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JEIM
20,5 Customer orientation and
performance outcomes in supply
chain management
578
Jung Sik Jeong and Paul Hong
Department of Information Operations and Technology Management,
College of Business, The University of Toledo, Toledo, Ohio, USA

Abstract
Purpose – Despite an extensive body of knowledge on the importance of customer orientation in the
marketing and management literature, the impact of customer orientation and interactive system
infrastructure throughout enterprise networks is not fully understood. The purpose of this paper is to
present a model linking customer orientation, interactive system infrastructure, value chain practices,
and network performance outcomes.
Design/methodology/approach – The prior literature on customer orientation and supply chains
is reviewed and a framework is presented which shows the relationship between customer orientation
and network performance outcomes, along with other variables.
Findings – The conclusion supports the importance of customer orientation in the context of the
proposed value chain framework.
Research limitations/implications – The framework introduced in this paper provides a review
of customer orientation in the enterprise network and a basis for further empirical validation.
Practical implications – The research framework suggests that customer orientation practices
may have a positive impact on network infrastructure design, practices, and performance outcomes.
Implementation of customer orientation practices and outcomes within this research framework may
allow management to meet customer requirements more effectively.
Originality/value – This paper expands the concept of customer-orientation in the extended
enterprise network context.
Keywords Customer orientation, Value chain, Modelling, Supply chain management
Paper type Conceptual paper

Journal of Enterprise Information
Management
Vol. 20 No. 5, 2007
pp. 578-594
q Emerald Group Publishing Limited
1741-0398
DOI 10.1108/17410390710823707
Introduction
In today’s international business dynamic, globally competitive environment supply
chain management is a critical strategic initiative. Many researchers argue that supply
chain management creates competitive values through the active involvement of
supply chain entities and their supportive systems for enterprise interaction.
Sustainable business successes are no longer measured by a single entity’s
performance outcomes but through the competitive advantage of the collaborative
supply chain network (Spekman et al., 1994). Since the customer is the ultimate judge of
supply chain performance, effective and timely responses to ever- changing customer
tastes and preferences have become essential components for successful business
performance. The head of McKinsey & Co. in Detroit has said, “Customers have
changed their minds about what defines quality – a shift that is making the uphill
climb for US automakers even more steep” (Nahm et al., 2004). Increasingly, firms are
required to become more customer-oriented through their supply chains (Deshpande
et al., 1993; Shapiro, 1988; Spekman et al., 1998).
 The challenge for many firms, however, is what to do with customer orientation Customer
beyond their immediate organizational boundaries. It is not enough to say, “We have orientation
implemented customer orientation in our organization.” The challenge is how to
implement customer orientation within the complex network of the supply chain.
Although market orientation and customer orientation is explored in the marketing
literature, its application in the supply chain context needs further refinement and
expansion. A few studies (Chae and Hill, 2000; Tu et al., 2004; Russel and Hoag, 2004) 579
have addressed the needs of such an expanded approach. In this paper we consider
customer orientation as a critical aspect of supply chain management and explore its
implementation process. Specifically, we examine how customer orientation can be
applied in the interactive supply chain system infrastructure.

