January 8, 2025

The relation between marketing and supply chain management – part 1

Research Topic

Global Supply Chain With The Local Marketing Talent

 Released in August 2014

Research Questions:

• What is the importance of local marketing talent within the global supply chain network for multinational firms? 

• What kind of supply chain relationships best facilitate the integration of marketing strategy planning and execution? 

• Can we extend organization learning to supply chain learning? 

• Can we extend market orientation to supply chain orientation?

• What are the best methods for capturing the voice of the customer in different firms embedded in different national and corporate cultures? 

• How should globally derived voice of the customer data be integrated and contemplated within strategic market planning? 

• What roles do qualitative and quantitative customer data play in customer value prediction at various points in global supply chains? 

• Should customer value learning and creation processes be formalized and standardized for maximum global supply chain effectiveness and efficiency or is the world so hyper-competitive and amorphous to require more temporary, localized, ad hoc processes? 

Research Objectives: 

1- Re-evaluating the relationship between marketing and strategic supply chain management and transferring it to a more strategic level, in addition to providing a new framework and ideas for this relationship and new strategies that must be innovative by the rapid change and quality management system in the global business environment and customer perception. orders across different markets around the world.

2- Integrating local marketing talents with global strategic supply chain management design for multinational companies.

Keywords

Global supply chain, strategic integration between marketing and SCM

Global Value Chain, Collaboration, Standardization vs. adaptation Local marketing talent, Economies of scale & Economies of scope

Framework

LPG and Global Supply Chain 

Liberalization, Privatization, and Globalization (LPG) economic systems have a significant effect on the competitiveness among firms, as many factors lead to an increase in the interdependent & integrated economic system called the global economic system, as a result, the competitive environment faced by the firms has a dramatic change since the last decade as a result from the drivers of globalization like decreasing tariffs and barriers and improving transportation and information technology as well as we live on the era of the communications activities.

These changes gave the firms high access to produce globally and the result from this was a proliferation of choices for consumers all over the world this required the firms to offer greater products and services at lower cost and high quality to remain a competitive advantage and customer’s satisfaction and increasing their customer value creation and relationships, so this pressure lead to more emphasize on reengineering internal business process as well as working more collaboratively with customers and suppliers to integrate planning and operations throughout the supply chain management.

The changes also have a significant effect on increasing the dynamic markets and lead to more uncertainty about customer demand, day after day customers gain more access to more products and services globally as well the introduction of new products and services is occurring at a faster pace.

The main important point from the introduction above lies on; in today’s business the firm’s competitive positions mainly depend on the ability to realize and well understand the changes of the customer demands and perceptions which have a rapid change also the differences of customer tastes and preferences among different markets to respond appropriately and quickly to those different and changeable demands for the customers.

Supply chain management tools and techniques are considered as the mechanism that allows the firms to respond to all of these changes, so strategic integration between marketing and supply chain management is an essential topic in today’s business.

 Brief history of supply chain management:

Logistics activities have existed since the early 1900s and were related with the military as an essential branch of war that pertains to the movement and supply of armies.  The logistics model is essential by the Military Forces which use the logistics model to ensure the availability of the required materials at the right and accurate place at the right and accurate time the logistics model is still essential and being used by the military forces until now. Since 1950 The Supply chain has been something very interesting and got more attention in the manufacturing and production sector, we can observe that the inventory became the responsibility of the marketing and accounting as well as the production areas, also order processing as part of sales and accounting duties 

The supply chain is one of the most powerful engines in business transformation, The supply chain is considered one area where the efficiency and effectiveness of the operational activities can be reached it decreases the organization’s costs and improves customer service as well as increases the firm’s value chain. As much as the technological and telecommunications tools increased supply chain management became more powerful. 

In the early days, the supply chain was referred to as the functions of logistics, transportation, purchasing, and supplies.

 The evolution of the supply chain has moved to focus on integration, visibility, cycle time reduction, and streamlined channels. Also integration with marketing, this integration has a variety of activities that include:

• Integrated Purchasing Strategy 
• Supplier Integration 
• Supply Base Management  
• Supply Chain Management

Competitiveness and Supply Chain Strategies 

During the last decades, multinational firms succeeded by how they could capture the economies of scale and & economies of scope as well as the usage of advanced technology in their products and services into the physical assets, and this for sure increases the customer’s value creation. Competing in the global market requires new capabilities within the firm Such as considering the customers as strategic assets.

This research focuses on the FMCG multinational firms, and it’ll propose a framework to move the integration between marketing and supply chain management to a more strategic level through the integration of local marketing talent with the global supply chain management design for the Multinational firms into a more strategic level, not only on the operational and tactics level.

The proposed framework builds on these perspectives, which captures the integration between marketing and supply chain into the business unit and moves them onto a more strategic level. Integrating marketing and supply chain strategies involves the management of the following levels of integration:

1. Strategic corporate, customer, and shareholder integration.
2. Strategic supplier integration.
3. Strategic marketing and SCM with the local marketing talent integration.

I’m focusing on explaining the customer’s value within the supply chain network, and customer segments, realizing the rapid change of the global business environment and customer demands & perceptions, and delivering value to the customers.

The purpose of this research is to evaluate and review supply chain management and its relation with marketing, to contribute to the body of knowledge by developing a conceptual framework for integrating marketing and supply chain management on a more strategic level to include local marketing talent, As well as to understand, evaluate and analyze the global supply chain and global marketing strategies, the relation between both as well as the important of integration of local marketing talent in the strategic decisions in global supply chain management to MNC also suggest strategies and activities to MNC to improve the marketing talent. and all of the above considered as the answer of why this topic is important.

