You are on page 1of 24

The Supply Chain Management

Keely L. Croxton, Sebastián J. García-Dastugue and Douglas M. Lambert The Ohio
State University
Dale S. Rogers
University of Nevada, Reno

Increasingly, supply chain management is being recognized as the management of

key business processes across the network of organizations that comprise the
supply chain. While many have recognized the benefits of a process approach to
managing the business and the supply chain, most are vague about what processes
are to be considered, what sub-processes and activities are contained in each
process, and how the processes interact with each other and with the traditional
functional silos. In this paper, we provide strategic and operational descriptions of
each of the eight supply chain processes identified by members of The Global
Supply Chain Forum, as well as illustrations of the interfaces among the processes
and an example of how a process approach can be implemented within an
organization. Our aim is to provide managers with a framework to be used in
implementing supply chain management, instructors with material useful in
structuring a supply chain management course, and researchers with a set of
opportunities for further development of the field.
“Streamlining Hammer argues that now that companies have necessary for companies to implement a
crosscompany implemented processes within the firm, they standard set of supply chain processes.
processes is the next need to integrate them between firms: Practitioners and educators need a common
great frontier for Streamlining cross-company definition of supply chain management, and a
reducing costs, processes is the next great frontier for shared understanding of the processes.
enhancing quality, and reducing costs, enhancing quality, and We recommend the definition of supply
speeding operations”.
speeding operations. It is where this chain management developed and used by The
decade’s productivity wars will be Global Supply Chain Forum: Supply Chain
fought. The victors will be those Management is the integration of key business
companies that are able to take a new processes from end user through original
approach to business, working closely suppliers that provides products, services, and
with partners to design and manage information that add value for customers and
processes that extend across other stakeholders [3].
traditional corporate boundaries. The Forum members identified eight key
They will be the ones that make the processes that need to be implemented within
leap from efficiency to super and across firms in the supply chain. To date,
efficiency [1].
Monczka and Morgan also focus on the Page 13
importance of process integration in supply the published descriptions of these processes
chain management [2]. The piece that seems to were limited to one-paragraph summaries that
Volume 12, Number 2 2001 be missing from the literature is a provide little guidance on how to implement a
Supply chain comprehensive definition of the processes that process approach [4]. Our purpose in this
management is increasingly constitute supply chain management. How can paper is to provide more detail on the sub-
being recognized as the companies achieve supply chain integration if processes and activities that comprise the
integration of key business there is not a common understanding of the key supply chain processes. The goal is to provide
processes across the supply business processes? It seems that in order to management with guidelines to help with
chain. For example, build links between supply chain members it is implementation, instructors with material for
structuring a supply chain Customer Relationship Management Logistics. Activities in these processes reside
management course and • Customer Service Management inside a functional silo, but an entire process will
researchers with a • Demand Management not be contained within one function.
detailed framework for • Order Fulfillment Our purpose in this paper is to provide more
future research on supply • Manufacturing Flow Management detail on the subprocesses and activities that
chain management. • Procurement comprise the supply chain processes.
The paper is • Product Development and Commercialization
organized as follows. First, • Returns.
there is a brief review of The term “procurement” is a source of
the supply chain confusion. Novak and Simco highlight the
framework. Next, there is confusion by citing studies in which
a section on each of the procurement is defined as “...the act of buying...
eight processes. This is all those activities necessary to acquire goods
followed by a section on and services consistent with user requirements”
implementation. Finally, [6]. Other authors use similar definitions [7].

opportunities for future Because these definitions do not adequately

research and conclusions represent our view of the supply chain process,
are presented. we have renamed the procurement process
“supplier relationship management”. Also, for
Supply Chain further clarification we have changed the name
of the returns process to returns management.
The eight key business processes run the
The Global Supply
length of the supply chain and cut across firms
Chain Forum identified
and functional silos within each firm (see Figure
eight key processes that
1). Functional silos include Marketing, Research
make up the core of supply
and Development, Finance, Production,
chain management [5]: •
Purchasing and

Page 14 The International Journal of Logistics Management

The customer relationship Customer Relationship Management Next, the team identifies the criteria for
management process The customer relationship management categorizing customers and provides guidelines
provides the structure for for determining which customers qualify for
process provides the structure for how the
how the relationship with tailored PSAs and which customers will be
relationship with the customer is developed and
the customer is developed grouped into segments and offered a standard
and maintained. maintained. Management identifies key
customers and customer groups to be targeted PSA that is developed to provide value to the
While management of as part of the firm’s business mission [8]. segment. Potential criteria include: profitability,
all firms in each supply Customer teams tailor Product and Service growth potential, competitive positioning
chain should consider these Agreements (PSA) to meet the needs of key issues, access to market knowledge, market
eight processes, the relative accounts and segments of other customers [9]. share goals, margin levels, level of technology,
importance of each process Teams work with key accounts to improve resources and capabilities, compatibility of
and the specific activities processes, and eliminate demand variability and strategies, and channel of distribution. As part
included may vary. The non-value-added activities. Performance of this subprocess, the team develops the firm’s
subprocesses and activities reports are designed to measure the strategy for dealing with segments of customers
we describe are designed profitability of individual customers as well as who do not qualify for individually tailored PSAs.
from the perspective of a the firm’s financial impact on those customers. In the third sub-process, the team
manufacturing company develops guidelines for the degree of
sitting near the middle of The Strategic Process differentiation in the PSA. This involves
the supply chain (see Figure developing the differentiation alternatives and
At the strategic level, the customer
1). Each process is considering the revenue and cost implications of
relationship management process provides the
described at strategic and each. The output is the degree of customization
framework for managing relationships with
operational levels. The that can be offered to customers. The goal is to
customers, and is comprised of five
strategic portion consists of offer PSAs that enhance the profitability of the
subprocesses (see Figure 2). In the first, the
the establishment and firm and the customers. To find and understand
process team reviews the corporate and
strategic management of the differentiation opportunities, this sub-
marketing strategies to identify customer
each process, and provides process will interface with all of the other
segments that are key to the organization’s
a blueprint for processes.
success now and in the future.
implementation. This is a
necessary first step in
integrating the firm with Figure 2
Customer Relationship Management
other members of the
supply chain. The Strategic Sub-Processes Processes Interfaces Operational Sub-Processes
operational portion is the
actualization of the process Customer Differentiate Customers
Service Management
once it has been Review Corporate and
Marketing Strategy
Demand Prepare the Account/Segment
Next, we will describe Management Management Team
the sub-processes and Identify Criteria for
activities that make up each Categorizing Customers
Order Fulfillment Internally Review the Accounts
of the eight processes as
well as the interactions
Provide Guidelines for the
between processes, Degree of Differentiation in the Manufacturing Flow
Identify Opportunities with the
Product/Service Agreement Accounts
functions, and key
members of the supply
Supplier Relationship Develop the Product/
chain. The description of Management Service Agreement
Develop Framework
each process is of Metrics
accompanied by a figure Product Development Implement the Product/Service
& Commercialization Agreement
that illustrates the sub-
processes and the Develop Guidelines for Sharing
Process Improvement Benefits
interfaces between the with Customers Returns Management Measure Performance and
Generate Profitability Reports

Volume 12, Number 2 2001 Page 15

Developing the and implementing the PSAs. It is comprised of
framework of metrics seven sub-processes. First, customers are
involves outlining the differentiated based on the criteria developed
metrics of interest and at the strategic level. Key customers are
relating them to the identified and other customers are grouped into
customer’s impact on the customer segments.
firm’s profitability as well as Next, the account or segment
the firm’s impact on the management teams are formed, including the
customer’s profitability. salesperson who will be the account or segment
The customer relationship manager. The teams are cross functional with
management process has representation from each of the functional
the responsibility for areas. In the case of key accounts, each team is
assuring that the metrics dedicated to a specific account and meets
used to measure all of the regularly with the customer. In the case of
other processes are not customer segments, a team manages a group of
conflicting. Management customers and develops and manages the
needs to insure that all standard PSA for the segment.
internal and external Each account team reviews their account
measures are driving or segment of accounts to determine the
consistent and appropriate products purchased, sales growth and their
behavior [10]. position in the industry. Once the team has an
In the final sub- understanding of the customer(s), they work
process, the team develops with each account or segment of accounts to
the guidelines for sharing develop improvement opportunities in sales,
process improvement costs and service. These opportunities might
benefits with customers. arise anywhere, so the account teams need to
The goal is to make these interface with each of the other processes.
process improvements win- In the fifth sub-process, each team
win solutions for both the develops the PSA for their account or segment
firm and the customer. of accounts. This team first outlines and drafts
In summary, the the PSA, and then gains commitment from the
objective of customer internal functions. For key accounts, they
relationship management present the PSA for acceptance, and work with
at the strategic level is to the customer until agreement has been
identify customer reached. It is important that the PSAs for key
segments, provide criteria accounts include a communication and
for categorizing customers, continuous improvement plan. For other
provide customer teams accounts, the PSA is presented to the customer.
with guidelines for In the sixth sub-process, the team
customizing the product implements the PSA, including regular meetings
and service offering, with key customers. At this point, input is
develop a framework for provided to each of the other processes that are
metrics, and provide affected by the customizations in the PSA.
guidelines for the sharing of In the last operational sub-process, the
process improvement team captures and reports the process
benefits with the performance measures. Metrics from each of
customers. the other processes also are captured in order
The Operational Process At the operational level, the customer
At the operational relationship management process deals with
level, the customer writing and implementing the PSAs.
relationship management
process deals with writing

