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Achieving consumer focus in supply


Article in International Journal of Physical Distribution & Logistics Management April 2007
DOI: 10.1108/09600030710742434 Source: OAI


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Keivan Zokaei Peter Hines

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International Journal of Physical Distribution & Logistics Management
Achieving consumer focus in supply chains
Keivan Zokaei Peter Hines
Article information:
To cite this document:
Keivan Zokaei Peter Hines, (2007),"Achieving consumer focus in supply chains", International Journal of
Physical Distribution & Logistics Management, Vol. 37 Iss 3 pp. 223 - 247
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Douglas M. Lambert, Martha C. Cooper, Janus D. Pagh, (1998),"Supply Chain Management:
Implementation Issues and Research Opportunities", The International Journal of Logistics Management,
Vol. 9 Iss 2 pp. 1-20 http://dx.doi.org/10.1108/09574099810805807
Peter Hines, Nick Rich, (1997),"The seven value stream mapping tools", International Journal of Operations
& Production Management, Vol. 17 Iss 1 pp. 46-64 http://dx.doi.org/10.1108/01443579710157989
Peter Hines, Matthias Holweg, Nick Rich, (2004),"Learning to evolve: A review of contemporary lean
thinking", International Journal of Operations & Production Management, Vol. 24 Iss 10 pp. 994-1011

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Achieving consumer focus consumer focus
in supply chains in supply chains
Keivan Zokaei and Peter Hines
Cardiff Business School, Lean Enterprise Research Centre, Cardiff, UK 223
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Purpose Supply chain performance is two-dimensional: efficiency and effectiveness. The purpose
of this paper is to further define and explore the demarcation between supply chain effectiveness and
supply chain efficiency.
Design/methodology/approach A case-study research method is adopted in this paper. This
contribution discusses an approach for the improvement of supply chain effectiveness, i.e. Supply
Chain Kano-QFD.
Findings A case-study of the fast moving consumer goods sector is provided which shows how the
proposed Supply Chain Kano-QFD technique can be deployed to engage the capabilities and
enthusiasm of the firms along the chain to enhance the value of the final consumable.
Practical implications Supply Chain Kano-QFD is an integrative method which helps drive
effectiveness by focusing on how the various supply chain members might jointly develop innovative
solutions to create unique, individualized sources of consumer value.
Originality/value A review of the existing supply chain literature shows that there is generally a
strong focus on efficiency improvements while little attention is given to enhancing the effectiveness of
the supply chain offer. The supply chain management literature, however, should evolve to address
relevant methods for achieving consumer focus in the context of the supply chain, i.e. supply chain
Keywords Supply chain management, Quality function deployment, Consumers, Customer orientation,
Fast moving consumer goods
Paper type Research paper

Today, for many leading authorities, supply chain management (SCM) is emerging into
consumer driven value chain management which, in addition to pursuing efficiency
improvements, recognizes the importance of consumer needs and attempts to capture
the subtleties of consumer value as a source of differentiation and supply chain
competitiveness (Godsell and Harrison, 2002; Christopher, 2005; Womack and Jones,
2005). In this situation, not only the product, but also the entire chain of business
activities from raw material through to the final point of consumption should be
effectively managed continuously to deliver the end-consumers value requirements.
Therefore, it will be a distinct advantage if one supply chain succeeds in effectively
capturing the genuine consumer attributes, systematically analyzing the value
proposition at each step, identifying the misalignments with the consumer value and
duly transforming the products and processes (such as the product features and supply
chain activities/relationships) to deliver those requirements. International Journal of Physical
Distribution & Logistics Management
Vol. 37 No. 3, 2007
The authors would like to acknowledge and thank Ms Kate Bailey for her contributions towards pp. 223-247
q Emerald Group Publishing Limited
this work. The authors also wish to acknowledge the anonymous reviewers of this paper for their 0960-0035
constructive comments. DOI 10.1108/09600030710742434
IJPDLM The literature review below shows that there is an over-emphasis with supply chain
efficiency improvements (e.g. time compression, cost cutting and quality improvement)
37,3 and an underplaying of the innovative supply chain factors which enhance the
consumer value. Despite much theoretical discussion around improvement of supply
chain competitiveness through delivering enhanced consumer value, there is little
empirical research on how, in the context of the supply chain, value proposition can be
224 enhanced and aligned. As a result, certainly outside of the marketing literature, there is
a dearth of tools and techniques that academics and practitioners can use to create ever
more effective value chains. However, nearly, a decade ago, in an article in this journal,
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Hines et al. (1998, p. 18) contended that:

. . . in order to achieve the delivery of excellent products and services to end-consumers it is
necessary to harness the expertise, enthusiasm and dynamism of all the firms that contribute
to the final consumable. In order to do this, it is necessary to view each of the value-adding
processes in each of the companies responsible as a part of a value stream dedicated to the
final consumers requirements.
Hines et al. (1998, p. 18) proposed a methodology for helping to create effective value
streams labelled as the value stream analysis tool or VALSAT. VALSAT is
essentially the refinement and re-application of the quality function deployment (QFD)
(Akao, 1990) method to the supply chain. Despite efforts to verify the technique
through application to one company, the VALSAT method remains largely theoretical
(Banks, 2002).
This paper further defines the problem of misalignment to the consumer value and
introduces a practical solution for re-aligning the supply chain activities and
relationships with the requirements of the end-user. Whereas VALSAT is akin to a
policy deployment tool (Akao, 1991), the method introduced in this paper develops this
concept along with thinking derived from the supply chain mapping and analysis
literature (Hines and Rich, 1997; Zokaei and Simons, 2006a). Thus, a new approach is
presented that addresses the lack of consumer focus at the supply chain level in the fast
moving consumer goods (FMCG) (and indeed other) sector(s). The paper develops two
Japanese quality/engineering tools, the Kano model of consumer value (Kano et al.,
1984; Center of Quality Management Journal, 1993) and QFD (Akao, 1990), from the
new product development (NPD) field of study and develops an integrated technique
for improving consumer satisfaction in the SCM arena. The proposed technique is
termed Supply Chain Kano-QFD. This technique is about capturing and
understanding the consumer attributes, characterizing consumer value under Kano
categories, and linking the consumer and supply chain attributes by means of a QFD
type tool.

Background literature review

Evolution of supply chain management in the management theory
SCM is a fairly new concept which started to make a significant appearance in the
management literature in the 1980s (Oliver and Webber, 1982; Houlihan, 1985; Stevens,
1989) and has, since, been popularized by several authors as an independent field of
study (Cooper and Ellram, 1993; Cooper et al., 1997; Christopher, 2005; Skjoett-Larsen,
1999; Mentzer et al., 2001; Gibson, et al., 2005). However, much of the underlying
thinking dates back several decades. In fact, the roots of SCM can be traced to
systems dynamics and analysis (Forrester, 1959), integrated logistics management
(Bowersox et al., 1959) and the idea of forming cooperative relationships with suppliers Achieving
(Farmer and MacMillan, 1976). Along with the growing attention to SCM in the consumer focus
management literature, over the past two decades, there has been an increasing
divergence in the way supply chain and SCM are understood and defined by the in supply chains
management theorists. Table I provides an overview of some of the most frequently
cited perspectives on SCM and supply chain, covering the related constructs such
as value stream and value chain. 225
As illustrated above, there is no one single definition of supply chain or SCM. One
reason for this is that the supply chain has been viewed and studied from different
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theoretical perspectives (Skjoett-Larsen, 1999). Moreover, different researchers have

used different units of analysis in their approach to SCM. These units of analysis
include relationships covering the issues of trust, power and collaboration (Hines and
Samuel, 2006), resources including manufactured means of production and human
resources (Bowersox and Closs, 1996; Hakansson and Snehota, 1995) and flow of
information, material and economic-value (Forrester, 1959; Hines and Rich, 1997;
Cavinato, 1991). Finally, the concept of SCM has re-emerged in many different
variations and under different names in a range of management streams such as,
relationship marketing (Berry, 1983; Gummesson, 1996), co-makership (Merli, 1991),
value chain competitiveness (Porter, 1985), industrial networks (Hakansson, 1987;
Hakansson and Snehota, 1995) and financial value chain analysis (Shank and
Govindarajan, 1993; Cavinato, 1991). It is notable that globalization of trade,
sophistication of technology and markets (La Londe and Masters, 1994), increased
competition, and the rise and dominance of the Japanese production philosophies
(Womack and Jones, 1996; Hines, 1994; Lamming, 1993) have immensely contributed to
the evolution of SCM and its core concepts.
Despite the diversity in the way SCM is defined in the literature, central to all
these definitions is customer satisfaction as a shared objective of the whole supply
chain. Yet, the literature review shows that the existing supply chain improvement
literature largely remains focused on efficiency improvements as their prime
objective, e.g. time-based competition (Stalk and Hout, 1990; Womack and Jones,
1996; La Londe and Masters, 1994; Christopher, 2005), cash-to-cash time (Bowersox
and Closs, 1996), quality-based competition (Womak et al., 1990) and cost-based
competition (Shank and Govindarajan, 1993; Cavinato, 1991). Few recent
publications, however, emphasize the importance of supply chain effectiveness
and enhanced consumer satisfaction in the context of the supply chain (Zokaei and
Simons, 2006a; Hines et al., 1998). Mentzer et al. (2001) argue that SCM, as an
integrative paradigm, is about directing all firms along the chain to focus on
developing innovative solutions to create individualized sources of consumer value.
In this context, understanding consumers attributes and jointly striving on
augmentation of consumer satisfaction are imperative to successful SCM.
It is not the aim of this paper to ascertain the appropriateness of the aforementioned
conceptualizations of the supply chain or SCM (Table I). In fact, the above
contributions are all apt in the capacity of the industry or the historical background
from which they have emerged. What matters is that most of these contributions
regard the supply chain, solely, as a source of efficiency improvement, implicitly or
explicitly (e.g. reducing inventories, improving the flow of information and material, or
collaborating towards lower costs). Those few definitions which associate the supply
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Table I.

