The Supply Chain Becomes the Demand Chain

• Date: 01 March 2014
• Published date: 01 March 2014
• Author: Martin Christopher,Lynette J. Ryals
• DOI: http://doi.org/10.1111/jbl.12037

The Supply Chain Becomes the Demand Chain

Martin Christopher and Lynette J. Ryals

Cranfield School of Management

For most of its 30-year history, the description of our discipline as “supply chain management”has tended to encourage a supply-focused

viewpoint in which production push rather than demand pull is the dominant logic. We argue the emerging case for demand chain manage-

ment, in which new manufacturing techniques (such as additive manufacturing) and enhanced information flows (big data) enable our supply

chains to run, concurrently, with lower inventory and fast customer response. Remodeling our supply chains into demand chains creates the

possibility that waste and obsolescence can be reduced; companies in this world will not create demand unless they can supply it. Increasingly,

demand chains that exhibit both lean and agile characteristics (“leagile”) will challenge the received wisdom of lean versus agile. We explore

some antecedents for the development of demand chains, the implications for the relationship between marketing and supply chain management

in organizations, and the consequences for academic discourse—both research and teaching—in these two fields. In particular, we argue that

offerings such as Rolls-Royce’s TotalCareâchallenge siloed academic perspectives, and we formulate a cross-functional research agenda to

examine a number of these boundary-spanning practices.

Keywords: inventory management; supply chain management; logistics; total cost; service-dominant logic

It is just over 30 years since the phrase “supply chain manage-

ment”entered the managerial lexicon (Oliver and Webber 1982).

In this seminal paper, the authors suggested that:

Through our study of firms in a variety of industries….we

have found that the traditional approach of seeking trade-

offs among the various conflicting objectives of key func-

tions—purchasing, production, distribution, and sales—

along the supply chain no longer worked very well. We

needed a new perspective and following from it, a new

approach: supply-chain management.(Oliver and Webber

1982 cited in Christopher et al. 1991, 64)

In a sense, it was perhaps unfortunate that Oliver and Web-

ber chose to call this new way of looking at the end-to-end

value creation process supply chain management. Supply chain

management suggests a focus on production “push”rather than

demand “pull”(Vehlhaber 2000), and indeed today the reality

is that most supply chains are based on a production-driven

rather than a demand-driven perspective. Thus, the academic

discourse and the professional identity of supply chain manag-

ers have revolved around “make versus buy,”low-cost manu-

facturing, and production efficiency rather than on the

challenges involved in delivering superior value in the market-

place. Further, because the business environment in which the

idea of supply chain management originally emerged was rela-

tively stable, the focus of both researchers and practitioners

was on network optimization and control. Equally, the availabil-

ity of resources at affordable prices was taken for granted,

encouraging organizations to make decisions over longer time

horizons.

Many of these conditions no longer apply. In short, we need a

new response to a changing business environment, which we

term “demand chain management.”This requires a different con-

ceptualization of the role of a supply chain manager and entails

a new and more integrated approach to the research and teaching

of the topic by academics. In particular, it can be argued that the

professional identity of the supply chain manager (i.e., the way

that they perceive their role, purpose, and function) will have to

change fundamentally.

A DIFFERENT VIEW: DEMAND CHAIN MANAGEMENT

Our view is that, in a world of scarce resources, ever-faster tech-

nology cycles, and “big data,”we need to think differently and

begin to frame our discourse in terms of demand chain manage-

ment. Arguably, the world’s biggest problem is not scarcity of

resources so much as waste of the resources we have. Global

food production is an example: a recent report suggested that up

to half of all worldwide food production is wasted (Smithers

2013). In a sustainable world, the supply chain needs to be

designed from the customer backward (demand pull) instead of

from the factory outward (supply push), making it responsive to

customer demands and reducing waste and returns.

This fundamental change, from supply chains to demand

chains, is being driven by market forces and enabled by new tech-

nologies. The power locus is shifting steadily downstream, from

producers and retailers to buyers and users. Information-enabled

consumers and customers can now shop globally for everything

from a liquid soap dispenser to a power station. Collaborative

design and open innovation practices challenge the boundaries

between firms and change the risk model. New technologies and

“big data”analytics both shorten time to market and enable greater

specificity of the value proposition. Additive manufacturing (i.e.,

3D printing) is likely to push the power shift even further toward

consumers. Demand chains will use new manufacturing tech-

niques and enhanced information flows to run with lower inven-

tory and fast customer response, exhibiting both lean and agile

characteristics (Vehlhaber 2000). The implication of today’s turbu-

lent and unpredictable business environment is that demand chain

solutions are required. That is, we need solutions that are flexible

and capable of responding rapidly to structural change on both the

supply side and the demand side of the business.

Corresponding author:

Lynette J. Ryals, Demand Chain Management, Cranfield School of

Management, College Road, Cranfield, Beds, MK43 0AL UK;

E-mail: lynette.ryals@cranfield.ac.uk

Journal of Business Logistics, 2014, 35(1): 29–35

© Council of Supply Chain Management Professionals