Page 16 The International Journal of Logistics Management

The customer service provides the set of products and services the sources of the information needed to handle
management process is firm can offer its customers. The strategic each of the events and determining the
the firm’s face to the customer service management process is appropriate communication means for internal
customer. It provides the responsible for planning how each of the and external coordination. This subprocess
single source of possible products and services to be included in provides the information technology and
customer information, the PSA is going to be delivered and managed. communication needs for managing the PSAs
such as product
Strategic customer service management efficiently and effectively. If there are
availability, shipping
has four sub-processes (see Figure 3). In the technical constraints restricting the
dates and order status.
first, the customer service strategy is developed establishment of this infrastructure, the
to generate the customer for the set of PSA features identified in the products and services that are affected have to
profitability reports. These customer relationship management process. be re-evaluated and eventually modified to
profitability reports provide The team identifies the deliverables of the make them feasible.
information for measuring customer service process, operationalizes the As in the other processes, the last sub-
and selling the value of the triggers for initiating action, and defines the process of customer service management at the
relationship to each staffing needs. The deliverables of the process strategic level is to develop the framework of
customer and internally to are standardized responses to standardized metrics. The metrics should provide
upper management. The events that occur while administering the PSA. management with the information necessary to
value provided should be The output of this first sub-process is a list identify problems and improvement
measured in terms of costs, of events with its corresponding triggers and opportunities in the administration of the PSA.
impact on sales, and deliverables. In the second sub-process, the These measurements are used not only for
associated investment, team develops response procedures for each of managing the process, but also for improving its
otherwise the efforts these events. This includes developing the efficiency. The team interfaces with the
incurred will go internal and external coordination required to customer relationship management team to
unrewarded [11]. respond. assure that the metrics developed are
Next, the process team identifies the consistent with the firm’s objectives.
Customer Service
Management Figure 3
The customer service Customer Service Management
management process is the
Strategic Sub-Processes Processes Interfaces Operational Sub-Processes
firm’s face to the customer.
It provides the single source
of customer information, Develop Customer Service
Relationship Management
Recognize Event
such as product availability, Strategy

shipping dates and order Demand

status. Real-time Management

information is provided to
the customer through Develop Response Order Fulfillment Evaluate Situation and
Procedures Alternatives
interfaces with the firm’s
functions, such as
Manufacturing Flow
manufacturing and Management

logistics. Customer service Develop Infrastructure for

management is responsible Implementing Response
Procedures Supplier Relationship Implement Solution
for administering the PSA.

The Strategic Process Product Development

& Commercialization

At the strategic level, Develop Framework Monitor and Report

of Metrics
the customer service
Returns Management
management process is
concerned with designing
the process for managing
the PSA. Customer infrastructure for implementing the response In short, the objective of customer service
relationship management procedures. This involves identifying the management at the strategic level is to develop

Volume 12, Number 2 2001 Page 17

the necessary coordination intensive, as other business either internal or external events that
infrastructure and process owners or function managers often disrupt the balance of supply and demand.
coordination means for need to participate in the implementation. At
implementing the PSA and this point, the actual response to the event is
providing a key point of executed.
contact to the customer. Finally, the customer service management
process includes monitoring and reporting the
The Operational Process process performance. This sub-process includes
At the operational recording the event in a database that can be
level, the customer service used for future reference, and monitoring the
management process is evolution of the event in order to know to what
responsible for responding extent the response has been implemented.
to both internal and Part of the sub-process is collecting information
external events. The first and informing the customer about how the
step is to recognize the issue is being resolved. Performance of the
event. This might seem process is measured and conveyed to the
trivial but the goal of being customer relationship management and
proactive makes this a supplier relationship management teams.
challenging part of
administering the PSA. The Demand Management
team needs to have a The demand management process needs
thorough understanding of to balance the customers’ requirements with
the firm’s operations, and the firm’s supply capabilities. This includes
try to foresee the effects of forecasting demand and synchronizing it with
a given event on the production, procurement, and distribution.
customer and on the “Demand Management coordinates all acts of
internal operations of the the business that place demand on
firm. Events that require manufacturing capacity” [12]. The process is
action might originate in also concerned with developing and executing
any one of the other contingency plans when operations are
processes so coordination is interruped.
Once the event is The Strategic Process
recognized, the team Demand management is about forecasting
evaluates alternatives for and synchronizing (see Figure 4). The process
managing the event with team first determines which forecasting
the least disruption to the approaches to use. This includes determining
customer and internal the levels and timeframes of the forecasts
operations. The team needed throughout the firm.
determines a set of Different parts of the organization might need
alternative actions working different forecasts [13]. The team determines
jointly with the specialists the sources of the data required to generate the
in each of the functions forecasts [14]. These might include historical
affected by the event or data, sales projections, promotion plans,
that can contribute to corporate objectives, market share
implementing the solution. The demand management process needs to
This requires interfacing balance the customers’ requirements with
with other processes that the firm’s supply capabilities.
are affected by the
Another important component of the
alternative responses. The strategic demand management process is
implementation of the developing contingency plans in the event of
selected alternative is

Page 18 The International Journal of Logistics Management

data, trade inventory,
market research, and new Figure 4
categories of growth. If Demand Management
systems such as
Strategic Sub-Processes Processes Interfaces Operational Sub-Processes
collaborative planning,
forecasting and Customer
replenishment (CPFR) or Determine Forecasting
Relationship Management
Collect Data/Information
vendor managed inventory
(VMI) are being Customer Service
implemented, the customer
is a direct source of data. Plan Information Flow Forecast
Once the team Order Fulfillment

decides on the method of

forecasting and the sources Determine Synchronization Manufacturing Flow
Management Synchronize
of data, they plan the Procedures

information flow. Several

functional silos and Supplier Relationship
customer relationship Develop Contingency
Managment System
Increase Flexibility and
Reduce Variability
management need to
Product Development
provide input to the & Commercialization

forecasting process. The

Develop Framework Measure Performance
forecasts are then of Metrics
Returns Management
communicated to the other
process teams that are
affected by them, including
customer service future capacity issues and make the customer relationship management team to
management, order recommendations to proactively address them assure consistency.
fulfillment, manufacturing before they cause problems.
flow, and product Another important component of the The Operational Process
development and strategic demand management process is At the operational level, the process team
commercialization. developing contingency plans in the event of executes the forecasting and synchronization as
Next, the team either internal or external events that disrupt it was designed at the strategic level. This
determines the the balance of supply and demand [15]. The begins with collecting the data. To do this, the
synchronization procedures team develops guidelines or rules to deal with team interfaces with the marketing functional
required to match the unexpected demand or interruptions to supply. silo as well as the order fulfillment and customer
demand forecast to the These guidelines should be developed in service management processes. These sources
firm’s production, sourcing accordance with the expectations of the are close to the customer and provide critical
and distribution customers outlined in the customer relationship information on sales projections and anticipated
capabilities. To do this, management process, and with input from demand.
they need to understand manufacturing flow and supplier relationship With all the required data in hand, the
the capacity and flexibility management. The team determines the team develops the forecasts. They track and
available at all points along guidelines and communicates them to the analyze the forecast error and incorporate this
the supply chain. They also customer service management team, since they feedback to fine-tune the forecasting method.
need to determine the address the concerns of customers when these This is an important component of the learning
long-term planning events occur. process associated with good forecasting.
requirements, particularly Finally, as with the other processes, the The forecast provides the input for
in the case of demand with team develops the framework of metrics to be matching demand with supply. Some firms refer
high seasonality or used to measure and monitor the performance to this as aggregate planning. Sources of
longterm changes, such as of the process. Typical process measures might information for the synchronization subprocess
sustained growth. At this include forecast error and capacity utilization. include customer relationship management,
point in the process, the Again, the team confirms these measures with customer service management, manufacturing
team might recognize flow, and product development and

