Efficiency Only Goes So Far

The last ten years of American business have been focused on integrating and perfecting operational efficiencies through the perfection and active management of the Supply Chain. For the last couple of years of economic turmoil, many companies have almost exclusively focused on supply chain efficiencies as a strategy for survival. Now the challenge is taking the expertise and company culture focused on linear thinking and introspection of the supply chain and start growing again.

The University of Texas Research Findings

A recent study by the McCombs School of Business  done in conjunction with Chief Outsiders revealed that 2/3 of mid-size businesses are Operationally focused, as opposed to Market focused.  These Operationally focused organizations are usually led by a founder or CEO from an operational background and the key management teams of these organizations are primarily operational, or internally focused.

Marketing as a Discipline

One way to get these operationally-focused organizations growing again is to start addressing strategic growth and marketing with the same discipline and linear thinking that they have applied to Supply Chain planning and optimization.  In other words, address business growth and marketing like a Demand Chain.

The Difference

Just like the Supply Chain, the end point of the Demand Chain is the final purchase and use of the product or service by the end user. The Supply Chain and the Demand Chain meet at the same end point but they start out very differently. The development of a Supply Chain often has a middle point of the product or manufacturing, and then works backwards towards supplier and forwards towards delivery. The Demand Chain also has a middle point of the products or services, but it can work backwards to understand and integrate the needs of the target customer/consumer and then forwards to the distribution channel, demand generation and eventual delivery systems. In a sense, the supply chain is the physical chain whereas the demand chain is logical, although quite real. This is where companies find their relevance and differentiation. The most relevant, but differentiated offerings win time and again.

We'll continue this discussion in future articles. If you'd like to see how some large companies addressed their growth challenges by focusing on the demand chain, you might enjoy "How Companies Win" by Cash and Calhoun.

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