Literature review
A supply chain is defined as “the integration of key business processes from end users
through original suppliers that provides products, services, and information that adds
value for customers and other stakeholders” (Lambert et al., 1998). Here, a supply chain
includes all the value chain processes from suppliers to end customers. It is vital that
each supply chain participant adds value from the perspective of the end customer in
the supply chain. This assumes integration of both supply and demand side activities
in the value chain. Increasingly, the integration of both supply and demand requires an
understanding of the inherent differences. In this sense, Frohlich and Westbrook (2002)
divided such integration into supply chain and demand integration. Trevile et al. (2004)
defined demand integrations as “integration that supports market mediation, with the
primary role of demand integration being the transfer of demand information to
facilitate greater responsiveness to changing customer needs.” They argued that
increased access to demand information throughout the supply chain permits rapid
and efficient delivery, coordinated planning, and improved logistics communication.
Heikkilä (2002) pointed out the need to shift the emphasis from the supply side to the
demand side of supply chain management. These studies implicate customer
orientation as a foundational element in the entire supply chain.
Conduit and Mavondo (2001) supported the importance of customer orientation and
antecedents to customer orientation. Customer-orientation throughout the supply chain
requires improvement in employee training, management support, internal
communication, personnel management, and external communication involvement
(Conduit and Mavondo, 2001). Chae and Hill (2000) found that the associations between
cooperative organizational culture, planning formality and competitive/organizational
benefits are related in a global business environment. Russel and Hoag (2004) argued
the impact of organizational culture on the rate of IT systems adoption in supply
chains. Appiah-Adu and Singh (1998) showed a link between customer orientation and
performance, providing examples of small and medium-sized enterprises. Martin and
Grbac (2003) claimed that supply chain management is very critical to the
responsiveness to customer needs, and in supporting customer orientation in the
supply chain. Grunert et al. (2005) developed a conceptual model of market orientation
in value chains using four case studies, where their main emphasis was customer
orientation in value chains. According to Sawhney and Piper (2002), firms with a high
customer value focus achieve a higher level of business performance outcomes than
those that show weaker customer value emphasis. Hajjat (2002) studied the
JEIM construction of measurements and validation of customer orientation of organizations.
20,5 The above studies separately address the nature of customer orientation, cultural
factors, structural requirements, and their potential benefits. What is missing is the
integration of customer orientation in terms of defining variables, and their
interrelationships and outcome measures. This paper identifies and further
investigates the details of customer orientation in the context of supply chains.
580
Customer orientation by partial efforts vs throughout in supply chain
In this section we first explain the difference between customer orientation through
single firms and through supply chains. Figure 1 shows the supply chain, divided into
supply side and demand side integration, and their relationships through individual
firms and supply chains respectively.
Various studies have discussed customer orientation in a single firm context
(Deshpande et al., 1993; Heikkilä, 2002; Nahm et al., 2004). Part (a) of Figure 1 shows
how a dominant firm in the value chain impacts the scope and the nature of customer
orientation. The practices are highly control-driven. For example, the dominant firm
(e.g. OEM – original equipment manufacturer) directs cost cutting and significant
value added processes as an important requirement for all the suppliers, assuming
reasonable quality conformance. The relationship mostly affects immediate
relationships between the tier 1 supplier and tier 2 suppliers, tier 1 suppliers and
OEM, OEM and distributor. Customer orientation may not go beyond immediate
relationships. Supplier involvement in customer orientation is not extensive. On the
other hand, as part (b) of Figure 1 shows, customer orientation in supply chains focuses
on immediate relationships (e.g., tier 1 supplier and tier 2 supplier, tier 1 supplier and
OEM, OEM and distributor) while at the same time other supply chain entities are
aware of their impact on meeting the requirements of end customers. Suppliers in this
case are well connected with the manufacturer through easy, fast, and quality
information sharing, and develop effective supply chain practices with the support of
interactive system structures.
Table I shows the differences between customer orientation by organization-specific
(i.e. single and fragmented efforts) and supply chain-encompassing (i.e. coordinated
and joint efforts).
Each supply chain participant is well aware of the requirements of end customers
and makes specific contributions to achieve customer value. Firms that utilize
customer orientation in supply chains communicate their primary value components to
the supply chain participants and collaborate with other partners in the supply chain.
The range of final products is more extensive and comprehensive. Customer roles in
each supply chain are proactive, in that their specific requirements are
well-understood. An interactive infrastructure allows each supply chain entity to
have closer, faster, and more flexible customer responsiveness. It is through
implementing customer orientation in supply chains as a whole that provides highly
customer-valued products and services.

A research framework
In this section we present a research model and propositions. Figure 2 is our research
model, which shows four constructs (customer-orientation, interactive system
infrastructure, supply chain practices and supply chain performance outcomes).
 Customer
orientation

581

Figure 1.
Customer orientation
through individual firms
and customer orientation
through supply chains