Volume 12, Number 2 2001 Page 19

commercialization. The manufacturing flow team to find ways to to be most successful in improving its
output of the introduce postponement into the competitive position.”
synchronization sub- manufacturing process. To reduce demand
process is an aggregate variability, the team might work with the
production plan and an customer relationship management team to
inventory-positioning plan. help customer’s better plan promotions. In
The team also develops a order to find ways to increase flexibility and
rough-cut capacity plan for reduce variability, the process team works with
any new products soon to the sales, marketing and manufacturing
be launched. These plans organizations, customers and suppliers. This
need to be communicated involves process interfaces with customer
throughout the firm, and relationship management, customer service
therefore there are management, manufacturing flow and supplier
interfaces with customer relationship management.
relationship management, Finally, the process team is responsible for
customer service measuring the performance of the process with
management, order the metrics developed at the strategic level.
fulfillment, manufacturing These metrics are used to improve the process
flow, supplier relationship and are conveyed to the customer relationship
management, and product management and supplier relationship
development and management teams.
commercialization. In
addition, any internal or Order Fulfillment
external event that causes a A key to effective supply chain Effective order fulfillment requires
disruption to supply or large management is to meet customer requirements integration of the firm’s manufacturing,
forecast errors needs to be in terms of order fulfillment [17]. Effective logistics and marketing plans.
handled with the order fulfillment requires integration of the The design and operation of the
contingency management firm’s manufacturing, logistics and marketing network has a significant influence on
plans developed at the plans. The firm should develop partnerships the cost and performance of the
strategic level. with key members of the supply chain to meet system.
Another key customer requirements and reduce total and manufacturing flow processes provide
component to demand delivered cost to customers. input. The team evaluates the core
management is an ongoing competencies within order fulfillment and
process aimed at increasing The Strategic Process determines which aspects of the process are
flexibility and reducing potentially service differentiating.
The strategic order fulfillment process
variability (in demand, lead- Evaluating the logistics networks is an
considers manufacturing, logistics and
times, capacity, etc). The important step in order fulfillment. The design
marketing requirements to design the
former helps management and operation of the network has a significant
distribution network (see Figure 5).
respond quickly to both influence on the cost and performance of the
In the first sub-process, the team reviews
internal and external system [20]. It has been estimated that up to
the role of customer service in the marketing
events, and the latter aids 80% of the total cost of the final product is
strategy, customer service goals, and the supply
in consistent planning and determined in the design of the network [21]. It
chain structure [18]. This requires an interface
minimizing surprises. “The is necessary to evaluate the network including:
with the customer relationship management
supply chain which best which plants produce which products; where
succeeds in reducing warehouses, plants, and suppliers are located;
Next, the requirements for order
uncertainty and variability and, which transportation modes should be
fulfillment are specified, including the orderto-
is likely to be most used. Important input to this sub-process comes
cash cycle. Key inputs include manufacturing
successful in improving its from the demand management and returns
capabilities, lead-times and customer service
competitive position” [16]. processes. The resulting network is provided to
requirements [19]. At this stage, the customer
For example, to gain the manufacturing flow process.
relationship management
flexibility, the team might The next strategic sub-process is to define
“The supply chain which best succeeds in
work with the the plan for order fulfillment, determining how
reducing uncertainty and variability is likely

Page 20 The International Journal of Logistics Management

orders from various
customers or segments of Figure 5
customers will be filled. Order Fulfillment
The process team
Strategic Sub-Processes Processes Interfaces Operational Sub-Processes
communicates with the
customer relationship Customer Generate &
management process team Review Marketing Strategy, Relationship Management Communicate Order
Supply Chain Structure &
to make sure that all Customer Service Goals

customer expectations are Customer Service Enter Order

Define Requirements for
In the final sub- Order Fulfillment
process, a framework of Demand Management Process Order

metrics is developed and

communicated to the Manufacturing Flow
Evaluate Logistics Network Handle Documentation
customer relationship Management

management process.
Typical process measures Supplier Relationship
Management Pick Order
might include order-to-cash Define Plan for
Order Fulfillment
cycle time, order fill rate,
Product Development
and order completeness. & Commercialization Deliver Order

Develop Framework
The Operational Process of Metrics
Perform Post Delivery Activities
Returns Management
& Measure Performance
The order fulfillment
operational process defines
the specific steps regarding
how customer orders are: manufacturing flow process. manufacturing flexibility needed to serve the
generated and In the next sub-process, the team handles target markets. The process includes all
communicated, entered, all documentation. They acknowledge the order activities necessary for managing the product
processed, documented, and prepare the bill of lading, picking flow through the manufacturing facilities and
picked, delivered, and instructions, packing slips and generate the for obtaining, implementing and managing
handled post delivery. invoice. At the order picking stage, the flexibility.
There are three steps to merchandise is picked, packed, and staged for
accepting and processing loading. The load confirmation is prepared and The Strategic Process
an order. First, orders are feedback is provided to customer service
generated and management.
communicated. Generally, The order fulfillment team is responsible
these orders come from for preparing shipping documents, transmitting
customer service delivery confirmation, and auditing and paying
management. Second, a the freight bill. They also provide delivery
member of the order information to the customer service
fulfillment team receives, management team.
enters, edits the orders, In the final sub-process, the team performs
and transmits these data to post-delivery activities, including receiving and
the customer service posting payment, recording bad debt expense,
management and demand and measuring performance. Feedback is
management processes. provided to customer relationship
Third, the inventory and management, supplier relationship
customers’ credit are management and returns management.
checked and the order is
processed. Information Manufacturing Flow Management
about these orders is The manufacturing flow process deals with
provided to the making the products and establishing the

Volume 12, Number 2 2001 Page 21

At the strategic level, Incompatibility between the manufacturing development and commercialization, and order
the objective of process and market characteristics may have fulfillment provide input to this sub-process.
manufacturing flow is to “unfavorable impact on business performance” The team defines the make/buy strategies, for
determine the [22]. In the same vein, environmental aspects example, what manufacturing activities are
manufacturing of manufacturing set by the business plan, regarded as strategic and should not be
infrastructure needed for corporate strategy, and the outsourced at any cost? These strategies
fulfilling the customers’ The manufacturing flow process deals with provide indications to supplier relationship
needs and wants (see making the products and establishing the management about supplier selection and
Figure 6). The process manufacturing flexibility needed to serve the eventually the guidance of partnership
begins with the team target markets. opportunities. In the last activity of this sub-
reviewing the functional The push-pull boundaries help to process, the team plans capacity growth based
business strategies from determine the stocking points in the supply on the marketing strategy and the business
marketing, logistics, chain for servicing manufacturing facilities, plan.
manufacturing and distribution centers and customers. The degree of flexibility established in the
purchasing. This sub- environmental laws have to be taken into previous sub-process leads to the determination
process requires interfaces account. Manufacturing strategy is linked to the of the push-pull boundaries. The customer
with customer relationship corporate strategy since environmental tolerance time (the time the customer is willing
management, where the management practices may strengthen the to wait for an order) and the customer service
corporate and marketing firm’s competitive advantage [23]. goals constrain the extent to which
strategies are reviewed. The objective of the second sub-process is manufacturing can be postponed in the supply

Figure 6
Manufacturing Flow Management

Strategic Sub-Processes Processes Interfaces Operational Sub-Processes

Review Manufacturing, Customer

Sourcing, Marketing Relationship Management
& Logistics Strategies Determine Routing & Velocity
through Manufacturing

Customer Service
Determine Degree of Management
Manufacturing Flexibiltiy

Demand Manufacturing & Material

Management Planning
Determine Push/Pull


Identify Manufacturing
Constraints and Requirements Synchronize Capacity
and Demand
Supplier Relationship