Global SCM and Marketing Strategies 

The value of the research could be as follows: the relation between marketing and supply chain management as it is considered an essential topic of global marketing. This research will focus on the integration between marketing and supply chain management on a strategic level as well as the importance of the local marketing talent in the global supply chain design. 

This research will explain the Decision framework for the development and implementation of global SCM and marketing strategies and programs, also evaluate management decisions connected with the global SCM and marketing process, design the global SCM and marketing programs and implement, coordinate the global SCM and marketing programs within supply chain network.

The definition of global marketing to realize what are the aspects, that are essential in this study and connect it to the marketing strategy and programs within the supply chain network, to understand and realize the background and the main dimensions to be connected on the integration between marketing and supply chain management including the local marketing talent on a strategic level. So first the research will explain the meaning of local marketing talent.

Local marketing talent

 To realize the meaning of local marketing talent we have to get the meaning of the following: 

Talent management 

Talent management refers to the firm’s anticipation and expectation of required human capital as well as the planning to meet those needs.

Talent management can be described, as the science of using strategic human resources to improve the business value for enabling the firm to achieve its strategic goals and increase its competitive advantage. Also talent management including recurring, retaining, rewarding, developing, and enabling the employee performing forms a part of talent management as well as planning the workforce on a strategic level, basically the talent management strategy has to be linked to the business strategy to make sense, and logically supply chain management is the core of the business strategy. This research focuses on the strategic integration between marketing and supply chain management so we have to realize the meaning of  Marketing Talent 

Marketing talents concentrate on everything related to the market and competition with customer value creation involving the value of talent that enables the firm to cover the benefits of economical areas, customer satisfaction, competitors, quality productivity, cycle time, market capitalization as well as costs and revenues, rationally those activities can’t be achieved through machines, so it should be achieved through talented persons, so the firm’s process which improves the management and marketing talent not only including hiring the most qualified and valuable employee but focusing on how to retain them and the main important to improve their skills and knowledge. 

From a talent management point of view, the firm is concerned with two major areas (performance and potential), performance involves the current performance of the employee, and potential involves the potential outcomes and benefits from the talented employee so I see that the talented marketers can play a vital role if we want to move the integration between marketing and supply chain management into more strategic level that will be clear within the body of the research.  

Global Market Entries 

Global marketing refers to the firm’s commitment to coordinate its marketing activities across national boundaries to satisfy the global customer wants & needs better than the competition and this implies that the firm can: 

• Develop its marketing strategies and activities based on the similarities and differences between markets
• Utilize and exploit the knowledge from the headquarters (home org.) through worldwide diffusion and adaption
• Transfer the experience, knowledge, and best practices from any of its markets and use it in other markets which doing business. 

Hence we can conclude that the collaboration and integration between marketing and supply chain management is essential on a strategic level.

Global+local=Glocal “Think Globally, act local” 

Glocalization :

Because this research focuses on the relationship between marketing and supply chain management as well as the integration between supply chain management and local marketing talent, so we have to take a look at the concept of Glocalization

Glocalization can be described as the global marketing strategy that seeks to achieve the slogan Think Global, Act Locally, which called Glocalization, which could be achieved through dynamic interdependence between the firm’s headquarters and its subsidiaries among coordination of their efforts and functions to ensure the global integration and local flexibility at most cost-effectiveness. Principally the value chain functions should be carried out which is not required to be achieved only from the firm’s headquarters (Bellin and Pham, 2007) so the role of supply chain management and marketing is critically important in this topic.

The key point of Glocalization is knowledge management which refers to continued learning from experience, from this point I want to mention that in the context of global marketing, the management of knowledge can be achieved through cross-culture activity, which its key task, is to foster and continually upgrade collaborative cross-culture learning. Glocalizaton is one part, which is also important for the research’s main idea.

Organization’s Marketing Structure

* Centralization vs. decentralization

One of the core activities of any multinational firm lies in the organization’s marketing structure, which could be centralized or decentralized. One of the main functions of the firm’s marketing activities is communication. The marketing department continuously tries to communicate the brand image, mission, and objectives as well as the products & services of the organization. And how the communication approach might produce different marketing tones, which is affected by the firm’s structure and how the different departments are allocated. For example in a centralized marketing approach, there is only one marketing department that controls all the marketing activities from the headquarters in the home country that responsible for managing and conducting all the different marketing initiatives and unifying the brand image this approach is applied when the Multinational firms conducting global standardized marketing strategy.

Decentralization basic view refers to that multiple business groups can make a decision. Some benefits from decentralization are adopting the products or approaches to the local culture insight, local competition, local language & laws, and increasing the sales channels. And this point is considered as one of the reasons, that increases the importance of integration between marketing, and supply chain management. 

Usually, the decision to centralize or decentralize the organization’s marketing activities comes by default, based on how the company is structured as well as the relation between marketing and supply chain management plus the capabilities of the supply chain to meet the different customers demands in different markets which considered as one of the main Important factors which are essential in the organization’s decision of centralized or decentralized, and this factor considered as the nature of the product or services that offered.

The research focuses on “FMCG “fast-moving consumer goods and this industry always depends on decentralized as well as adaptation approaches in their marketing strategies and activities, also the research will examine the mix of both centralized/decentralized with its relation within supply chain management and the importance of integration between marketing and supply chain management on diverse perspectives. 

