Relationship between supply chain management and marketing

relationship between supply chain management and marketing

An integrated framework of the relationships between the marketing concept, a market orientation, relationship marketing, and SCM is proposed. Introduction. Sneha Lundia SUPPLY CHAIN MANAGEMENT Marketing . needs Supplier Relationship Management • Collaboration between Buyers and. CSCMP – Supply Chain Management encompasses the planning and can be as wide as the gap between marketing/sales and operations.

For example, delivery reliability, invoice accuracy, invoice clarity, and personnel are major factors that determine customer satisfaction. A market orientation requires a firm to redefine the responsibilities of each function within a firm, especially those of marketing. Narver and Slater argued a seller's creation of value for buyers is analogous to a symphony orchestra in which the contribution of each subgroup is tailored and integrated by a conductor.

Thus, in addition to traditional marketing activities, marketing should perform a guiding and coordinating role to make sure the rest of the company delivers on customers' expectations Kotler, A market orientation becomes instrumental in coordinating the activities of all departments, with the marketing function playing a pivotal role in the success of the firm because everyone is involved in marketing activities.

The responsibilities of functions, other than marketing, are also broadly redefined so that everyone within the firm becomes a marketer either on a full-time or part-time basis Gummensson, - because any individual in any function in a firm can potentially contribute to value creation for customers Porter, ; Webster, As inter-functionally coordinated actions prevail within a firm and the responsibilities of each function are redefined, the boundaries between each function become blurred.

Since the marketing concept is concerned with company-wide efforts i. A form of interfunctional coordination is the organization of cross-functional teams across functional silos with experts from different functional areas working together toward common goals cf. Kahn and Mentzer, At the extreme, the marketing function could disappear as a distinct management function and specialty Day, Thus, Kotler proposed a firm should consider managing a set of fundamental business processes, rather than independent functional departments for more efficient and effective response to fulfill customer satisfaction.

Given the discussion above: A market orientation forces a firm to restructure its organizational system.

relationship between supply chain management and marketing

Jaworski and Kohli found a firm's financial performance return on investment ROI and return on assets ROA and employee-related performance organizational commitment and esprit de corps are positively related to a firm's degree of market orientation. Narver and Slater and Slater and Narver also found a positive relationship between a firm's market orientation and its sales growth and new product success.

A market orientation positively contributes to a firm's business performance. Management of inter-firm relationships. The influences of a market orientation do not stop within the boundaries of the firm, but expand to inter-firm relationships with consumers, customers, suppliers, and distributors.

Role of Marketing in Supply Chain Management | Bizfluent

Thus, a market orientation provides an environment in which relationship marketing is nurtured. Nurturing relationship marketing through a market orientation starts with developing commitment, trust, and cooperative norms and reduced conflict between firms.

Because a market orientation requires a supplier to devote considerable resources to satisfying distributors' needs, the distributor commits to maintain the relationship with such a devoted supplier Siguaw et al.

Trust is a willingness to rely on an exchange partner in whom one has confidence Moorman et al. Cooperative norms reflect the belief that both parties in a relationship must combine their efforts and cooperate to be successful Cannon and Perreault, Macneil argued cooperative norms function as a conflict-resolving mechanism.

If a supplier is market oriented and working to satisfy a distributor's needs, the distributor is likely to perceive cooperative norms in the dyadic relationship both parties are working toward the mutual goal of need satisfaction Siguaw et al. Conflict is defined as the level of disagreement in the channel relationship that impedes, blocks, or frustrates another firm's goal pursuit Brown and Day, ; Thomas, According to several authors e.

Berry, ; Sheth and Parvatiyar, ; Gronroos,relationship variables such as commitment, trust, cooperative norms, and reduced conflict are prerequisites of relationship marketing. A market orientation influences the implementation of relationship marketing by helping firms build commitment, trust, cooperative norms, and reduced conflict, all of which are prerequisites of relationship marketing.