Determine Manufacturing
Capabilities Product Development
& Commercialization
Measure Performance

Develop Framework
of Metrics Returns Management

These strategies help to determine the degree of manufacturing chain.

identify the expertise and flexibility the firm and the supply chain require. Postponement promises to be beneficial to the
the changes in the This sub-process provides the manufacturing supply chain, but might lead to longer delivery
manufacturing technology capabilities and constraints, such as the times [24]. The degree to which the firm
that are needed to minimum batch size and cycle time, the labor postpones manufacturing and logistics activities
operationalize expertise needed for manufacturing, and the depend to a great extent on the design of the
manufacturing flow. quality policy and controls. Product products; therefore, the product development

Page 22 The International Journal of Logistics Management

and commercialization extent to which activities in the supply chain are output of demand management into resource
process provides input for synchronized. The process team designs and production planning. The team integrates
setting the push-pull communication mechanisms for synchronizing the capacity of the manufacturing facilities into
boundaries. In order to the activities with minimal management effort. these decisions to assure no disruptions in the
determine the pushpull They also develop acceptance criteria for product flow. This sub-process interacts with
boundaries for the supply establishing the quality standards expected at demand management to establish
chain, the team identifies each step of the manufacturing process. manufacturing priorities, and with supplier
the decoupling point Performing these activities may lead to relationship management to set priorities for
separating the part of the identifying needs for the suppliers that can be suppliers and to gain their commitment of
supply chain operating in a included in a supplier development program; if resources.
maketo-order environment so, this is an input for the supplier relationship In the next step, manufacturing and
from the part of the supply management process. material planning, the process team produces a
chain based on planning In the next sub-process, the team detailed capacity plan and a time-phased
[25], which is the typical determines the manufacturing capabilities and requirement plan. Interfaces with the customer
make-to-stock operating translates them into deliverables to the relationship management and supplier
environment. The push- customer. For example, the minimum cycle relationship management processes extend the
pull boundaries help to time and the minimum economically viable lot focus of this sub-process to other supply chain
determine the stocking size is a result of the design of the members. Manufacturing planning and control
points in the supply chain manufacturing capabilities. For a strategy to be encompasses creating the overall
for servicing manufacturing effective, it must be communicated and manufacturing plan, performing the detailed
facilities, distribution understood throughout the organization [27]. planning of materials and capacity needs, and
centers and customers. At this point, the manufacturing flow and executing these plans [28].
These stocking points, customer relationship management teams Next, capacity and demand are
referred to as decoupling discuss the possible features of the PSA, and synchronized. This step identifies what
points, permit the adjust infeasible features. The capabilities are inventory levels are needed for synchronizing
downstream section of the communicated to the demand management, the activities of the many supply chain
supply chain to operate order fulfillment, and returns process teams. members. Inventory includes raw materials,
independently from the Further, the customer service management work-in-process, sub-components, and
upstream section [26]. The team receives the order acceptance guidelines. packaging at the different tiers. This step
decisions made in this sub- The team uses these guidelines every time a requires input from demand management and
process are communicated customer has a request. They help to identify order fulfillment, and provides output to
to the supplier relationship which customers’ requests can be fulfilled. customer service management.
management team since Some requests require additional management The final step in the manufacturing flow
the push-pull boundaries time to evaluate their economic and technical process, measuring performance, includes more
affect the interactions with viability. than just tracking process measures, and
the suppliers. Similarly, In the final sub-process, the team develops reporting them to the customer relationship
coordination with order the metrics framework and communicates it to management and supplier relationship
fulfillment is necessary for the customer relationship management team. management teams. It includes analyzing
establishing lead-times and These metrics measure the effectiveness of the product quality and examining the root causes
stocking requirements. manufacturing flow process and might include of quality problems. The manufacturing flow
The objective of the cycle time, inventory levels, and product quality. process team is responsible for finding solutions
next sub-process is to to quality issues. This might involve working
identify manufacturing The Operational Process with supplier relationship management,
constraints and Manufacturing flow at the operational product development and commercialization,
requirements to help level looks like operations management internal or returns management.
determine the capabilities to the firm. However, certain characteristics of
of the supply chain. The the process are designed to integrate internal Supplier Relationship Management
role of suppliers and the operations management with activities in the Supplier relationship management is the
supplier development supply chain. In the first sub-process, the team process that defines how a company interacts
strategy is an important determines the routing and velocity through with its suppliers. As the name suggests, this is
component of this sub- manufacturing. This step includes developing a a mirror image of customer relationship
process for defining the master production schedule by translating the management. Just as a company needs to

Volume 12, Number 2 2001 Page 23

develop relationships with compatibility of the supplier’s process
its customers, it needs to implementation; the supplier’s technological
foster relationships with its capabilities and compatibility; the volume
suppliers. As in the case of purchased from the supplier; the capacity
customer relationship available from the supplier; the culture of
management, a company innovation at the supplier; and, the supplier’s
should forge close Manufacturing flow at the operational level
relationships with a small looks like operations management internal
subset of its suppliers, and to the firm. However, certain characteristics
maintain more traditional of the process are designed to integrate
relationships with the internal operations management with
others [29]. Each supplier activities in the supply chain.
agrees to a PSA that defines
the terms of the
relationship. Supplier
relationship management is
about defining and
managing these PSAs.

The Strategic Process

At the strategic level,
the output of the process is
an understanding of the
levels of relationships the
firm will maintain, and the
process for segmenting the
suppliers and working with
them to develop
appropriate PSAs. To do
this, the process team first
reviews the corporate,
manufacturing and
sourcing strategies, and
identifies product and
service components that
are key to the
organization’s success now
and in the future (see Figure
With these key
components driving the
decisions, the team
identifies criteria for
categorizing suppliers.
Criteria to examine might
include, but are not limited
to: the supplier’s
profitability, growth and
stability; the criticality or
required service level of the
components purchased;
the sophistication and

Page 24 The International Journal of Logistics Management

Key suppliers work with and select the boundaries for the degree of the firm’s profitability as well as the profitability
customized PSAs; other customization that might be required or of the supplier. It is key that the team performs
suppliers work with desired. At this step, the team interfaces with profitability analyses because management can
standard PSAs with little each of the other processes because they need use these to sell the value of supply chain
to no customization.

Figure 7
Supplier Relationship Management

Strategic Sub-Processes Processes Interfaces Operational Sub-Processes

Review Corporate, Relationship Management Differentiate Suppliers
Manufacturing and
Sourcing Strategies

Customer Service Prepare the Supplier/Segment

Management Management Team

Identify Criteria for

Categorizing Suppliers
It is important for the Internally Review the Supplier/
Demand Management
supplier relationships to Supplier Segment

be win-win. If both
parties do not gain from Provide Guidelines for the
Degree of Customization in the Order Fulfillment Identify Opportunities
with the Suppliers
the relationship, the Product/Service Agreement

anticipated quality levels. Develop Product/Service

Manufacturing Flow Agreement and
The team determines Develop Framework
Management Communication Plan
which of these criteria of Metrics

should be used and how a Product Development Implement the Product/Service

& Commercialization Agreement
supplier will be measured
Develop Guidelines for Sharing
on each one. They develop Process Improvement Benefits
Measure Performance and
with Suppliers
a categorization scheme Returns Management Generate Supplier
Cost/Profitability Reports
that will guide the
operational team on
determining the firm’s key
suppliers, and grouping to understand the degree of differentiation that activities [30]. Improvements from suppliers
other suppliers into is desirable as well as be ready to design systems may have impact throughout the organization
segments. for supporting these alternatives. For example, and these should be reflected in supplier cost or
examining the demand management process profitability reports.
incentive to be in the
relationship is diminished
and it will likely dissolve.
Key suppliers work might lead the team to consider implementing It is important for the supplier
with customized PSAs; CPFR with some of the suppliers, but doing so relationships to be win-win. If both parties do
other suppliers work with might require implementing new technology not gain from the relationship, the incentive to
standard PSAs with little to and making changes to the existing demand be in the relationship is diminished and it will
no customization. management process. likely dissolve. The supplier relationship
Therefore, a standard PSA is As with each of the other supply chain management process team must develop
written for each supplier processes, an important step at the strategic guidelines for sharing process improvement
segment. For key suppliers, level is developing the metrics framework. This benefits with the suppliers. For example,
the team provides is particularly critical in the supplier relationship WalMart decided to split cost savings with
guidelines for the degree of management process because these metrics Procter & Gamble three ways: 1/3 to Wal-Mart,
customization that is measure the success of the firm’s relationship 1/3 to the supplier and 1/3 to the customer [31].
acceptable. To do this, they with its suppliers. With these metrics A key to this step of the process is finding ways
consider the quality and management sees the impact of the integration to easily quantify benefits in financial terms.
cost implications of various in the supply chain. It is important that the team
differentiation alternatives, relates these metrics to the supplier’s impact on The Operational Process