The mistake often lies in lumping everything under marketing because it should be under the supply chain management with its relation to marketing.

The level of benefit will depend on what part of the marketing function we talk about as well as the level of scale benefits that could be achieved within the supply chain network also the factors that affect the advertising have a critical interest as well as the market segmentation variables have a significant effect on the advertising process in different ways.

The contextual variables include regulations and media availability as well as the costs of advertising plus the number of competitors in the foreign market.

Multinational firms should take into consideration the local advertising regulations which means some global ideas can violate the rules and regulations in one particular market, so multinational firms should realize the essence of globalization of advertising while considering local responsiveness which means the adaptation should be conducted (think globally, act locally) when dealing with different cultures, the Multinational firms should realize how this different cultures decoding the advertising so the decentralized approach should take place on this area of working. 

Organization’s Marketing Structure

The standardization vs. adaptation 

One of the most important decisions associated with the marketing mix is developing an adequate marketing mix in diverse markets to achieve the firm’s objectives. The products that entire new markets for the first time should be adopted and tailored to the characteristics of the customers to be suitable to their demand, especially taking into consideration the existing heterogeneity of the markets ( Vignali,2001). In this point, we can say that the decisions of standardization or adaptation make a lot of organizations redesign their supply chain management with its relation to marketing activities and should manage well the supply chain network. 

The global strategy of multinational firms seeking to manage the differences that emerge beyond different domestic markets across the world ( Ghemawt,2007) Also global marketing is not synonym with a standardized approach to managing the marketing processes (Acito, & Rusetski, 2006; Zou & Cavusgil, 2002).

 Multinational firms follow 3 diverse perspectives when competing in the global market

First: concentration-dispersion perspective: the perspective, which analyzes the structure of the firm 

Second: integration- independence perspective; the perspective which has to do with the process, which is independent from the organizational structure but integrated to the marketing and supply chain management in the competition challenges faced by the multinational firm.

Third: concentration of the articles, which deal with the standardization/adaptation perspective associated with the degree of adjustment or standardization of the marketing mix factors. 

Some theories support the standardization approach which builds on the belief that the world is becoming more and more homogenous as a resulted of advanced technology and telecommunications as well as evolving transportation (Jain 1989:levitt, 1983) also some researchers such as (Jain, 1989, 2007; Levitt, 1983; Vrontis & Papasolomou, 2005) mentioned that. Consumers are converging on some global norms, and sharing common tastes, needs, desires, references, as well as cultural similarities so the researchers said according to these big similarities, and the low barriers and advanced technology that occurred from integrated and interdependence economic system as a result from globalization, the multinational firms can sell more standardized products that lead to more standardized marketing programs (Zou & Cavusgil 2002).

According to the research, the researcher doesn’t support this approach however it has some activities which the researcher accepts it, but when the multinational firms adopt their marketing strategy, they can bring more advantages and outcomes that exceed the disadvantages and strengthen also these disadvantages and strengthen can be handled when we integrate the marketing and supply chain management within professional supply chain network. 

Finally, on this point; the degree of standardization or adaptation depends on internal and external factors and in today’s business environment adaptation is highly required so the integration and collaboration between the internal and external factors requires an integration between marketing and supply chain management.

January 8, 2025

The relation between marketing and supply chain management – part 2

 Research Topic

Global Supply Chain With The Local Marketing Talent

Released in August 2014

Economic of scale and economic of scope 

Now we’re moving to describe the economies of scale and economies of scope and its relation with marketing and supply chain management  

First, let’s define the economies of scale and economies of scope 

Economies of scale

Economies of scale refers to the accumulated volume in production and sales which occurs by decreasing the cost price per unit due to the experience curve and increased efficiency in a lot of factors such as production, marketing, and other factors. The global presence has a significant effect on extending the firm’s scale of operations by giving the firm a large capacity in its production as well as a large asset base. From this point we can say that; through large scale, the firm could create a competitive advantage but in case if the firm converts the scale into economies of scale, to make the idea more clear we can describe some benefits from economies of scale according to (Gupta and Govindarajan, 2001):

• Decreasing the operating cost per unit as well as spreading the fixed costs over a larger volume due to experience curve effect
• Pooling global purchasing supports the firm and provides an opportunity to concentrate global purchasing power over suppliers which leads to volume discounts and reduces the transaction cost
• Increase the talent of the members within the firm 

From this point we’ll move to the other side, Economies of scope to explain more the idea of the relation between economies of scale and scope to marketing and supply chain management.

Economies of scope  

First, let’s say the economies of scope happen when the firm is serving in diverse marketplaces in the world, simply the global scope can’t take place in case the firm is serving customers in just one country, customers should purchase a bunch of identical products and services across diverse countries and they can bring those products either from a horde of global suppliers or a single global supplier (international marketer) that are presents in all of the markets which the firm is already serving customers within. From this point, we can conclude that compared with a horde of local suppliers and a single global supplier (marketer) can lead to an increase in the value for the global customer among the consistency in the product’s quality and features as well as in the services across countries, here we can conclude the importance of the integration between marketing and supply chain management within professional supply chain network across the countries. As well as the importance of local marketing talents will be clear in the following paragraphs.