Customer orientation
Customer orientation in supply chain is defined as the degree to which a supply chain
focuses on customers and recognize their desires, placing first priority on meeting their
needs with superior products or services through collaboration with other supply chain
partners. This definition is similar to those by Rindfleisch and Moorman (2003), Slater
JEIM (1995), and Deshpande et al. (1993) Rindfleisch and Moorman (2003) defined customer
20,5 orientation as the set of behaviors and beliefs that place a priority on customer
interests and continuously create superior customer value. Slater (1995) stated that
customer orientation is a culture that accentuates the creation of customer value, while
Deshpande et al. (1993) stressed the priority of customer interests, ahead of those of
other stakeholders. Customer orientation can also be considered as a set of behaviors
582 and beliefs (Rindfleisch and Moorman, 2003). Slater (1995) understands it as a culture,
and organizational culture is an extension of psychodynamic processes of organization
members. In our study, we see customer orientation as the combination of
organizational culture, manager and employee commitment to customers, and formal
and informal managerial desires to fulfill customer needs through the entire supply
chain.
Supply chain entities should be committed to customer orientation for satisfying
and exceeding multiple customer requirements. We identify three aspects of customer
orientation in supply chains (customer-closeness, customer-flexible, and
customer-accessible) as follows:
(1) Customer-closeness. This aspect of customer orientation is organizational and
individual commitment to stay in touch with customers and to continue
perceiving their changing needs over time (Bowen et al., 1989; Conduit and
Mavondo, 2001). Management support is a critical element in customer
orientation (Conduit and Mavondo, 2001). We define customer-closeness as the
extent to which a supply chain displays readiness to keep in contact, to
communicate with customers effectively, and to understand their needs and

Organization-specific Supply chain-encompassing

Extent and scope Focused and narrow Extensive and comprehensive

Customer role Passive Proactive
Table I. Customer responsiveness Distant, slow, and fragmented Close, fast, and flexible
Customer orientation by Infrastructure Partially integrated Highly integrated
partial efforts vs Performance measures Attention to trade-off based Optimization of the set of
throughout supply chains performance outcomes performance outcomes

Figure 2.
Research model
 requests throughout the entire supply chain. Even though customer orientation Customer
is not a new idea, it gets lost in the industrial paradigm that emphasizes orientation
stability and efficiency. A critical transition in customer focus in the
post-industrial era came with intensive global competition and individualized
customer requirements (Doll and Vonderembse, 1991). Bowen et al. (1989)
argued that high customer contact is a key strategic choice. Murakoshi’s (1994)
analysis shows that Japanese industry that moved from highly product-oriented 583
to a more customer-oriented and customer-driven stage has been the most
advanced in Japan’s markets. Various studies have also discussed customer
closeness in marketing and product development contexts (Nahm et al., 2004;
Samaranayake, 2005; Tu et al., 2004).
(2) Customer-flexible. “Flexible” is related to the range of performance requirements
in manufacturing, supply chain, and strategy areas (Aranda, 2003; Barad and
Even, 2003; Garavelli, 2003; Sommer, 2003; Zhang et al., 2003). Customers
rapidly change their tastes and preferences in dynamic social environments.
Customer-flexible firms are fully aware of the needs for building internal
design, manufacturing and service capabilities in view of constantly changing
customer expectations. Customer-flexible therefore refers to the extent of
awareness and the intent of firms that are willing to respond to changing
customer expectations (Kerwin, 2003; Sethi and Sethi, 1990; Gupta and Somers,
1996; Sanchez, 1995; Lau, 1996).
(3) Customer-accessible. Customer-accessible refers to the extent to which a supply
chain is ready to allow customers to access information that is critical in
fulfilling their multiple requirements. Location and distribution networks have
been regarded as strategic decisions in targeting customers. Customer
orientation is not just about the impeccable execution of internal operational
details or friendly customer service. Rather, in dynamic environments, firms
extend the concept of market and service scope by making information
available according to customer needs (Cho and Park, 2003). Although end
customers may not have direct access to third tier suppliers,
customer-accessible supply chains may have information infrastructures that
include even the third tier suppliers, as needed. Therefore, customer
accessibility requires an operational strategy for developing effective
operational and service delivery systems for customer contact (Boyer et al.,
2002) and for customer support (Mols, 1999). Waiting time for access to
information may be a source of irritation to customers and have a negative
impact on the evaluation of services (Hanson, 2000; Van Hoek et al., 1999). On
the contrary, fast and easy accessibility to information has a positive effect on
customer trust in accessing products and/or services (Bauer et al., 2002).