Volume 12, Number 2 2001 Page 25

Once the process negotiate the PSA. Recall that segments of strategy contains the needs assessment of
team determines the other suppliers receive a standard PSA. For key customers.
criteria for categorization of suppliers, the team customizes the agreement Next, the process team develops the idea
suppliers and the levels of according to the improvement opportunities generation and screening processes. This stage
customization at the identified. An important step in developing the can include determining sources for ideas,
strategic level, the PSA for key suppliers is gaining commitment of considering incentives for developing new
operational supplier the company’s internal functions, particularly products for the focal firm and their suppliers
relationship management those affected by the customized PSAs. The PSA and customers, beginning to develop formalized
process develops and includes a communication plan between the customer feedback programs, and establishing
manages the PSAs. First, firm and the supplier and a continuous guidelines for strategic fit. At this point, the
the team implements the improvement plan. product development and commercialization
categorization scheme in Once the suppliers have agreed to the process interfaces with the customer
order to identify key PSA, the supplier teams are responsible for relationship management process to provide
suppliers and supplier implementing and managing it. This involves the
segments. This involves working with the other processes to assure Supply chain management includes
analyzing how suppliers that the PSA is being adhered to, and meeting integrating customers and suppliers into the
impact the firm’s with the suppliers regularly to monitor product development process in order to
profitability and measuring progress and performance. reduce time to market.
each supplier on the Measuring performance is a critical part of It is critical to have the right people from
appropriate criteria. the supplier relationship management process the internal functional silos along with key
Each key supplier is because management needs to assess the customers and suppliers involved in the
assigned to a supplier success of the firm’s relationships. The other product development and
management team. Other process teams communicate supplierrelated commercialization process.
suppliers are grouped into performance to the account teams who tie framework that will be used to determine how
segments and a these metrics back to the profit of both the firm new products will impact customers and the
management team is and the supplier, and report the results both level of acceptance of those products.
assigned to each segment. internally and to the supplier. The process team then establishes
Each supplier/segment guidelines for the membership of the
team is comprised of a Product Development and crossfunctional product development team. It is
team manager and a Commercialization critical to have the right people from the
crossfunctional set of team Product development is critical to the internal functional silos along with key
members. continuing success of the firm [32]. Developing customers and suppliers involved in the product
Each new products quickly and getting them to the development and commercialization process.
supplier/segment team marketplace in an efficient manner is a major This step includes determining the extent of
internally reviews the component of corporate success. Time to involvement from both key customers and
suppliers to assure that market is a critical objective of this process [33]. suppliers. Empirical studies found that firms
they understand the role of Supply chain management includes integrating may form alliances to complement their existing
that supplier in the supply customers [34] and suppliers [35] into the internal knowledge and help them learn about
chain. A supplier team product development process in order to new markets and technologies as well as to
works with each key reduce time to market. As product life cycles reduce overall risk in the product development
supplier to identify shorten, the right products must be developed process [37]. In this stage of the process, the
improvement opportunities and successfully launched in ever-shorter team assesses relative strengths, weaknesses,
within the account. The timeframes in order to remain competitive [36]. and roles of personnel to determine who should
team examines each of the be involved in the product development and
other supply chain The Strategic Process commercialization process. The team examines
processes, both at the firm constraints to determine which resources the
The first step in the strategic portion of the
and at the supplier, looking firm can utilize on specific new product projects.
product development and commercialization
for opportunities to The fourth step is to develop product
process is to review the sourcing, manufacturing
increase sales, reduce rollout issues and constraints. The team
and marketing strategies to determine how
costs, and improve service. identifies pinch points that could hamper the
those plans will likely impact product
Next, each team works product development and commercialization
development (see Figure 8). The marketing
with a key supplier to process. Activities within this sub-process

Page 26 The International Journal of Logistics Management

include market and
promotion planning, sales Figure 8
force training, inventory Product Development and Commercialization
deployment planning, and
Strategic Sub-Processes Processes Interfaces Operational Sub-Processes
transportation planning. In
this stage of the process,
Customer Define New Products
each of the internal Review Sourcing, Manufacturing Relationship Management & Assess Fit
& Marketing Strategies
functional silos have to be
Establish Cross-functional
involved to avoid poor Customer Service Product Development Team
product rollouts. In Develop Idea Generation and
Screening Processes
addition, the team obtains Formalize New Product
Development Project
input from the order Demand
Establish Guidelines for
fulfillment team to assess Cross-functional Product
Development Team Membership Design & Build Prototypes
how new products will
Order Fulfillment
impact the network flow.
Next, the team Develop Product Rollout Make/Buy Decision
Issues & Constraints
establishes new product Manufacturing Flow
project guidelines. This Determine Channels
includes determining time- Establish New Product
Project Guidelines
to-market and profitability Supplier Relationship
Management Product Rollout
expectations, and
Develop Framework
estimating the drain on of Metrics
Returns Management Measure
human resources resulting Process Performance

from new product projects.

The team establishes
guidelines for examining is to define new products and assess fit. Using The team is responsible for formalizing the
the strategic fit of potential the means defined at the strategic level, new product development project. This step
new products and for product ideas are generated and screened. In includes determining time-to-market
making the make/buy this initial screening, the team completes a expectations, identifying likely product
decision. market assessment, consults with key profitability scenarios, and further examining
The final step to the customers and suppliers, and determines the fit the strategic fit of the product within the firm
strategic product with existing channels, manufacturing, and and its key markets.
development and logistics environments. This involves interfaces The product development team manages
commercialization process with customer relationship management and the process of designing and building
is to develop the framework supplier relationship management, as well as prototypes of the product ideas. For example,
of metrics. Typical process with the functional silos in the firm. the auto companies develop concept cars to test
metrics might include time Using the guidelines developed at the new product ideas. In this phase, each team
to market, time to strategic level, a cross-functional product works with suppliers and performs a value
profitability and first year development team is established for each analysis to determine what portions of the
sales. The metrics are product idea that passes the screening process. product design and rollout process add value.
communicated to the Key suppliers and customers are included on the They then source materials and manufacture
customer relationship team as early as possible in order to compress prototypes.
management team to time to market. Therefore, this sub-process Once the team evaluates the prototypes,
assure they do not conflict includes an interface with supplier relationship they determine how much of the new product
with other metrics or the management and customer relationship should be manufactured in-house. Many firms
firm’s objectives. management. The focal company might also adopt a short-term perspective for making
participate in the product development process make/buy decisions. However, these decisions
The Operational Process of a key customer. For example, a supplier of may have strategic implications for the firm. For
The first step in the salad dressings may participate in the product example, during the development of the
operational product development process of a restaurant chain. In personal computer, IBM outsourced the
development and such cases, the customer relationship operating system to a small company named
commercialization process management process team is actively involved. Microsoft. This decision may have enabled IBM