 The challenge in capturing the economies of scope within the global level lies in the quick response from the firm on the tension between two factors: The need for central coordination of most elements of the marketing mix and the need for local autonomy in the actual delivery of products and services ((Gupta and Govindarajan, 2001). As the adaptation approach is Highly required in today’s business; multinational firms are serving a lot of different customers in different countries across the world.  Could gain benefits from the concept of economies of scale and scope through transferring the experience gained from one country to another country in terms of similarity in culture, customer characteristics, and business environment. From this point, we can conclude that if the firm is concerned with improving the local marketing talent in different nations, it can exploit the experience that the marketer gained and use it in another country that shares similar culture, customer characteristics, and business environment. Which will be represented in the data and analysis section. 

From the paragraph above we can conclude that everyone in the supply chain may value something different within the global value chain.

The value chain as a framework for identifying international competitive advantage

In all stages in the value chain, there’s an opportunity for a positive contribution to the firm’s competitive strategy through performing some of the activities or processes in a way that brings a competitive advantage in comparison with other competitors and if the firm can attain such a competitive advantage that’s profitable, defensible, and valued among the market, so it can earn high rates of returns. 

In competitive terms, value can be defined as the amount that the buyers are willing to pay for the products or services that the firm provides to them, “perceived value” when the value of the products or services that the firm provides to the customers exceeds the costs of doing them, then the firm is profitable. And this is the goal of any generic strategy.

The value chain displays total value and it consists of value activities and margins.

The value activities can be described as the physical and technologically distinct activities the firms perform, as well as it’s the building blocks by which a firm creates a product or service valuable to the buyers Margin can be described as the difference between the total value (price) and the total and collective costs of performing the value activities.

Value chain activities can be defined as the key that links the company resources and its strategic position within the global market. And on this point, one logical question emerges here that’s; when the company resources considered to be valuable?

The answer is, that the company resources could be valuable when they are transformed into activities that generate either lower cost or greater value than competitors ( Sheehan and Foss,2009) 

The firm might be able to identify elements of the value chain that aren’t worth the costs and this could be conducted outside the firm called “outsourcing” hence the role of supply chain management emerges.

The value activities are divided into 2 types:

1- Primary activities are the activities involved in the physical creation of the product, as well as its sale and transfer to the buyer as well as the services after sales that can be technical assistance. 

2- Support activities can be defined as the activities that support the primary activities and each other through providing purchased inputs, technology, and human resources as well as various and wider functions, the procurement, technology development, and human resources management are related and associated with specific primary activities and supporting the entire chain.

So we can conclude that the value chain can be described as it’s not a collection of independent activities but it’s a system of integrated and interdependent activities either within one organization or within various organizations.

 “Figure  shows the value chain as a framework for identifying international competitive advantage

Global Supply Chain 

When defining supply chain management, Most of the authors focus on the importance of the various chain players also consider the customers as vital players in the chain and this supports the research idea of “the importance of the local marketing talent in global supply chain design” about understanding and realizing the customer’s psychology wants, needs, characteristics, and behaviors are essential and the researcher consider this point as the main point in the organization success in all domains, so the researcher opinion is that; the best persons who can realize this point is the local marketer so the global supply chain as it essential in reducing cost and the success of the multinational firms in different markets should be according to the local marketing talents lets see how different authors talk about the supply chain management

A lot of definitions of supply chain management focus on the 2-way flows of goods and services along with information & funds from the purchaser to the user.

One of the interesting detentions that also support the researcher’s idea is the following: 

Monczka et al. (2002) indicate that changes in global business conditions and situations as well as the competition increases among organizations have influenced the management complexity of all organizations.

 In today’s business conditions, all organizations should manage both the upstream firms—suppliers that provide direct & indirect inputs and the downstream firms- distributive network. 

Also, the author said; that the supply chain includes all the activities that are related to the flow and transformation of goods that start from the raw materials until the end user. The supply chain includes the managerial system, production & production scheduling, operation & assembly, inventory management, warehousing, transportation, and customer service. Supply chains are essentially linked to suppliers and customers; we can consider every customer is in turn a supplier to the next downstream organization until the final product reaches the ultimate end user. Supply chain management is considered the integration of all those activities through improving the supply chain relationship to attain a sustainable competitive advantage.

The points that are very interesting to the dissertation’s main idea . Supply chain management includes the associated information flows, materials & information flow up and down the supply chain, the author focuses on this point but as the information came from the upstream marketer from the Head Quarter the dissertation point view according to the researcher perspective, that the information should come from the Upstream marketer with the assistance from the downstream marketer from the local market and sure it should be aligned with the headquarter and the reasons will take a critical discussion in the following paragraphs supported with real examples. 

Supply chain management has a tremendous impact on the strategies of any organization, mainly those associated with purchasing and sourcing, also it contributes to multiple organizations as chain participants.

Supply chain management can be divided into 3 parts :

• . Internal functions
• . Upstream suppliers
• . Downstream customers

1) The internal functions: the internal functions of the organization have some duties such as order processing that include extensive customer interaction that starts from taking the order until aftermarket service. One of the other duties of the internal functions within any organization is production scheduling which includes actual plans and schedules. 

2) The upstream suppliers: the main function of the upstream suppliers is to manage the flow of the right materials at the right time to the right internal users. 

3) Downstream customers; the main functions of downstream customers include the distribution channels, the process and function which the products possess through To reach the ultimate customers. In this area, the logistics managers are involved in managing transportation and distribution. 

