Integrating customer relationship management and supply chain management 489
something to be managed as efficiently as
possible. Today, the emphasis has shifted. The
way in which a business satisfies demand and
services its customers has become a fundamental
basis for successful and enduring relationships.
This process is commonly termed the
‘supply chain’, but logically the label ‘demand
chain’ describes its central role in demand
satisfaction. Whatever the terminology, how-
ever, the important principle is that it should be
managed as a horizontal business process that
connects customers with the organization,
extending upstream into the supplier basis.
Ideally, we should seek to manage the business
as an ‘extended enterprise’ from the customer’s
customer back through the internal operations
of the firm to the supplier’s supplier.
In a sense, these three critical business
processes are all subsidiary to, and form the
basis of, the fourth key process – the customer
relationship management process.
The customer relationship
management process
CRM unites the potential of IT and relationship
marketing strategies to deliver profitable, long-
term relationships. Importantly, CRM provides
enhanced opportunities to use data and infor-
mation both to understand customers and
implement relationship marketing strategies
better. Customer relationship management, we
suggest, builds upon the philosophy of rela-
tionship marketing (Christopher et al., 2002) by
utilizing information technology to enable a
much closer ‘fit’ to be achieved between the
needs and characteristics of the customer and
the organization’s ‘offer’.
The management of customer relation-
ships where those customers are other organi-
zations (i.e. business-to-business) has been the
subject of much attention over recent years. It
has long been acknowledged that marketing to
other organizations requires a deep under-
standing of those customers’ business processes
and indeed of their value creation processes.
A major feature of the four high-level
processes outlined above is that by definition
they are cross-functional and hence they must
be managed cross-functionally. This has led to
the notion of the ‘horizontal organization’
(Ostroff and Smith, 1992), which is market
facing and market driven – as distinct from the
conventional business, which is ‘vertical’,
focused around functions, and is inward look-
ing and budget-driven.
Companies as diverse as Xerox and Uni-
lever are now transforming their organizations
to become market-driven and to shift the locus of
power from functions to core processes, in effect
turning the organization chart through 90°.
Figure 19.3 highlights the fundamental change
in orientation that such a strategy requires.
The achievement of this transformation
must begin with a recognition of the inter-
linking roles of the CRM and SCM processes.
We will shortly examine the CRM process in
more detail. However, it is appropriate to first
explain why the supply chain is so important in
the context of CRM.
The SCM process entails the linking of
production plans with materials requirements
plans in one direction and distribution require-
ments plans in the other. The aim of any
organization should be to ensure that produc-
tion produces only what the market requires
whilst purchasing supplies production with
what it needs to meet its immediate require-
ments. But how can this fairly obvious idea be
converted into reality?
The key lies in the recognition that the
order and its associated information flowsshould
be at the heart of the business. It may be a
truism but the only rationale for any commer-
cial organization is to generate orders and to
fulfil those orders. Everything the company
does should be directly linked to facilitating
this process, and the process must itself be
reflected in the organizational design and in its
planning and control systems.
Figure 19.4 shows the interlinking roles
between CRM and SCM. In the literature on
CRM, most of the discussion often focuses on