Customer influence on supply chain management strategies

Abstract

Purpose Customers influence companies’ operational strategies and supply chain (SC) processes. In this vein, signals coming from the market must be translated into proper strategies in terms of production and supply. The purpose of this paper is to provide an understanding on how to transform customers’ expectations into SC decisions. The yacht industry, encompassing both technical and emotional peculiarities, becomes this study’s driven focus to interrogate the interrelationship between supply and demand. Design/methodology/approach The study explores the luxury yacht industry through exploratory case studies conducted with eight companies operating in Italy. Findings It was found that a wide range of factors influenced customers. That is to say, brand reputation, other brands’ involvement in the final product and emotional appeal were the most distinguishing characteristics identifying emotion-oriented customers. In this sense, companies serving such customers adjusted their SC strategies to channel a direct emotional impact. It was noticed that personalization was pivotal and companies were increasingly required to customize and create unique products to attract and further satisfy the customers. Thus, multiple sourcing strategies were often employed with an increasing number of suppliers to ensure that increasing material supply need would be met. As for performance-oriented companies, cost, quality and innovation capabilities emerged as key signals to be embedded in operations management. Companies serving performance-oriented customers were characterized by low product value and medium level of customization, and kept their core activities, including design and architecture, vertically integrated. In order to generate cost advantages without compromising product quality, single sourcing strategy was largely implemented. What the findings suggested is that the customization level and the product value were positively correlated. To illustrate, companies having more exclusive products were found allowing their customization and customer involvement in higher degrees. Originality/value Due to a relatively unexplored nature of the phenomenon, this study opted for a method by which individual and collective reconstructions were explored in a not well-investigated area, that is, the luxury yacht industry.