“Monczka” observed that there are upward and downward flows of both the materials and the information as well as the funds between the players or the participants of the supply chain management, its very important and also considered imperative to manage the relationship among those participants to align the activities between all of them. Effective management of the Supply chain is considered the core competency that offers an opportunity for competitive advantage to the organization in domestic and global markets as well it presents the following:

•  Cost reduction 
• Improving the delivery of the materials
• Shorter cycle time including product development cycle time 
• Quality improvement. Access to a product and process technology  

 Ross said the supply chain management is based on 3 dynamics: 

1- Operation management techniques   

This refers to all the organization’s functions such as manufacturing, marketing, and finance. Those activities should be integrated to form the common business system and these techniques offer comparative advantage through adding value to the daily work and day-to-day performance of the regular activities. The 3 sets of activities are the inbound logistics, processing activities, and support activities.

2- Integrated logistics management 

The main objective at this level is to interface closely with each other but not merge the identical functions performed by logistics counterparts outside the supply channel partners and this point takes us to one of this research ideas “In which degree the interdependent/integrated global economic system are driving the Multinational firms to rely on a network of relationships with external organization or parties.”

The main rationale of the dynamic process is that an organization needs support not only from its internal supply chain partners but also from external supply chain partners to gain a global competitive advantage and market leadership to manage the supply chain management toward customer value creation. Also, this point will be clear in one of the case studies of PepsiCo which did a joint venture with one Arabian company Almaraie. 

3- Strategic dynamics

This part concentrates on reducing costs and time and also focusing on adopting the management technique as well as the management information system to attain breakthroughs in products and services that are suitable for the change of the customer needs. This strategic dynamic focuses on and opens up new dimensions for the firms as well and it enables the firms to attain a competitive edge between setting alliances with channel system partners as well as offering relationships, which are based on marketing to suppliers and customers. 

After the analysis above Ross summed the definition of supply chain management as the following:

Supply chain management is a continuously evolving management philosophy, which is seeking to unite and consolidate the collective productive competencies and resources of the business functions that are within the organization and outside the organization. Supply chain management always searching for innovative solutions and synchronizing the flow of materials and information to create a unique source of customer value.

The ultimate objective of supply chain management is to achieve a strategic fit between the organization competitive strategy and supply chain strategy, the treatment that can achieve this strategic fit effectively is to understand and realize very well the customer demand that can help the organization to manage well the production and services as well as to define the cost and services requirements and understanding the supply chain activities that should drive according to the customer value creation, according to the multinational firms that doing business in different countries that have different customers, so the researcher sees that the local marketing talent should take high consideration on designing the global supply chain strategy, which means to be integrating with the global supply chain management design for the Multinational firms on a strategic level not only on operational and tactics level.

The major question here is if any mismatches exist between the capabilities of the supply chain of doing with considering the local customer demands and appeal, what the multinational firm should do? 

1. Alter its strategies in the local market that’s means the branch of the firm or the subsidiary should adopt their strategies and activities to be matching with the global supply chain of the multinational firm however this strategy doesn’t suit the local responsiveness to a high degree

1. Alter the structure of the supply chain design to be able to satisfy the local customers for each different market and in this point, the role of the local Upstream marketer with the assistance of the downstream marketer should emerge and engage in the supply chain structure and design into more strategic level.

            So the answer is the firm should alter the supply-chain design. 

Another important element for this question, do the multinational firms set its marketing strategies according to the capability of the global supply chain or set the structure of the supply chain design according to the local market demands that’s means not suffice to depend only on the local market responsiveness and then either continue on this scale and design or alter and redesign the supply chain so from this point the importance of integration between the marketing and manufacturing & logistics, enable the factory to have a quick reaction as well as respond quickly to the dynamic market changes also ensuring the value creation for the customers, from this point the question here what about to make the factory have more quick reaction or could be parallel with the customer demands and trends changes in different market across the world so the dissertation is mainly focusing on the importance of global supply chain with the local marketing talent that should be integrated on the strategic decisions in the global supply chain design for the multinational firms on more strategic level.

Fredendall and Hill (2001) and Burt et al. (2003). Fredendall and Hill (2001) focused a lot on this point and examined the importance of including customers as one of the participants on the supply chain management and with the multinational firms this mainly depends on the local customer responsiveness in each different market. 

Ross (1998) also highlighted the importance of customers and he mentioned that supply chain management should be completely customer-driven. Supply chain management plays a vital role in the communications of customer demand from the point of sale back to the supplier as well as the physical flow process that ensures the efficiency of cost and time, this is very important to ensure the efficiency and effectiveness of the application of supply chain management, Ross mentioned that the products should be customized because of customers nowadays are increasingly accustomed and this requires to receiving customized products and services specially as the market responds to demand-pull product strategies rather than push product strategies and for multinational firms, the responsibility of the local upstream and downstream marketer plays a vital role on this issue. 

Various paradigms of supply chain management focus on the management of internal customers as well as external customers. The definition of internal customers can be as follows: internal customers can be defined as the receiver persons or could be a department of another person’s or department’s output or final product, service, or information. Many researchers and dictionaries like (APICS Dictionary, cited in Fredendall and Hill 2001). Also defined the internal customers as the persons or departments that ensure the delivery of products and services as well as the information to the external end-users.

According to Ross (1998), he mentioned that supply chain management is a dynamic and open–ended approach to marketplace competitiveness, and also it can be a continuous process of determining intercompany performance, product& services quality, information system techniques as well as the organizational & personal competencies to utilize the different customer demand, by the way, the utilization of both internal and external participants help the firms to achieve productivity profit and growth and can be done through the 2-way flows of product & service in information & funds from raw material until the end-user.  

