol. 63, pp. 168-79.
Svensson, G. (2002), “Supply chain management: the re-integration of marketing issues and
logistics theory and practice”, European Business Review, Vol. 14 No. 6, pp. 426-36.
Vollmann, T. and Cordon, C. (1998), “Building successful customer-supplier alliances”,
Long Range Planning, Vol. 31 No. 5, pp. 684-94.
Vollmann, T., Cordon, C. and Raabe, H. (1995), “From supply chain management to demand
chain management”, IMD Perspectives for Managers, November, pp. 1-4.
Walters, D. (2006), “Demand chain effectiveness supply chain efficiencies”, Journal of Enterprise
Information Management, Vol. 19 No. 3, pp. 246-61.
Walters, D. and Rainbird, M. (2004), “The demand chain as an integral component of the value
chain”, Journal of Consumer Marketing, Vol. 21 No. 7, pp. 465-75.
Yin, R.K. (2003), Case Study Research – Design and Methods, Sage, London.

Corresponding author
Per Hilletofth can be contacted at: per.hilletofth@his.se

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

Or visit our web site for further details: www.emeraldinsight.com/reprints