Supply and demand chain management: the effect of adding services to product offerings

Abstract

Purpose -The purpose of this paper is to understand how firms manage their product and service offerings, integrating supply chain management (SCM) and demand chain management (DCM) strategies. Adding services to the product portfolio of a firm may bring benefits to an organisation, but requires a reconsideration of the supply chain management approach. Design/methodology/approach -A survey is used to collect data, with valid questionnaires obtained for 4,227 UK-based respondents. Empirical analysis utilises structural equation modelling (SEM). Findings -The paper proposes that a combination of management approaches is required by firms which add services to their portfolio of traditional product offerings. A supply chain management approach may be suitable for traditional product offerings. The management of the services value chain, where the customers' role as value creator is a central feature of the construct, is better served by integration of the market orientation of DCM. Originality/value -The paper addresses a research gap related to the shift in traditional activities carried out by a firm moving from purely product to a product service offer and reconsiders the supply and demand chain management approach. The paper is from a Business to Consumer (B2C) perspective. In this context, the work pioneers analysis into a particular case where a firm's product and service offerings may be substitutes for each other in the eyes of the customer.

Product-service systems business models for circular supply chains

“…The transit from traditional product-based firms to service orientation is complex and contextual. Bustinza, Parry, and Vendrell-Herrero (2013) proposed that this requires a reconsideration of the management of supply and demand chains. Vendrell-Herrero et al (2017) explored how servitisation affect upstream-downstream firms interdependencies in the context of digital business models, and found that digital services could empower upstream and downstream firms differently under certain circumstances.…”

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“…The conclusions agree with DeSarbo et al [DeSarbo et al, 2001] and provide empirical evidence of the importance of consumer value analysis when firms deal with heterogeneous markets. This paper also contributes to the understanding that product and services need to be managed in different ways [Bustinza et al, 2013a]. Services are more amenable to global upstream delivery, whereas product format relies upon national or regional assets [Graham et al, 2004].…”

“…This proposal leads to the formulation of the following set of hypotheses: Hypothesis 1. Ngo, 2011;Vargo, Lusch, 2004] such that it is possible, using the appropriate mix of value offerings [Ngo, O'Cass, 2009], to engage with and influence consumers and increase their likelihood of making a purchase [Bustinza et al, 2013a]. According to this argument, and considering the particular characteristics of potential music consumers, it is expected that specific value strategies can positively influence consumer attitudes.…”

“…Global headquarters manage the transfer of innovations [Dellestrand, 2011] and provide support to a network of national and regional operational and marketing functions. Restructuring value chains is seldom limited to geographic boundaries, instead it often transgresses national borders [Bustinza et al, 2013a]. Supply chain data on different artist's sales on particular platforms from across multiple countries is often quoted, such as the global number of YouTube views, demonstrating that some global standardization is already happening.…”

“…Value propositions are used by firms to engage consumers and encourage them to purchase products. Relationship value [Payne, Holt, 2001] denotes if it is possible to engage with and influence consumers, to increase the likelihood of purchase [Afuah, 2002;Bustinza et al, 2013a]. Value captured is the worth, usually monetary, which firms secure through value exchange with consumers who purchase their offering [Lepak et al, 2007].…”