(Burt et al. 2003)  defined supply chain management in very simple words” linkage between the ultimate customers and mother Earth”

 Burt highlighted the involvement of funds and described it as the funds that come only when end-users purchase products or services, otherwise, the transactions that are performed within the supply chain could be as the simple allocation of those funds through the chain’s internal & external members.

A very important factor emerges on this point: professional communications and information flow tools are very important and valuable factors to coordinate and synchronizing the activities that are performed between the members within the supply chain management.

Here the importance of the strategic integration of local marketing talent in the various markets for multinational firms. 

Collaboration 

Collaboration can be defined as the process that involves the adaptation of a high level of purposeful cooperation of each partner to attain a trading relationship over time which is bilateral which means the partners have the power to shape the nature of the future direction over time. The mutual commitment of partners to the future is something essential in collaboration as well as the power relationship balance plays a vital role in collaboration. 

The collaboration could have some disputes between partners so managing those disputes is critical the supply chain management should design the duties and function between partners as it is essential to success so the strategic integration between marketing and SCM as well as the local marketing talent is very important to the multinational firms.

Four important characteristics define the firms that succeed in developing global supply chain networks to control and manage the total supply chain costs and enhance the quality 

1) Corporate Global vision:

The primary question on this point lies in “Do multinational firms create an effective global vision which is the primary driver for investing resources and effort in seeking global suppliers and customers?

On this point, if there’s no ideal vision of what the firm is focusing on and trying to achieve in their global marketing strategy and this vision should be well understood to all the firm’s subsidiaries in different markets will result that the managers in all subsidiaries will get confused in doing their activities. 

Coordinating business unit strategies between all the firm’s subsidiaries is very complex so what about coordinating the business unit strategies with the external suppliers, as the multinational firms are seeking to expand their global operations as the effective vision as a primary force for developing a global supply base, so this take us to the idea of the multinational firms should integrate their local branches or subsidiaries in different markets in the strategic decisions and make them deiced what are the strategic business unit that should be conducted in their local markets and for sure under the headquarter consultancy otherwise the multinational firm should deploy a lot of headquarters which can identify the firm strategic decisions and strategic activities and this also require high costs and high tanning as well as the employee in different headquarter should be well understood and realize the local culture and business environment and people demographics of the country that doing business within but on a practical way not suffice to study reports through internet or reports from the managers from the different branches of the firms because as the research mentioned; the best persons that can realize well the people demographics and culture of the local market are the persons who are living in the local market.

2) Management structure and systems 

The question on this point lies on: Are the multinational firms organized to promote an effective way the coordination through different global strategic business units? 

Successful multinational firms have invested a lot of money and efforts in order to enabling the firms structure system to deploy the firm’s global vision through different ways and actions such as Global community council and reporting systems in order to deploy and ease the communications among different subsidiaries in different countries, also the international procurement officers (IPO) and sales officers should be in contact and make a strong relationships with governmental agencies to promoting its global strategy as well as to gain effective experience and knowledge regarding the traditional sourcing as well as the sales opportunities and  country regulations and procedures as well as the multinational firms can gain an opportunity to improve total cost models for decisions making and one of the main important benefits is that the multinational firms can gain a valuable information regarding to providing sourcing and demand information to global production design sites so  including the local marketer in those operations can facilitate performing all of those activities also the main important that the local marketer should be involved in determining the supply chain design and the multinational firm’s headquarter should adopt its global supply chain according to the local marketer recommendations. 

3) Configuring the global supply base

The question on this point lies in “Are sourcing and sales strategies developed to optimize the mix of global suppliers/ distributors and local suppliers/distributors when the multinational firm sets up production units in a new country or region?

Almost of successful multinational firms often have discovered and the researcher used the word  “has discovered” because, in global marketing strategies, there’s nothing fixed but rapid change always exists and is considered one of the main challenges of multinational firms, so discovering and investigating the concepts and the nature of the global business and environment is variable, for any case they have discovered that some mix of global and local suppliers/distributors is the optimal however the mix may occur some changes in their multinational firm’s supply chain but the benefits are greater than a change in some of the multinational firm’s supply chain strategy especially they can gain a valuable experience from the local suppliers. So the local marketer plays a vital role on this point. 

4) Supplier development

The question on this point lies in “How could the multinational firms treat their global strategy to reduce costs among different markets and how it can ensure the supplier’s capabilities in the competitive & manufacturing strategies and align all the activities? 

Supplier development approaches are different from one country to another or region to another according to the specific sort of problem encountered, Developing a global supply chain strategy requires a fundamental shift in the way of thinking in doing business, one of the main drivers on the marketing decisions is to understand well the total cost of the ownership across the entire global supply chain through understanding and realizing the cost drivers among well understanding and realizing the drivers of cost that underlie total cost, managers will have the availability to implement a strategic design to reducing cost.

From the four characteristics above we can conclude that the world economy is becoming integrated and interdepend which is driven by global market forces, as well as global cost forces and technological forces should be one of the highest priorities as the political and macroeconomic forces all of those changes affect the way of multinational firms think on doing business globally so the integrating marketing and global supply chain with local marketing talent is very important.  Also, supply chain management usually involves a plethora of countries, as it comes with a plethora of new difficulties, to manage the global supply chain well, you have to think well about reducing costs and one of the main important factors in reducing costs is local labors. 