Interactive system infrastructure

Inter-organizational integration is essential for supply chain performance (Williamson
et al., 2004), and information technology (IT) and partnerships with suppliers are two
necessary requirements for supply chain performance (Fearne, 1998; Prasad and
Sounderpandian, 2003). We define interactive system infrastructure as the extent of the
physical and social setting that supports collaboration in supply chains (Fearne, 1998;
McAdam and McCormack, 2001; Neuman and Samuels, 1996).
JEIM .
IT infrastructure. IT infrastructure is defined as an enabling strategic vehicle for
20,5 inter-organizational communications and relationships that facilitates supply
chain management practices. IT provides the capability to execute transactions
at a distance in order to match requirements, negotiate, and design contracts
(Malone and Laubacher, 1998). Three functions of IT infrastructures are
communication linkages, resource planning, and relationship tools (Kumar,
584 2001). Communication linkages convey data or information and allows
connections and access between two or more parties; resource planning
integrates all resources and related applications for an entire enterprise; and
relationship tools facilitate the association and handle related processes among
the entities in a supply chain.
.
Partnership infrastructure. Partnership infrastructure is defined as an
associative relationship arrangement among two or more entities in a supply
chain for the purpose of enhancing complementary performance objectives.
Strategic partnerships allow an effective flow of materials and information.
Trust and commitment are essential in building long-term cooperative
relationships among the partners (Spekman et al., 1998). Effective partnerships
require trust, open communication, fairness, consideration of the self-interest of
partners, and a balance in the reward/risk equation (Ragatz et al., 1997; Sheridan,
1998).

Strong customer-oriented organizations demonstrate customer-close,

customer-flexible, and customer-accessible business approaches (Frohlich and
Westbrook, 2002; Heikkilä, 2002; Trevile et al., 2004). Such a customer orientation
requires its enabling IT infrastructure to be characterized by strong communication
linkages, resource planning, and relationship tools. Management of these organizations
invests in building the kind of IT and partnership infrastructure that is conducive for
customer orientation. Nielson (1998) identified the role of closeness in terms of trust,
commitment, and information sharing. A highly customer-orientated firm translates its
intention through actions that promote the desirable behavioral patterns (i.e. trust,
commitment, shared reward and risks) (Nahm et al., 2004). Supportive managerial
beliefs also help to build a cooperative IT for integrative tasks (Chen and Small, 1994;
Reda, 1999). In this sense, customer orientation in supply chains is positively related to
interactive system infrastructures.

Customer-oriented supply chain practices

Customer-oriented supply chain practices are defined as techniques, methodologies,
procedures, and processes that are adopted and used in the supply chain for fulfilling
or exceeding performance requirements of the end customer.(Childershouse et al., 2003;
Perry and Sohal, 2001; Wu et al., 2004).
.
Information sharing. Information sharing has three aspects; real-time
information sharing, information quality, and priority information sharing.
Information sharing is the key to a seamless supply chain (Spekman et al., 1994;
Towill, 1997). As the speed of technology increases, information has been shared
more and more on a real time basis (McAdam and McCormack, 2001). A high
degree of information quality assumes accuracy, timeliness, adequacy, and
credibility of the communicated information (Holmberg, 2000; Monczka et al.,
 1998). Determination of information priority is essential in reducing the delay of Customer
information delivery and the negative effect of information distortion (McAdam orientation
and McCormack, 2001).
.
Operational practices. Operational practices related to customer-oriented supply
chains include lean systems, postponement, and time-based management. Lean
systems focus on reducing waste in the form of unnecessary costs, time, and
processes throughout the entire supply chain (Handfield and Nichols, 1999; Rich 585
and Hines, 1997; Taylor, 1999). Postponement is defined as the practice of
moving forward as far as possible one or more operations or activities to a later
point in the supply chain (Van Hoek et al., 1999). Time-based management
increases flexibility in production and distribution to reduce delays (Tu et al.,
2004).
.
Customer management. Customer management refers to “demand management
practices through long-term customer relationship, satisfaction improvement,
and complaint management” (Tan et al., 1998). These three practices can sustain
and expand an existing customer base by offering value-added products and
services. Compared to supplier management, customer management is highly
demand-focused and it is an increasingly important component for enhancing
the effectiveness of supply chain practices (Tracey and Tan, 2001).