frequently cited
Some of the most

conceptions of supply
Proposed delineation for supply chain, SCM or
Contributor(s) related constructs Key features of the definition

Forrester (1959) Company (and supply chain) will come to be Forrester shows the importance of the
recognized not as a collection of separate functions interrelationships between company functions and
but as a system in which the flows of information, between the company and its network. Forrester
materials, manpower, capital equipment, and emphasizes that the dynamics of relationships
money setup forces that determine the basic between the flows of information and materials
tendencies towards growth, fluctuation, and should be studied and standard management
decline methods should be extracted from such studies
Houlihan (1985, p. 26) The supply chain is viewed (and managed) as a Argues that, traditional logistics and materials
single process . . . supply is a shared objective of management approaches, which sought trade-offs
every function in the chain . . . SCM calls for a among various conflicting key functional objectives
different perspective on inventories which are used of purchasing, production, distribution and sales,
as balancing mechanism of last, not first, resort. . . does not work very well any longer. It is needed to
A new approach to systems is required adopt a new approach: SCM
integration rather than interfacing
Jones and Riley (1985, p. 19) SCM deals with the planning and control of total Key to managing a supply chain efficiently is to
flow of materials from suppliers through end-users plan and control the inventories and activities as an
integrated single entity
Porter (1985, p. 38) Proposes the value chain model and subsequently The value system model is probably, today,
the value system model as means of analysis of recognized as value stream map. The value system
intra/inter firm competitiveness. The value chain model disaggregates the supply chain into
and value system Models are process-based views strategically relevant processes in order to
of the firm and its supply chain: every firm/supply understand the sources of competitive advantage. It
chain is a collection of value activities (processes) emphasizes the importance of the linkages of
performed to create a product valuable to buyers processes along the chain
Stevens (1989) The objective of managing the supply chain is to Stevens (1989) proposes a structured framework for
synchronize the requirements of customer with the developing an integrated supply chain strategy
flow of materials from suppliers in order to effect a which is even applicable to todays supply chains.
balance between what are often seen as conflicting This framework has three stages, identifying the
goals off high customer service, low inventory customer needs, diagnosing supply chain
management, and low unit costs opportunities and developing an action plan for
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Proposed delineation for supply chain, SCM or

Contributor(s) related constructs Key features of the definition

Christopher (1992, p. 5) SCM is the management of upstream and Argues that the industry is entering an era of
downstream relationships with suppliers and supply chain competition as opposed to single firm
customers to deliver superior customer value at less competition, i.e. individual firms cannot compete in
cost to the supply chain as a whole isolation anymore
Towill et al. (1992) A supply chain is a system, the constituent parts Focus on supply chain efficiency and information
of which include material suppliers, production flows. Proposes that the efficiency of the system
facilities, distribution services and customers can be improved through free exchange of
linked together via the feed-forward flow of information concerning true market demand
materials and the feedback flow of information
Cooper and Ellram (1993, p. 13) A supply chain is an integrated business process, Stipulates a set of characteristics for SCM, i.e.
from the end-user through different tiers of coordination across the chain, long-term
suppliers to the raw material producer. SCM is An orientation, joint reduction of channel inventories,
integrative philosophy to manage the total flow of apresence of a channel leader, long-term sharing of
distribution from the supplier to the ultimate userthe risks and rewards, compatibility of the
corporate philosophies, and channel-wide approach
to cost efficiencies
Hewitt (1994, p. 4) Hewitt contends that SCM approach is sharply Successful SCM depends on the recognition and
distinct from the conventional logistics management of three critical dimensions in the
management. Hewitt regards this level of logistical chain:
evolution as integrated intra-company and (1) physical flow (work activity);
inter-company supply chain management (2) information flow; and
(3) decision/authority flow
La Londe and Masters (1994, pp. 37-8) SCM involves expanding the integrated logistics The authors refer to the strategy of applying
concept beyond the corporate borders of the firm to integrated logistics to all elements of a supply chain
include the logistics operations of the vendors and as supply chain management
Cooper et al. (1997, p. 2) SCM is the integration of business processes from The authors argue that a new understanding of
end-user through original suppliers that provides SCM is emerging re-conceptualizing SCM as a
products, services and information that add value notion broader than logistics embracing all
for customers (p. 2) business processes cutting across all organizations
within the supply chain