January 8, 2025

The relation between marketing and supply chain management – part 3

Why integration creates value

It is very important to realize that customers have at least 3 perspectives of value so when the firm’s decision makers realize and understand well all of those values they design the firm’s strategy according to meet the customer’s perspective. 

We can divide the customer’s perspective of values into 3 factors:

1. The traditional perspective: is an economic value that builds on an economy of scale and this economy of scale could be in operations as the source of efficiency, the economy of scale pursues to gain the benefits from fully utilizing fixed assets to attain the lowest total landed cost the main concentration of the economic value lies on the efficiency of the creativity of product/ service, and the economic value considered as the factor which seeks to doing the jobs as well as possible. And the customer always searching for products and services that are high quality at a reasonable price.

   2. Market value: The customer’s takeaway in terms of market value is convenient product/service assortment and choice. Realization of economic value and market value are the criteria which very important to customers. However, firms are recognizing that’s the way to business success but also should depend on the following point.

  3. Relevancy value is considered as the third perspective, relevancy value involves the customization of value-adding services or the customization of the product itself according to different locations and different customer’s appeals and demands, relevancy value means the right product /service as reflected by the market value at the right price as reflected by economic value In a consumer context for example, relevancy means transforming ingredients into ready-to-eat meals. In general merchandise retailing, relevancy means transforming products into fashionable apparel. When integrating particular components into the product to increase functionality, which is desired by customers, which results in relevancy value is achieved within the manufacturing and assembly stage. Customers need unique products & services that are addressed especially to them, and then the relevancy value is reached. To achieve economic value, market value, and relevancy, the integration of the overall business process is required, and this is known as the integrative management proposition.

 More strategic integration between marketing and supply chain management,

A network business model has developed over the last 3 decades, which means the firms have moved from a hierarchal and vertically integrated shape to more closer, even virtual network of partnership with key suppliers (Christopher and Ju ̈ttner, 2000). According to this concept, the network is considered a series of nodes, which connected through links. So it’s critical and really important to manage those links through an effective integration between partners within the supply chain network to ensure the sustainability and firm’s competitive advantage. The network is viable to expand so if the network fails to act in a concert for whatever reason the potential risk for the focal firm could be in consideration (Ponomarov and Holcomb, 2009). Within the network business model the integration of the strategic decisions is something important but to integrate the network from the customer end to the supplier end is something very complicated so the strategic integration between marketing strategies and supply chain strategies is highly required. As the marketing strategies focus on the decisions associated to customer demands, market segmentation, distribution, and the marketing mix 4 p’s “product place, price, promotion” strategies (e.g. Kotler and Armstrong, 2007).

 Supply chain management includes a focal firm behavioral orientation toward collaborative partners within the supply chain network as well as it also involves the process configurations across the key supply chain process (e.g. Green et al., 2006; Tokman et al., 2007). Supply chain strategies are also concerned with optimizing across organizational activities which rely on a close relationship with a high degree of interactions and integrations with marketing and sales.

The marketing strategies should be infused across organizational business processes to transform the customer perspective within the supply chain network.

On this topic, the researcher wants to mention that the interface between marketing and supply chain management results in mutual benefits to both fields through close alignment, according to this point many researchers such as (Martin and Grabc 2003) suggest that supply chain management leverage marketing strategies as well as the firm’s market orientation also it could ease and support the marketing strategy in global supply chain contexts and it has a significant positive effect on increasing customer value ( Flintand Mentzer 2004), many studies such as (Green et al,2006) suggest that firm’s supply chain strategy has a positive effect on marketing orientation such as mediate the relationship between market orientation and financial issues that lead to marketing success. A lot of studies such as (Min and mentzer 200) discussed some of the key theoretical concepts of marketing and supply chain management and concluded the following (marketing concepts, market orientation, and relationship marketing are considered factors that are inextricably linked with supply chain management. at the operational level, also the studies investigate the impact of marketing activities within the supply chain management.

The interface between marketing and supply chain management can be discussed through three different perspectives (inter-functional perspective & process perspective & integrating business concepts perspective.)

 A) Inter-functional perspective:

Inter-functional perspective is considered the first contribution, which lies in the integration between marketing and logistics & manufacturing.  Logistics and manufacturing are considered they have the biggest influence on the development of supply chain management, as well as seen as conceptual processors in the last three decades. Logistics is the function, responsible for managing the flow of materials & information as well as it’s contributing to supply chain management. Many researchers such as  (Cooper et al., 1997) recommended and stressed the need to broaden the scope of supply chain management beyond logistics.

The interference and relation between logistics and marketing could be through the origins of logistics as the physical side of distribution as well as the coordination between both increasing the firm’s customer value creation and have a positive impact on the customer service performance.

Some researchers such as (Chen et al., 2007 and Ellinger, 2000) stressed the rapid change in the global business environment and customer demands, and here the role of local upstream marketers with the assistance of downstream marketers emerges and should be on the strategic level within the global supply chain network for the Multinational firms. The manufacturing and marketing interface has very important relationships of integration due to these rapid changes in the external business environment and customer perception & demands. The integration enables the factory to respond quickly to dynamic market changes. Many researchers such as (Kahn and Mentzer, 1998, and O-Leary-Keller and Flores, 2002). Confirm the importance of collaboration and integration between both as well as the joint decision-making on a range of performance toward customer’s value propositions. 