Nahm et al. (2004) found that customer orientation is an antecedent to five shared
managerial beliefs. Supportive managerial beliefs are found to be critical in successful
implementation of IT and cooperation on integrative tasks (Chen and Small, 1994;
Ramamurthy and King, 1992). If managers believe that supplier relationships are
critical to achieving strategic competitiveness, they will put effort into information
sharing and cross functional integration. Other employees are also willing to
participate in lead time reduction by using lean system practices (Monden, 1983;
Schonberger, 1986). Postponement allows an organization to be flexible in developing
different versions of the product as needed, and to meet changing customer needs (Van
Hoek et al., 1999). If workers have a willingness to meet and adapt to customer needs,
they will strive to implement customer-oriented practices. Firms with a high level of
customer orientation are willing to participate in reducing lead times through lean
system practices to accomplish multiple customer requirements (Monden, 1983;
Schonberger, 1986). As more employees desire to meet and respond to changing
customer needs and requirements, they will strive to implement customer practices.
Therefore, customer orientation is positively related with customer-oriented supply
chain practices.
IT infrastructure is considered a great facilitator for supply chain practices (Prasad
and Sounderpandian, 2003; Williamson et al., 2004). The rapid deployment of IT allows
firms to integrate suppliers and customers, to have better communication and
information sharing (Burgess, 1998), and to implement strategic supplier partnerships
and time-based strategies (Bowersox and Daugherty, 1995). Thus IT has become a
major tool for providing links among customers and suppliers (Power et al., 2001), and
information processes allow firms to communicate with other partners, with improved
timing and accuracy (Reda, 1999). The advent of the Internet broadens the extent of
supply chain practices by supporting low cost communication and accurate
information sharing in supply chains (Cross, 2000).
JEIM However, as suggested by Sheridan (1998), IT is only part of the solution for
20,5 successful implementation of supply chain practices. Real problems in supply chains,
in many cases, are not technology itself, but are people-related (Ragatz et al., 1997;
Sheridan, 1998; Wright, 2001). In this context, trust is an important factor for building
strategic partnerships (Sheridan, 1998) (Burgess, 1998). Commitment is also a
pre-requisite for good supply chain practices (Bowersox and Daugherty, 1995) and the
586 lack of shared rewards and risks makes the coordination of supply chain vulnerable
and ineffective (Ragatz et al., 1997). Therefore, interactive system infrastructures will
have a positive impact on customer-oriented supply chain practices

Customer-oriented supply chain performance outcomes

Customer-oriented supply chain performance outcomes refer to the extent of an
organization’s defense of its position or its competitive advantage through the
implementation of customer- oriented supply chain practices. Supply chain
performance outcomes have three dimensions: informational outcomes; operational
outcomes; and customer outcomes (Chan and Qu, 2003; Trevile et al., 2004; Narasimhan
and Kim, 2002; Otto and Kotzab, 2003).
(1) Informational outcomes. Informational outcomes are related to problem solving
through the use of information technology throughout the supply chain. A great
deal of uncertainty exists in how firms resolve problems in the areas of
integrating suppliers and customers, building communications, and sustaining
constructive partnership networks in real time (Bowersox and Daugherty, 1995;
Cross, 2000; Williamson et al., 2004). The measure of information outcomes is
given by the degree of real time problem solving, and the amount of innovative
problem solving and collaborative problem solving.
(2) Operational outcomes. Operational outcomes are related to competitive
advantage in terms of operational effectiveness, including cost, quality,
delivery, flexibility, and time (Rich and Hines, 1997). Cost and quality
advantage refers to the extent to which organizations can compete against
competitors, based on cost and quality superiority in creating value for
customers. Also, it is argued that time-based advantage is an important
competitive priority in supply chain (Kessler and Chakrabarti, 1996).
Time-based advantage refers to the extent to which organizations can
compete, based on time superiority in creating value for customers.
(3) Customer outcomes. Customer outcomes refer to the extent of customer
responsiveness, that results in sustaining a loyal customer base and/or
expanding a new customer base. Customer responsiveness is the speed of a
supply chain’s response to customer requests (Narasimhan and Kim, 2002). A
loyal customer base is a measure of customer outcomes over a long period of
time (Tan et al., 1998; Tracey and Tan, 2001). The extent of new customer
creation through new products and services may also be an important measure
of customer outcomes (Flint, 2004).

