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Marketing Creates Value in Supply Chains

Tomas Hult

Five Michigan State University researchers have completed an assessment of 50 years and hundreds of articles worth of marketing-related research in supply chain management.

The results, published in a recent article in the Journal of Retailing, show that marketing is of crucial importance to the creation of value in supply chains.

“Companies that can combine marketing channels effectively with the other functions in supply chains satisfy customers better, get repeat sales from these customers, and have stronger overall brands,” said Tomas Hult, a professor of marketing co-author of the article. “Customers want to buy from these companies.”

The research identified four functions as key success areas for supply chains: marketing channels, logistics, purchasing and operations. The marketing channel – what some call the “last mile” of the supply chain – is where creation of customer value is the most obvious. The real value is assessed when customers decide whether to buy a product or not, which places marketing at the center of supply chain strategy.

“This is where the supply chain meets the customer and delivers a product or service that the customer wants or needs,” said Irina Kozlenkova, an assistant professor of marketing and co-author of the article.

Several notable success themes were found throughout the 50 years of research, including numerous companies that are successful because of their supply chains, such as Amazon, Apple, Cisco, Coca-Cola, Nike and Starbucks. The effective and efficient supply chains of these successful companies allows them to pass along increased value to end consumers, while disruptions in the poorly run supply chains of other companies can have effects up and down the chain.

“Wal-Mart’s success is often said to be its excellent supply chain management, while competitors, such as Kmart, have struggled over the last few years with a less effective supply chain,” Kozlenkova said.

The research showed that not only is marketing important to supply chain management, but supply chain management is also important to marketing. Value is developed throughout the supply chain and depends on a strong relationship between marketing and supply chain management for successful companies. A fragile relationship often exists in weaker companies.

“The value creation is very visible in the marketing channel, and 50 years of research on supply chain management shows us how companies can best create and deliver it to customers,” said Hult. “The answer lies in integrating marketing channels with logistics, purchasing, and operations. Neither of the four supply chain functions leads and neither follows – they work together.”

According to the researchers, the goal of their study was to see what works and what doesn’t work in supply chains – to learn from the past and perform even better in the future.

Doctoral student Pinar Kecec and professors Jeannette Mena and Donald Lund were also co-authors.

– Mark Kuykendall, Tomas Hult via MSU Today

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