A market orientation - by its nature - requires close inter-firm relationships that are the sources of information outside the firm. Kohli and Jaworski claimed the market, which is the unit of analysis of a market orientation, includes end users and distributors as well as exogenous forces that affect their needs and preferences.

Therefore, a firm should have intimate relationships with its customers to closely monitor their current and future needs and to make sure that customers obtain what they want from the firm. In addition, the firm should have close relationships with distributors, suppliers, and any other participants in the market to identify influences of those market participants on customers' needs and preferences. Day claimed that organizational learning needs close and extensive relationships with its customers, suppliers, and other key constituencies.

Kanter, ; Webster, also proposed learning from others, includes benchmarking, forming joint ventures, networking, developing strategic alliances, and working with lead customers to recognize strong needs before the rest of the market and to find solutions to those needs.

relationship between supply chain management and marketing

Organizational learning consists of information acquisition, dissemination, and shared interpretation of information across a firm Sinkula, According to Slater and Narvera market orientation and organizational learning are inseparable.

Organizational learning does not stop within the boundary of a firm, but expands outside the firm. Thus, organizational learning cannot be separated from close relationships with other firms and, therefore: A market orientation directs a firm to move toward relationship marketing to deal with the increasing complexity of building and learning new sources of competitive advantage beyond the firm.

A market orientation plays a pivotal role in implementing SCM. First of all, a firm's market orientation produces and stores valuable market information that is needed in the process of building, maintaining, and enhancing supply chain relationships. For example, since a firm has information about customers, suppliers, competitors, sociopolitical environments, and technological trends, it could answer such questions as which supply chain best serves its customers' needs, with which firms it should work to implement SCM, what should be the objectives to be pursued in SCM, and so on.

In addition, Cooper et al. A market orientation should indirectly contribute to information sharing within a supply chain because market information obtained by individual partners could serve as the basis of shared information among the supply chain partners. Information sharing among the partners in a supply chain may simply be part of practicing organizational learning within the boundary of a supply chain rather than the boundaries of individual firms and dyadic inter-firm relationships.

Brown and Hendry claimed two major ongoing changes in SCM practices are organizational learning through the supply chain and working better with suppliers. When combined, these changes help partners within a supply chain achieve better two-way relationships with suppliers.

The role of marketing in supply

With improved information exchange, partners are better able to utilize supplier creativity and knowledge, improve processes particularly for cost savings and performance benefits in the supply chainand encourage individual learning within an established supply chain context.

Finally, a market orientation facilitates relationship marketing that, in turn, could promote the implementation of SCM indirectly vis-a-vis relationship marketing. Gundlach and MurphyMorgan and Hunt and Gruen suggested relationship marketing depends on inter-firm cooperation that focuses on the systematic development of ongoing, collaborative business relationships.

What is Logistics Management? Definition & Importance in Supply Chain - AIMS Lecture

Therefore, the implementation of relationship marketing promotes inter-firm cooperation, in addition to close long-term relationships among the supply chain members. Thus, the role of market orientation in SCM: A market orientation positively and indirectly influences firms to implement SCM.

In summary, the marketing concept is conceptualized as a business philosophy, guiding a firm toward customer satisfaction at a profit, and a market orientation is the implementation of that philosophy, forcing the firm to generate, disseminate, and respond to market information.

The marketing concept, as a business philosophy, not only provides the philosophical foundation of a market orientation, but also plays an important role in the management of a firm, inter-firm relationships, and the implementation of SCM. A market orientation also impacts the management of a firm, inter-firm relationships, and a supply chain.

That is, a market orientation leads a firm to focus on market information generation, dissemination, and responsiveness to satisfy customers, coordinate its marketing efforts, redefine the responsibilities of each function, restructure its organizational system, and achieve superior business performance.

At the same time, a market orientation provides an environment which encourages a firm in its efforts to develop, maintain, and enhance close relationships with other firms, obtain organizational learning from other firms, and build commitment, trust, and cooperative norms in relationships with other firms.