Effective supply chain practices are expected to result in improved supply chain
performance (Narasimhan and Kim, 2002). Integration of suppliers, process
improvements, and quality, may enhance problem solving in product development
and time-reduced requirement fulfillment (Nielson, 1998). Accurate and adequate
information sharing contribute to customer performance outcomes in terms of Customer
customer responsiveness and satisfaction (Spekman et al., 1994). The implementation orientation
of mass customization not only solves the problem of flexibility in the supply chain but
also strengthens global efficiency and customer responsiveness (Van Hoek et al., 1999).
The implementation of time-based management significantly improves time and
efficiency requirements. Therefore, higher levels of customer-oriented supply chain
practices will have a positive impact on customer-oriented supply chain performance 587
outcomes.
Table II summarizes the above variables, along with related details. Examples of
firms in the table demonstrate the nature of customer orientation in the extended
enterprise network. As shown, no company is doing well in all aspects of customer
orientation. Their networks as a whole are aware of changing customer expectations
while consistently fulfilling current customer requirements. Although these firms are
diverse in terms of product characteristics and cultural contexts (e.g. Toyota vs
Hewlett Packard, ITC vs Korean Shipbuilding manufacturers, Whirlpool vs
Starbucks), they perform substantially better than their competitors in terms of key
performance outcomes, and are the recognized leaders in their respective industries.
In view of changing value priorities of customer and competitor offerings, these
firms realize that customer orientation starts with shared mindsets in an extended
enterprise. Managers that work in customer-oriented enterprises such as Starbucks
may be more inclined to consider their end customers as part of their network linkage.
In this sense, business entities that are a part of such extended networks will closely
link their business practices to the success factors of their network. Customer-oriented
enterprises craft their value chain practices to be cross-functional, integrative and
strategically-oriented. Developing a strong customer orientation in supply chains
requires interactive system infrastructures and customer-oriented value chain
practices. Customer orientation throughout network also requires effective
integration of information flows to respond to value creation challenges. Managing
this shared network of information flows involves both technical (i.e. information
infrastrastructure) and social (i.e. relationship) components that affect the overall
effectiveness of operational delivery systems. The performance of this network
structure is measured in terms of information outcomes (innovative, timely, and
collaborative problem solving capabilities), operational outcomes (competitive
capabilities in terms of cost, time and quality), and customer outcomes (satisfaction,
retention and loyalty).

