The differences cannot be ignored. Both parties need to prescribe to, and endorse, the long-term profit-maximising position. That is to say, they must agree the most efficient process to satisfy customer needs most profitably, but should not compromise future earnings, for instance, by upsetting a valued customer. There may be a justifiable requirement to offer customised products or services; or it may be totally uneconomic to a particular partner, channel or retailer/vendor to offer a customisation service to small customers. Often, inventory SKUs (Stock Keeping Units) or production downtime is necessary to manage a small run, which would make the latter unrealistic.
THE PROFIT MAXIMIZING POSITION
SCM is becoming very important in the drive to strip out cost and add value to the supply chain. The focus is now on the customer. The marketer's role in SCM is crucial, to ensure that all the players in the chain are aware of activity that will secure demand. Marketers need to be aware of all the implications of strategic action e.g. it is cost-effective to keep the range as narrow as possible; creating low volume niche products drives up costs and limits flexibility. Collaboration involves external as well as internal partnerships. The technology is the window, but human relationships are the key to success. Intranets can typically strip out 10%-15% of the channel cost by reducing human input, and removing duplicity in the process.