Volume 12, Number 2 2001 Page 27

to bring the PC to market in planning and executing the product rollout. The Strategic Process
quicker, but with hindsight, In the final step, the team measures In the first step of the strategic returns
it was clearly a strategic process performance through the metrics process, the team reviews environmental and
error. The make/buy developed at the strategic level, and legal compliance guidelines (see Figure 9). Team
decision “...should be communicates results to the customer members need to understand laws that apply to
formulated from a strategic relationship management and supplier used products and products planned for
perspective with senior relationship management teams. disposal. They also need to recognize rules
management involvement” associated with recall campaigns and packaging
[38]. Once it is determined Returns Management issues.
what will be sourced, the Effective returns management is a critical Next, the team develops return avoidance,
team assesses supply part of supply chain management. While many gatekeeping and disposition guidelines. Return
capabilities and manages firms neglect the returns process because avoidance means manufacturing and selling the
requests for quotations. management does not believe it product in a manner such that returns are
Sourcing decisions require The focal company might also participate in minimized. This avoidance can be derived from
interfaces with the the product development process of a key improved quality or better instructions to the
customer relationship customer. consumer as to how to properly operate the
management, product. Gatekeeping is the screening of
While many firms neglect the returns
manufacturing flow and process because management does not defective and unwarranted returned
supplier relationship believe it is important, this process can merchandise at the entry point into the reverse
management processes. assist the firm in achieving a sustainable logistics process [40]. Improved gatekeeping is
In the sixth sub- competitive advantage. a critical factor in making the entire reverse flow
process, the team manageable and efficient. It assures that only
determines the marketing product that should be returned to a specific
and distribution channels point in the returns network is indeed returned
for the new product. These to that point. Disposition guidelines define as
channels are defined with clearly as possible the returned item’s ultimate
input from customer destiny. Typical disposition options include
relationship management return to supplier, refurbish or remanufacture,
and order fulfillment. Then, recycle, and landfill. The team can examine
the team develops the potential secondary markets including Internet-
market plan for the product based auctions or retailers that specialize in
and does initial inventory returned goods or “seconds”.
planning. A firm should be able to make disposition
The next step is the decisions quickly. The team develops the rules
actual product rollout. in conjunction with other members of the
Many products are supply chain, as well as with input from other
unsuccessful due to poor processes, such as customer relationship
management of product management, product development and
rollout. In this step, the commercialization, and supplier relationship
team sources materials, management. Disposition and return reason
positions inventory, and codes compliant with company policy are
manufactures the product. As part of this subprocess, the team developed during this stage of the process.
They also implement the develops procedures for analyzing return
Next, the team develops the returns
market plan, train the sales rates and tracing the returns back to the
network and flow options. During this stage, the
force on the new product root causes.
team develops plans for transporting and
offering, and execute the is important, this process can assist the firm in holding returned products until they reach their
promotion plan. Inventory achieving a sustainable competitive advantage. final disposition. For some firms, products may
is deployed using Effective management of the returns process be routed to central returns centers where
methodologies developed enables the firm to identify productivity returned items are consolidated and examined.
in demand management. It improvement opportunities and breakthrough The team also determines what transportation
is important that the other projects [39]. programs the firm will employ. For example,
process teams are involved supply chain managers might decide that

Page 28 The International Journal of Logistics Management

utilizing backhauls may be customer may be a consumer returning an item,
the most efficient way of or a retailer or distributor sending back items
transporting returns. that did not sell. In some cases, these returns
Developing the returns come through the customer service
network requires input management process.
from customer service Once a return request is received, it is
management, order necessary to determine the routing for the
fulfillment, and supplier returned product and generate the return
relationship management. material authorization (RMA) derived from the
In the fourth step, the request. Advanced ship notices are sent,
process team develops signaling to the receiving firm that the returns
credit rules governing the are on their way.
returns process. At this Once the item is returned, it is verified,
stage, the finance inspected, and processed. This processing
organizations of the focal should be completed as quickly as possible so
firm, and key suppliers and that product value does not decrease any more
customers negotiate how than necessary. The order fulfillment team may
returned merchandise will become involved at this point to assist in
be credited. The team managing the return flow back to the
establishes credit warehouse or central returns center.
authorization guidelines Employees analyze the returns and select
and credit policies. Since the appropriate dispositions using the rules
this involves both suppliers developed in the strategic returns process. The
and customers, supplier disposition of the product can include return to
relationship management the supplier, refurbishment, remanufacture,
and customer relationship recycling, reselling as is, reselling through a
management are involved secondary market, or sending the product to a
in determining the rules. landfill.
The last step of the Once the returns are processed, credit is
strategic returns process is given to the appropriate customer, consumer or
developing the framework supplier. In some circumstances, a supplier
of metrics and might be crediting the firm for a return. This
communicating it to the sub-process will use the credit authorization
customer relationship guidelines developed in the strategic returns
management team. process.
Possible metrics are return
rates and financial impact
of returns. As part of this
sub-process, the team
develops procedures for
analyzing return rates and
tracing the returns back to
the root causes.

The Operational Process

At the operational
level, the returns process is
about managing the day-to-
day returns activities. The
process is initiated when a
return request is received
from a customer. This

Volume 12, Number 2 2001 Page 29

In the final step of the Implementing Integrated Supply Chain If the proper coordination mechanisms are
returns process, the team not in place across the various functions,
analyzes the causes of the the supply chain processes will be neither
The implementation of supply chain effective nor efficient.
returns and measures
management involves identifying the supply
process performance. The management requires making the transition
chain members with whom it is critical to link,
data on returns are used to from a functional organization to one focused
the processes to be linked with each of these
make improvements to the on business processes first inside the firm and
key members, and the type/level of integration

Figure 9
Returns Management

Strategic Sub-Processes Processes Interfaces Operational Sub-Processes

Review Environmental & Legal Relationship Management
Compliance Guidelines Receive Return Request

Customer Service
Develop Avoidance, Gatekeeping Determine Routing
& Disposition Guidelines

Develop Return Network
and Flow Options Receive Returns

Order Fulfillment

Develop Credit Rules Select Disposition

Manufacturing Flow

Determine Secondary Markets Credit Consumer/Supplier

Supplier Relationship

Develop Framework Analyze Returns and

of Metrics Product Development Measure Performance
& Commercialization

product and the processes. that applies to each process link. The objective then across firms in the supply chain. Figure 10
This analysis might result in of supply chain management is to create the illustrates how each function within the
feedback to the customer most value for the entire supply chain network, organization can be mapped with the eight
relationship management, including the end-customer. Successful supply supply chain processes. This figure provides
manufacturing flow chain management involves the coordination of examples of activities that might exist at each
management, supplier activities within the firm and between members junction of a functional area and process. For
relationship management, of the supply chain. Consequently, supply chain example, in the customer relationship
or product development process integration and reengineering management process marketing provides the
and commercialization initiatives should be aimed at boosting total account management expertise, research and
processes. This analysis process efficiency and effectiveness across the development provides the specifications which
should be used in the supply chain. define the requirements, logistics provides
ongoing strategic returns Although the functional expertise remains knowledge of customer service requirements,
process to help develop in place, implementing supply chain production provides the manufacturing
avoidance guidelines. The implementation of supply chain strategy, purchasing provides the sourcing
management involves identifying the supply strategy, and finance provides customer
chain members with whom it is critical to profitability reports. The customer service
link, the processes to be linked with each of requirements are used as input to sourcing,
these key members, and the type/level of manufacturing, and logistics strategies.
integration that applies to each process link.

Page 30 The International Journal of Logistics Management

If the proper transmitted upstream to suppliers.

coordination mechanisms The increasing use of outsourcing has

are not in place across the accelerated the need to coordinate supply chain
various functions, the processes since the organization becomes more
supply chain processes will dependent on suppliers [41]. Consequently,
be neither effective nor coordination mechanisms must be in place
efficient. By taking a within the organization. Where to place these
process focus, all functions coordination mechanisms, and which teams and
that touch the product or functions are responsible for managing them
provide information must become critical decisions.
work together. For The requirements for successful
example, purchasing
depends on sales and
marketing data fed through
a production schedule to
assess specific order levels
and timing of requirements.
These orders drive
production requirements
that, in turn, are