Discussion
This article has provided a customer orientation framework for supply chains, and
shows how customer orientation in this context can be accomplished. The theoretical
and practical contributions of this article are summarized below:
First, we highlighted the nature and scope for customer orientation from the value
chain perspective. Customer orientation in supply chains considers multiple customer
requirements (e.g. quality, delivery, and cost) throughout the corresponding value
chains. Building an interactive system infrastructure is conducive to customer
orientation. Customer orientation in the supply chain is facilitated by interactive
system infrastructures such as the IT and partnership infrastructures. An effective
enterprise network is characterized by interactive connectivity with suppliers. What
JEIM Constructs Items
20,5
Customer Customer-closeness
orientation Customer-flexible
Customer-accessible
Interactive IT infrastructure
588 system Communication linkage
infrastructure Resource planning
Relationship tool
Partnership infrastructure
Trust
Commitment
Shared reward and risks
Supply chain Information systems practices ITC developed e-Choupal and provides quality,
practices Real time information
sharing
Information quality
Priority information sharing enhanced their information system practices
Operational practices
Lean system
Postponement
Time-based management
Customer practices
Long-term relationship
building
Satisfaction improvement
Complaint management
Supply chain Informational outcomes
performance Real time problem solving
outcomes Innovative problem solving replacing an ineffective agent-based system.
Collaborative problem
solving
Operational outcomes
Cost advantages
Quality advantages
Time advantages
Customer outcomes
Customer responsiveness
Sustaining loyal customer
base
Table II. Expanding new customer
Summary of variables, base
items and examples
Examples
Toyota’s strategic initiatives indicate their
commitment for better customer contact for product
designs, accessibility for component parts and
flexibility in their service offerings
Wal-Mart utilizes its global information infrastructure
to standardize and rationalize all manufacturing and
logistics processes, and monitor customer seasonal
ordering/purchasing trends/patterns
Honda understands how their suppliers work and
conducts joint improvement activities with suppliers
through intensive information sharing and developing
supplier capability based on mutual loyalty
real-time information to farmers in India using easy
and adaptive information systems, replacing an
ineffective agent-based system UPS and DHL have
through real time delivery status of customer
packages
Hewlett-Packard Co. delivers customized products
quickly and at low cost by postponing tasks of
differentiating a product for a specific customer until
the latest possible point in the supply network.
Boeing integrates a variety of extremely diverse and
scattered 20,000 suppliers to streamline their
operational network for cost effectiveness, reliable
delivery and assembly simplifications
Whirlpool understands customer needs: delivery with
integrity and keeping delivery dates, in-home
appliances, identified individual trade partner
priorities, and align the supply chain to meet them.
Starbucks developed CSR (Consumer Service
Representative) and directly linked CSR with supply
chain organizations, integrating customer service,
production, manufacturing, and distribution
operations
e-Choupal developed by ITC enables farmers to have
real-time access to markets, and resolved problems by
UPS and DHL share information with the suppliers
and solve problems in real time.
Hewlett-Packard reduced lead-time and cost through
postponement practices.
Wal-Mart sustains cost, quality and time advantages
over its competitors.
Korea Shipbuilding (Hyundai, Samsung) achieved
world prominence over years for cost, quality and
delivery advantages
Whirlpool carefully monitors its performance
outcomes in terms of customers’ changing
expectations that require stability in fluctuating
market demands, delivery flexibility, and improved
service level, with reduced cost.
Starbucks can provide support at individual store
levels to sustain customer loyalty
customers expect is that the firms within the supply chain with which they interact can Customer
meet value creation challenges. Neither functionally specific efforts nor orientation
cross-functional collaboration can achieve the desirable level of customer orientation.
The key success factors relate to a simultaneous integration of a broad domain of effort
(i.e. know-what of network goals) at the required breadth and depth (i.e. know-how of
network requirements). Since not all firms within a supply chain network possess the
required level of core capabilities, increasingly the headquarters of the extended 589
enterprise must strategically approach customer orientation. Firms can strategically
outsource this information network structure to achieve the required competitive
advantage rapidly, thus achieving the required supportive infrastructure for customer
orientation.
Second, an extended enterprise manages both the supply and demand chain. This
research framework is helpful in understanding inter-relationships among customer
orientation, interactive system infrastructure, supply chain practices, and supply chain
performance outcomes. We have related customer management literature to the supply
chain literature (Reiner, 2005; Zhu and Sarkis, 2004), and shown a practical roadmap of
how to implement customer orientation in a network context. Traditionally, the supply
side of value chain has received more attention than the demand side. Many firms
relate better with their suppliers because of their close business relationships.
However, customers must be served and not managed. Therefore, an extended
enterprise requires clearly defined customer-driven network attitudes (i.e.
customer-closeness, customer-flexible, and customer-accessible) and realistic
incentives for continuous engagement of end customers. This also requires active
feedforward and feedback links with customers, so that their voices are heard and their
interests are reflected in network operations. A discussion of how to implement
effective interaction between end customers and enterprise networks is the essence of
demand management, but is beyond the scope of this paper.

Conclusion
In conclusion, supply chain management is an important aspect of change
management. This requires continuous adaptation of network organization
mindsets. This is a more critical success factor than any other type of value chain
practice. Networks should not focus too narrowly on implementing practices, without
first building shared organizational and value chain mental models and attitudinal
practices. In brief, effective customer orientation requires investment in network
culture development and other intangible partnership relationships as much as in
tangible IT infrastructures.

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Further reading
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About the authors

Jung Sik Jeong is a PhD student in Manufacturing Management based at the Department of
Information Operations and Technology Management, College of Business, The University of
Toledo, Toledo, Ohio, USA.
Paul Hong is an Associate Professor of Operations Management based at the Department of
Information Operations and Technology Management, College of Business, The University of
Toledo, Toledo, Ohio, USA. He received his PhD in Manufacturing Management and
Engineering at the University of Toledo. Paul Hong is the corresponding author and can be
contacted at: Paul.Hong@Utoledo.edu

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