A market orientation is performed both inside and outside a firm to recognize and respond to customers' needs, and obtain experiences, products, skills, technologies, and knowledge from outside the firm that are not available to other competitors.

relationship between supply chain management and marketing

Finally, a market orientation promotes the implementation of SCM. For example, the input of market information has indirect, positive impacts on the implementation of SCM. In addition, information sharing and organizational learning, both of which are components of SCM, are the broad applications of a market orientation beyond the boundary of an individual firm.

A close long-term inter-firm relationship, which is reinforced by a market orientation, is also a component of the implementation of SCM.

As such, a market orientation has numerous positive impacts on SCM implementation. Relationship marketing According to Gundlach and Murphyexchange - which is at the center of marketing - takes various forms, depending on its location in the exchange continuum. At one end of the continuum, transactional exchange involves single, short-term exchange events encompassing a distinct beginning and ending Gundlach and Murphy, At the other end of the continuum, relational exchange involves transactions linked together over an extended timeframe Gundlach and Murphy, Gundlach and Murphy explained that relational exchanges trace back to previous interactions and reflect an ongoing process.

The close and long-term relationships established between certain suppliers and their industrial customers e. Marketing strategies differ along the continuum of exchange from relationship-oriented strategies at one end to transaction-oriented strategies at the other Gronroos, Macneil's relational exchange theory suggests building personal trust relationships and developing social norms are key characteristics of interfirm relationships.

In addition, Gundlach and Murphy proposed that the characteristics of relational strategy include an emphasis on purposeful cooperation, extended planning, and the establishment of complex webs of operational and social interdependence. Since marketing deals with various forms of exchange - including discrete and relational - and involves more than buyer-seller relationships see Table IIIMorgan and Hunt's definition of relationship marketing as all marketing activities directed toward establishing, developing, and maintaining successful relational exchanges is adopted for this discussion.

relationship between supply chain management and marketing

Relationship marketing goes beyond repeat purchase behavior and inducement Sheth and Parvatiyar, In the same context, Webster proposed repeated transactions are only a precursor to relationships, and customers expect simply convenience and cost efficiency from repeated transactions. Firms in long-term relationships do not always put relationship marketing into practice.

For example, in industrial markets, buyer-seller relationships have typically involved relatively long-term contractual commitments, but even here the relationships have often been arm's-length and adversarial, pitting the customer against the vendor in a battle focused on low price Webster, Relationship marketing goes beyond transactional exchanges, repeated purchases, and even adversarial, long-term relationships.

Competitive forces in the global marketplace of the s compelled many firms to move significantly along the continuum from arm's-length relationships with suppliers to much stronger partnerships characterized by much greater interdependence Webster, As a result, relationship marketing today pursues buyer-seller partnerships, strategic alliances, joint ventures, and networks, all of which assume mutual, total-dependence relationships.

There are some prerequisites for relationship marketing. First, Berry proposed relationship marketing is built on the foundation of trust, defined by Moorman et al. Berry and Parasuraman also contend effective services marketing depends on trust because customers typically must buy a service before experiencing it. Second, mutual benefit to participating parties is essential for strong relationships Berry, This increases understanding of market demand and marketing initiatives, which in turn improves supply chain planning.

Video of the Day Brought to you by Techwalla Brought to you by Techwalla Growth When supply chain partners have the right level of market awareness, they can deliver added value and play a proactive role in providing products and services. Marketing can design programs to help partners grow their own business and make it easier for members of the supply chain to work together.

Business education programs help partners keep up with the latest developments and maintain their product and business skills. Courses cover issues such as management development, product marketing skills, industry knowledge and sales and marketing tools. Brand Marketing can help distribution partners benefit directly from the strength of a company brand. The brand differentiates a company from the competition when it communicates with potential customers.

Marketing also can support resellers by driving business in their direction.

Role of Marketing in Supply Chain Management

This can be as simple as generating leads or running joint marketing campaigns. Reward programs encourage distribution partners to do more business with a company, while incentive programs can increase revenue for both parties. Balance Marketing provides an essential balance in supply chain management.