Volume 12, Number 2 2001 Page 31

implementation of supply more detailed description of the eight what sub-processes and activities are included,
chain management include: processes and their relationships to each and how the processes interact with each other
• Executive support, other. However, there is much more work that and with the traditional functional silos.
leadership and needs to be completed. Research Further, how can the members of a supply chain
commitment to change. opportunities include: practice process integration if there is not a
• An understanding of the • How can the relationships between common understanding of what the business
degree of change that is subprocesses and the functional silos be processes are?
necessary. operationalized within firms? The members of The Global Supply Chain
• Agreement on the supply • How can cross-functional teams best work Forum identified eight business processes that
chain management vision together to optimize supply chain must be implemented within a firm and then
and the key processes. management processes? linked up, as appropriate, with key supply chain
• The necessary • How should the implementation effort members [43]. In this paper, we provide
commitment of across the multiple firms and functions be strategic and operational descriptions of each of
resources and organized? these processes. Our goal is to provide: 1)
empowerment to • What research is needed to further define companies with a common structure for
achieve the stated goals. each process? implementing supply chain management, 2)
• What are the implications for supply chain instructors with material that can be used in
Implications and management given the shape and length of teaching supply chain management, and 3)
supply chains in which the firm is involved? researchers with fertile groundwork for delving
• How should firms in the supply share costs more deeply into the issues within each process
Opportunities and benefits? What is the detailed and with their integration between companies.
There are several interaction between the sub-processes and We believe this article provides the framework
implications for management components such as the risk While some managers and researchers
practitioners and and reward structure or organizational continue to use supply chain management
researchers. While structures? interchangeably with logistics, there is an
marketing strategy has • What specific metrics should be introduced increasing
always considered internal to evaluate performance beyond the understanding that it is much more than
and external constraints, logistics.
borders of the firm? How can firms within
supply chain management the supply chain optimize total supply chain
makes the explicit performance while maximizing the
evaluation of these factors measurement of their own operations [42]?
even more critical.
Additionally, traditional
functional roles within the
firm are changing. Team Since the concept of supply chain
efforts are becoming more management was introduced, there has been a
common for developing great deal of confusion about what it actually
and marketing new involves. While some managers and
products, as well as researchers continue to use supply chain
managing current ones. management interchangeably with logistics,
The role of the firm’s sales there is an increasing understanding that it is
force is becoming one of much more than logistics. In recent years, many
measuring and selling the authors have stressed the importance of
value proposition for the implementing supply chain management as part
customer. of a process orientation to management.
However, most of what is written about supply
This article builds on
chain management advocates business process
previous work supported by
reengineering and integration without
The Global Supply Chain
specifying the processes that are to be included
Forum, in which the
in these efforts. It would be much easier for
structure of supply chain
management to implement a process
management was
orientation within their firm if there were clear
described, by providing a
guidelines as to what the processes ought to be,

Page 32 The International Journal of Logistics Management

necessary to develop the 2001; and, Douglas M. Lambert and Martha C. Planning and Control Systems, New York, NY:
theory that will move Cooper, “Issues in Irwin/McGraw-Hill, 1997, p. 4.
supply chain management Supply Chain Management,” Industrial [13] Helms, Marilyn M., Lawrence
to its next evolutionary Marketing Management, Vol. 29, No. 1 P. Ettkin and Sharon Chapman, “Supply Chain
stage. (2001), pp. 65-83. Forecasting - Collaborative Forecasting
[5] Cooper, Martha C., Douglas M. Supports Supply Chain Management,” Business
References Lambert and Janus D. Pagh, “Supply Chain Process Management Journal, Vol. 6, No. 5
[1] Hammer, Management: More than a New Name for (2000), p. 392.
Michael, Logistics,” The International Journal of Logistics [14] Helms, Marilyn M., Lawrence
“The Management, Vol. 8, No. 1 (1997), pp. 1-14. P. Ettkin and Sharon Chapman, “Supply Chain
Superefficient Company,” [6] Novack, Robert A. and Stephen W. Forecasting - Collaborative Forecasting
Harvard Business Review, Simco, “The Industrial Procurement Process: Supports Supply Chain Management,” Business
Vol. 79, No. 9 (2001), p. 84. A Supply Chain Perspective,” Journal of Business Process Management Journal, Vol. 6, No. 5
[2] Monczka, Robert Logistics, Vol. 12, No. 1 (1991), p. 145. (2000), p. 392.
M. and Jim Morgan, [7] Hutchins, Greg, Purchasing [15] Dobie, Kathryn, L. Milton
“What’s Wrong with Supply Strategies for Total Quality: A Guide to Glisson and James Grant, “Terrorism and the
Chain Management?,” Achieving Continuous Improvement, Global Supply Chain: Where Are Your Weak
Purchasing, Vol. 122, No. 1 Homewood, IL: Business One Irwin, 1992; and, Links?” Journal of Transportation Management,
(1997), pp. 69-72. Albert Lester and Anthony Benning, Vol. 12, No. 1 (2000), pp. 57-66.
[3] Lambert, Douglas Procurement in the Process Industry, [16] Towill, Denis R. and Peter
M., Martha C. Cooper and London/Boston: Butterworths, 1989. McCullen, “The Impact of Agile
Janus D. Pagh, “Supply [8] Berry, Leonard L. and A. Parasuraman, Manufacturing on Supply Chain Dynamics,”
Chain Management: “Marketing to Existing Customers” in The International Journal of Logistics
Implementation Issues and Marketing Services: Competing through Management, Vol. 10, No. 1 (1999), p. 86.
Research Opportunities,” Quality, New York, NY: 1991, pp.132-150. [17] Kumar, Akhil and Graham
The International Journal of [9] Seybold, Patricia B., “Get Inside the Sharman, “We Love Your Product, but Where Is
Logistics Management, Vol. Lives of Your Customers,” Harvard Business It?,” Sloan Management Review, Vol. 33, No. 2
9, No. 2 (1998), p. 1. Review, Vol. 78, No. 5 (2001), pp. 81-89. (1992), pp. 93-99.
[4] Cooper, Martha C., [10] Lambert, Douglas M. and [18] Stock, James R. and Douglas
Douglas M. Lambert and Terrance M. Lambert, Strategic Logistics Mangement,
Janus D. Pagh, “Supply L. Pohlen, “Supply Chain Metrics,” The New York, NY: McGraw-Hill, 2001.
Chain Management: More International Journal of Logistics [19] Waller, Matthew A., Dennis
than a New Name for Management, Vol. 12, No. 1 (2001), pp. 1-19. Woolsey and Robert F. Seaker,
Logistics,” The [11] Lambert, Douglas M. and “Reengineering Order Fulfillment,” The
International Journal of Renan Burduroglu, “Measuring and Selling the International Journal of Logistics
Logistics Management, Vol. Value of Logistics,” The International Journal of Management, Vol. 6, No. 2 (1995), pp. 1-10.
8, No. 1 (1997), pp. 1-14; Logistics Management, Vol. 11, No. 1 (2000), pp. [20] Croxton, Keely L., “Supply
James R. Stock and Douglas 1-17. Chain Optimization,” (1996), MIT, Boston, MA,
M. Lambert, Strategic [12] Vollmann, Thomas E., William Unpublished Manuscript.
Logistics Mangement, New L. Berry and D. Clay Whybark, Manufacturing [21] Harrison, Terry P., “Principles
York, NY: McGraw-Hill, of Global Supply Chain Design,” INFORMS
Annual Meeting, Miami, FL, 2001. Postponement,” Journal of Business Logistics, Vol. 9, No. 2
[22] Berry, William L. and Martha C. Cooper, (1988), pp. 117-136.
“Manufacturing Flexibility: Methods for Measuring the Impact [25] Naylor, J. Ben, Mohamed M. Naim and Danny
of Product Variety on Performance in Process Industries,” Berry, “Leagility: Integrating the Lean and Agile Manufacturing
Journal of Operations Management, Vol. 17, No. 2 (1999), p.177. Paradigms in the Total Supply Chain,” International Journal of
[23] Gupta, Mahesh C., “Environmental Production Economics, Vol. 62, No. 1/2 (1999), pp. 107-118.
Management and its Impact on the [26] Graves, Stephen C. and Sean P. Willems,
Operations Function,” International Journal of Operations & “Optimizing Strategic Safety Stock Placement in Supply Chains,”
Production Management, Vol. 15, No. 8 (1995), pp. 34-51. Manufacturing and Service Operations Management, Vol. 2, No.
[24] Zinn, Walter and Donald J. Bowersox, 1 (2000), pp. 68-83.
“Planning Physical Distribution with the Principle of

