Reconstructing the Sales and Fulfillment Cycle to Create Supply Chain Differentiation

Redesigns of supply chains have been largely limited to the differentiation of delivery processes to offer customers different delivery lead‐times on different products. In the future, differentiation will go much deeper, back into the supply chains within and across companies. Companies, together with partner companies in a supply chain, will increasingly have to design business processes that meet many different kinds of customer needs. This article describes how differentiated service will be realized through the reconstruction of the traditional sales and fulfillment cycle, whereby the traditional process is broken down and reconstructed in a manner that maximizes the overall efficiency of the chain. The article is based on the results of a year‐long study to develop supply chain improvements within two sectors ‐ electrical installations and pharmaceuticals. Distinctive aspects of this study were that it looked at supply chains that connected three echelons of independent companies in a project environment. The major players in the industries were involved in the project. The article describes three elements for reconstructing the sales and fulfillment cycle: i) reallocating activities to most efficient players; ii) reallocating inventory to reduce duplication; and, iii) using knowledge of end‐user demand to streamline (parts of) the supply chain. The article also examines two barriers to implementation and how to deal with these: the need for openness between supply chain partners; and the fact that current systems cannot handle the degree of differentiation and cooperation required.