Demand chain management - The evolution

Abstract

The concepts of Supply Chain Management (SCM) and Demand Chain Management (DCM) are among the new and debated topics concerning logistics in the literature. The question considered in this paper is: “Are these concepts needed or will they just add to the confusion?†Lasting business concepts have always evolved in close interaction between business and academia. Different approaches start out in business and they are then, more or less si- multaneously, aligned, integrated, systemised and structured in academia. In this way a terminology (or language) is provided that helps in further diffusion of the concepts. There is a lack of consensus on the definition of the concept of SCM. This may be one of the major reasons for the difficulty in advancing the science and measuring the results of implementation in business. Relationships in SCM span from rather loose coalitions to highly structured virtual network integrations. DCM is a highly organised chain in which the key is mutual interdependence and partnership. The purpose is to create a distinctive competence for the chain as a whole that helps to identify and satisfy customer needs and wishes. The classical research concerning vertical marketing systems is very helpful in systemising the rather unstructured discussions in current SCM research. The trend lies in increasing competition between channels rather than between companies, which in turn leads to the creation of channels with a high degree of partnership and mutual interdependence between members. These types of channels are known as organised vertical marketing systems in the classic marketing channel research. The behaviour in these types of channels, as well as the formal and informal structures, roles in the network, power and dependence relations, etc. are well covered topics in the literature. The concept of vertical marketing systems lies behind the definition of demand chains and demand chain management proposed in this paper. A demand chain may be defined as an integrated and aligned chain built on partnership and mutual interdependence aiming at the creation of a unique competence to identify and satisfy customer perceived value, while demand chain management may be defined as the effort to create, retain and continuously develop a dynamically aligned demand chain.