Volume 12, Number 2 2001 Page 33

[27] Boyer, Kenneth K. and Christopher Journal of Production
McDermott, “Strategic Consensus in Economics, Vol. 69, No. 2
Operations Strategy,” Journal of Operations (2001), pp. 161-176.
Management, Vol. 17, No. 3 (1999), pp. 289305. [35] Schilling,
[28] Vollmann, Thomas E, William L Melissa A. and Charles W.
Berry and D. Clay Whybark, Manufacturing Planning and Control L. Hill, “Managing the New Product
Systems, New York, NY: Irwin/McGraw-Hill, 1997. Development Process:
[29] Dyer, Jeffrey H. Dong Sung Cho and Wujin Chu, Strategic Imperatives,” The
“Strategic Supplier Segmentation: The Next “Best Practice” in Academy of Management
Supply Chain Executive, Vol. 12, No. 3 (1998),
Management,” California Management pp. 67-81.
Review, Vol. 40, No. 2 (1998), pp. 57-77. [36] Hutt, Ken and
[30] Lambert, Douglas M. and Renan Burduroglu, Graham Ross,
“Measuring and Selling the Value of Logistics,” The International “Collaborative Product
Journal of Logistics Management, Vol. 11, No. 1 (2000), pp. 1-17; Commerce,” Manufacturing
and, Douglas M. Lambert and Terrance L. Pohlen, “Supply Chain Systems, Vol. 18, No. 12 (2000),
Metrics,” pp. 64-68.
The International Journal of Logistics Management, Vol. 12, No. [37] McDermott,
1 (2001), pp. 1-19. Charles M., “Managing Radical
[31] Conversation with Lou Pritchett, former Vice Product Development in Large
President of Procter & Gamble, 15th hole, Plantation Golf Manufacturing Firms: A Longitudinal Study,”
Course, Ponte Journal of Operations
Vedra Beach, Florida, April 21, 2001. For more information on Management, Vol. 17, No. 6 (1999),
the Wal-Mart and Procter & Gamble relationship see: Lou pp. 631-644.
Pritchett, Stop Paddling and Start [38] Humphreys, P. K.,
Rocking the Boat, New York, NY: V. H. Y. Lo and R. T. McIvor, “A
Harper Business, 1995. Decision Support Framework for
[32] Cooper, Robert, “Benchmarking New Product Strategic Purchasing,” Journal of Materials
Performance: Results of the Best Processing Technology, Vol. 107, No. 1-
Practice Study,” European Management 3 (2000), p. 361.
Journal, Vol. 16, No. 1 (1998), [39] Rogers, Dale S.
pp. 1-17; and, Philip C. Ruffles, and Ronald S. Tibben-Lembke, “An
“Improving the New Product Examination of Reverse
Introduction Process in Logistics Practices,” Journal of
Manufacturing Companies,” Business Logistics, Vol. 22, No. 2
International Journal of (2001), pp. 129-148. [40]
Manufacturing Technology & Rogers, Dale S. and Ronald S.
Management, Vol. 1, No. 1 Tibben-Lembke, Going
(2000), pp. 1-19. Backwards: Reverse Logistics
[33] Schilling, Melissa A. and Charles W. Trends and Practices, Reno,
L. Hill, “Managing the New Product Nevada: Reverse Logistics
Development Process: Executive Council, 1998.
Strategic Imperatives,” The [41] Auguste, Byron G.,
Academy of Management Yvonne Hao, Marc Singer and
Executive, Vol. 12, No. 3 (1998), Michael Wiegand, “The
pp. 67-81. Other Side of Outsourcing,” The McKinsey Quarterly, No. 1
[34] Karkkainen, (2002), pp. 52-63; and, Charles H. Fine, “Clockspeed-based
Hannu, Petteri Piippo and Strategies for Supply Chain
Markku Tuominen, “Ten Tools Design,” Production &
for Customer-driven Product Operations Management, Vol.
Development in Industrial 9, No. 3 (2000), pp. 213-221.
Companies,” International

Page 34 The International Journal of Logistics Management

[42] Lambert, Douglas M. Acknowledgement
and Renan Burduroglu, Management, Vol. 12, No. 1 (2001), pp. 1-19.
“Measuring and Selling the Value [43] Cooper, Martha C., Douglas M. Lambert and Janus D.
of Logistics,”The International Pagh, “Supply Chain Management: More than a New Name for
Journal of Logistics Management, Logistics,” The International Journal of Logistics Management,
Vol. 11, No. 1 (2000), pp. 1-17; Vol. 8, No. 1 (1997), pp. 1-14; and, Douglas M. Lambert, Martha
and, Douglas M. Lambert and C. Cooper and Janus D. Pagh, “Supply Chain Management:
Terrance L. Pohlen, “Supply Chain Implementation Issues and
Metrics,” Research Opportunities,” The Internatioal Journal of Logistics
The International Journal of Management, Vol. 9, No. 2 (1998), pp. 1-19.

The authors would like to thank the members of The Global Supply Chain Forum: 3M, Cargill,
Cemex Mexico, Coca-Cola USA, Colgate-Palmolive Company, Fletcher Challenge Building, Ford
Motor Company, Hewlett-Packard, International Paper, Limited Logistics Services, Lucent
Technologies, Shell, Taylor Made-adidas Golf Company, Wendy’s International Inc., and Whirlpool
Corporation. Their contributions included dedicating time in Forum meetings to review and
evaluate the research. We would also like to thank our colleagues, Terrance L. Pohlen, University
of North Florida, and Thomas J. Goldsby, The Ohio State University, for their suggestions on earlier
drafts of this paper.

Keely L. Croxton is an Assistant Professor of Logistics in the Department of

Marketing and Logistics at The Ohio State University. Her research interests are at
the intersection of optimization and supply chain management. She teaches in the
undergraduate, MBA and Ph.D programs as well as on a number of executive
development programs. Her industry experience is in the automotive, paper and
packaging, and third-party logistics industries. She holds a BS in Industrial
Engineering from Northwestern University and a Ph.D. in Operations
Research from MIT. She was the recipient of a National Science Foundation
Fellowship and an Eisenhower Fellowship from the Department of Transportation.
She can be reached at The Ohio State University, 518 Fisher Hall, 2100 Neil Ave.,
Columbus, OH 43210. Phone: 614/292-6610. Fax: 614/292-0440. E-mail:

Sebastián J.García-Dastugue is a Doctoral Candidate at The Ohio State University.

His research interests are in the use of information technology in supply chain
management and logistics. Sebastián has more than 10 years of experience in
industry; he worked as an IT and communications specialist, as a logistics analyst,
and as a change management agent. He worked for Ryder Argentina, Cementos
Avellaneda, Solutions Informatiques Francaises, Sud America Seguros, and as a
part-time lecturer at the Instituto de Estudios para la Excelencia Competitiva.
Sebastián received his MBA from IAE - Universidad Austral; he holds a BA in MIS
from Universidad CAECE, both in Buenos Aires, Argentina. He can be reached at
The Ohio State University, 256 Fisher Hall, 2100 Neil Avenue, Columbus, OH
43210-1399. Phone: 614/247-6271. Fax: 614/292-0440. E-mail:

Volume 12, Number 2 2001 Page 35

Douglas M. Lambert is the Raymond E. Mason Chair in Transportation and Logistics
and Director of The Global Supply Chain Forum, Fisher College of Business, The
Ohio State University; and the Prime F. Osborn III Eminent Scholar
Chair in Transportation and Logistics, Professor of Marketing and Logistics and
Director, The International Center for Competitive Excellence at the University of
North Florida. Dr. Lambert has served as a faculty member for over 500 executive
development programs in North and South America, Europe, Asia, Australia and
New Zealand. His publications include seven books and more than 100 articles. In
1986, Dr. Lambert received the CLM Distinguished Service Award for his
contributions to logistics management. He holds an honors BA and MBA from the
Ivey School of Business at the University of Western Ontario and a Ph.D. from The
Ohio State University. He can be reached at The Ohio State University, 506 Fisher
Hall, 2100 Neil Avenue, Columbus, OH 43210-1399. Phone: 614/292-0331. Fax:
614/292-0440. Email: He also can be reached at the
University of North Florida, 4567 St. Johns Bluff Road South, Jacksonville, FL
32224. Phone: 904/620-2585. Fax: 904/620-2586.E-mail:

Dale Rogers is the Director of the Center for Logistics Management and a Professor
of Supply Chain Management at the University of Nevada. In 2001, he was the
Paper Foundation Visiting Eminent Scholar Chair in Supply Chain Management at
the University of North Florida. Dr. Rogers is also the chairman of the Reverse
Logistics Executive Council (, a professional organization
devoted to the improvement of reverse logistics practices and the Supply Chain
Technology Council, an organization that provides continued understanding of how
internet technologies can positively impact the supply chain. He received his BA,
MBA and Ph.D.from Michigan State University. Dr.Rogers has published in several
logistics journals and is the co-author of the 1999 book Going Backwards:Reverse
Logistics Trends and Practices and two previous books on logistics. He can be
reached at The Center for Logistics Management, University of Nevada, Reno, NV
89557. Phone: 775/784-6814. Fax: 775/784-1769. E-mail:

Page 36 The International Journal of Logistics Management