Differentiation focused supply chain design

Abstract

Purpose

The purpose of this paper is to develop a framework for differentiation focused supply chain design (SCD).

Design/methodology/approach

This research uses a literature review and case study approach to develop a framework for differentiation focused SCD. The proposed framework has been developed based on the literature review and evaluated against the case study. The case study describes SCD at two Swedish companies; one from the appliance industry and the other from the furniture industry, both having a significant international presence. Empirical data have been collected, mainly from in‐depth and semi‐structured interviews with key persons representing senior and middle management in the case companies.

Findings

This research suggests that differentiation‐focused SCD can be organized into a five‐stage process. It is essential that this process is aligned with new product development (NPD), so they exchange information, and operate based on the same segmentation model. The main benefits of a differentiated supply chain are enhanced competitiveness, as supply chain management (SCM) changes from being a cost center to being a value generating function, and increased profitability, by allowing differentiated customer needs to be satisfied cost‐efficiently. To succeed with developing a differentiated supply chain, logisticians must be extensively involved with both the NPD process and the strategic marketing process.

Research limitations/implications

Current models of SCD are simplistic and not well developed. By combining theory with practical applications, this research provides researchers and decision makers with detailed tools for developing a differentiation‐focused SCD process. The research is explorative in nature therefore empirical data from similar and other research settings should be gathered to reinforce the validity of the findings.

Practical implications

This research provides knowledge and insights on how a differentiated supply chain may be developed. The main implication is that SCD needs to be closely aligned with NPD and marketing in order to gain competitive advantage. Companies may also be able to employ labor closer to the consumption market by focusing on supply chain differentiation.

Originality/value

This research contributes by developing a process for differentiation‐focused SCD, and by demonstrating the main benefits and requirements of a differentiated supply chain.

Citation

Hilletofth, P. (2012), "Differentiation focused supply chain design", Industrial Management & Data Systems, Vol. 112 No. 9, pp. 1274-1291. https://doi.org/10.1108/02635571211278929