By the way, most of the studies about the inter-functional perspective are based on the resources dependence theory that existed in 1978 (Pfeffer and Salancik) also Anderson and Salancik 1982) which has developed until now as the fundamental changes in the economic system as well as the continuous change of the global business environment and customer perception & demands. By the way, both theories (Pfeffer and Salancik 1979 and Anderson and Salancik 1982) emphasize the specialization of functional areas within organizations and the interdependence between them. However logistics & manufacturing are considered the key functions within supply chain management but they are not sufficient to reflect adequately the breadth of the conceptual domain as well as its cross-organizational nature, they just reflect a subset of the relation and interface spectrum between both disciplines. So it should be related and integrated to the other factors within the supply chain network.

B) Process perspective 

The inter-functional perspective often conceptualizes the interplay from an interdepartmental stance as well as focuses on the relationships between the organizational units. But the process perspective is independent of the structure of the organization when we look at business activities that are traditionally related to marketing and supply chain management, also the process perspective is expanded to involve suppliers & customers within the supply chain 

The process integration within and between organizations or partners in the supply chain is a key characteristic of the conceptual domain. By the way according to the marketing point of view which sees the operation is an element that increases customer value marketing is embedded in the way that customer value is maximized, because of their cross-functional nature process which facilitates the interpretation of the relation and integration between demand creation which marketing is embedded and demand fulfillment process as the supply chain management process  (Christopher and Payne, 2002, Ju ̈ttner et al., 2006). From this point, we can say that the integration between demand creation and fulfillment processes is considered the key to delivering products that transform value to the customers through efficiently deploying resources. (Srivastava et al., 1999). Said that the exploration of the interdependence among the processes should lead to high success in the marketplace rather than concentration on improving the individual processes. ( Rainbird 2004) provides a processes fusion model that focuses on the integration between demand and supply chain processes, “Rainbird” differentiates 8 supply processes which start from order receipt/entry until delivery option and he introduces 7 demand processes such as customer relationship management and one of the essential processes is macro market definition. “Rainbird” mentioned the following “The linkage or the fusion between those processes can be achieved among 2 factors management, specific organizational capabilities or technology. From this point  (Ju ttner et al. 2007) built his vision and suggested three layers of processes integration model that links between demand which marketing is embedded, and supply chain process to the customer’s buying life cycle that’s related to customer value propositions through adopting the expanded supply chain perspective and linking marketing & supply chain processes to customer value creation, from this point the process perspective captures a wider range of the interface spectrum between marketing and supply chain management rather than the inter-functional perspective. 

C) Integrated business concepts perspective: 

 In the last decade, diverse business concepts have emerged associated with ideas that focus on the integration perspective between marketing and supply chain management, such as  “QR” quick response, agile supply chain management, as well as the last one that was introduced recently “DCM” demand chain management approach. All these three concepts seek to bridge the gap between the supply chain management and the market by increasing the supply chain’s response time, flexibility, or its differentiated customer focus which confirms the purpose of SCM toward customer value creation.

 First lets explain 

1) The concept of QR movement began in the North American textile and apparel industries and was introduced to the market as a competitive response to low-cost competition from offshore manufacturers, the description of “QR” (Christopher and Towill, 2002, p. 2). Can be described as the following; it’s a model of time compression that aims to reduce the time in the supply chain management that builds on the recognition which closer to the customer means creating value for the customers. Closer refers to closer on time more than closer in distance, The QR concept was the first concept that exploited bi-directional feedback and feedback forward flows of information between the expanded supply chain, among fast exchanges of demand information between not only apparel& retailers manufacturers but it was also textile industry producers. QR concept identifies that demand-driven decisions could be made at the last possible moment, and this guarantees the maintenance of diversity offerings while also enabling the firm to decrease the lead time cost and inventory. 

 2) Agile supply chain management: The origins of agile supply chain according to the business concepts can be described as the flexibility system of manufacturing, but flexibility as its key characteristic was soon expanded to the supply chain level as (Naylor et al 1999) mentioned. The main objective of agility lies in using market knowledge and virtual corporations to exploit profitable opportunities in a changeful marketplace.

Some researchers such as (Christopher 200) focus on and stress the ideas of the process–driven and network–based as two further distinguishing elements of agile supply Chains., Agile supply chain management is viewed as a proper approach in contexts with the important need for quick reaction to the violate changes in the market demand, either in volume, variety, marketing mix, by the way, and according to (Goldman et al 1995) who said that this helps the firm to exploit the unpredictable changing customer opportunities. 

3) DCM concept: this concept is considered the most recently introduced approach and it is still being developed now, as well as it lacks a consensus on its characteristic definition. Some of its supporters such as (Selen and Soliman 2002) define it as a factor that has a set of activities that aim to manage and coordinate the whole supply chain starting from the end customer as well as working backward to the raw material supplier.  However other researchers who criticized this concept see this concept, as’s broad understanding and also mentioned that this concept would imply that, the demand chain term could effectively replace the supply chain. Instead, they recommend restrictions of the concept to demand chains for products with innovative demand, where supply chain efficiency is a trade-off for customer service  (De Traville et al.2004). In any case, the DCM concept focuses on linking supply chain management to market characteristics and this perspective came from the idea that explained that customers are becoming increasingly sophisticated and demanding.

Hence the importance of integrating local marketing talent into the global supply chain management design for multinational firms on a more strategic level.

All three concepts emphasize the behavioral orientation within the supply chain toward the customers such as the supply chain should be designed and operated from the customer backward rather than the factory outwards.