in supply chains
consumer focus


Table I.
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Table I.

Proposed delineation for supply chain, SCM or

Contributor(s) related constructs Key features of the definition

Council of Logistics Management (CLM) SCM is the systemic, strategic coordination of the CLM distinguishes SCM from logistics
(1998) traditional business functions and the tactics across management and acknowledges that logistics is
these business functions within a particular one of the aspects of SCM
company and across businesses within the supply
chain for the purposes of improving the long-term
performance of the individual companies and the
supply chain
Mentzer et al. (2001, p. 15) SCM is concerned with improving both efficiency Mentzer et al. (2001) distinguish between SCM
(i.e. cost reduction) and effectiveness (i.e. customer philosophy and implementation. The view that
service) in a strategic context (i.e. creating customer companies across the chain constitute a potentially
value and satisfaction through integrated SCM) to coordinated entity is branded as supply chain
obtain competitive advantage that ultimately orientation. Subsequently, SCM is defined as the
brings profitability implementation of this understanding
Gibson, et al. (2005, p. 22) In essence Supply Chain Management integrates This contribution reports on the results of a Council
supply and demand management within and across of SCM Professionals survey of its members
companies definition of SCM
Source: Authors
chain with enhancement of the consumer value (Mentzer et al., 2001; Porter, 1985; Achieving
Hewitt, 1994; Christopher, 2005), however, do not show how this can be delivered consumer focus
through better SCM.
This paper looks at the evolution of SCM literature and highlights a gap for in supply chains
enhancement of the consumer value in the context of the supply chain. The following
identifies an emerging trend in SCM; an increasing emphasis on the delivery of
superior consumer value and leveraging the supply chain as a source of differentiation. 229
Yet, there is a dearth of literature explaining how consumer value can be enhanced in
the context of the supply chain.
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From supply chain to demand driven value chain

One of the key areas that has attracted increasing levels of attention in the SCM
literature is an increasing emphasis placed on the need for providing superior value to
the end-user (Mentzer et al., 2001; Hewitt, 1994; Christopher, 2005). SCM is changing
focus from supply issues to demand driven value. This is to some degree influenced by
the work of Michael Porter of Harvard Business School. Porter (1985) showed that a
firm and its supply chain should be disaggregated into groups of value-generating
activities (processes) which he referred to as the value chain/system (Table I). For a
firm (or a supply chain) to gain competitive advantage over its rivals it must perform
those activities more efficiently or perform activities in a unique way that creates
differentiation. So in Porters (1985) model a firms value chain and value system
become sources of augmenting consumer value. The value system model is probably
today best recognized as value stream map.
Another key factor influencing this paradigm shift in SCM is the rise of the Japanese
production philosophies and lean thinking (Womack and Jones, 1996). The concept of
value chain/system is later adapted as a key element of lean thinking (Womack and
Jones, 1996). However, Porters value chain model is criticized by the lean authors for
embracing an inherently economic meaning of value and a push-driven approach in the
supply chain (Hines, 1993, p. 14):
As neither Porter nor the firms being discussed concede that consumer satisfaction and not
company profit should be their primary objective, the (value chain/system) models focus is
on each firms margin and not on consumers satisfaction. Secondly, although Porter concedes
that integration is important, the Value Chain/System modelling shows a rather divided
network both in-company and between the different organisations in the total supply system.
The significance of Porters value chain model is that it addresses improvement of both
efficiency (i.e. cost reduction) and effectiveness (i.e. enhancing value through
differentiation) of a value system.
Despite much theoretical discussion around the critical role of the supply chain in
developing innovative solutions for enhancement of the consumer value (Mentzer et al.,
2001; Hewitt, 1994; Christopher, 2005), there is a lack of empirical research explaining
how this can be realized in practice (Hines et al., 1998; Zokaei and Simons, 2006a).
Consumer value in the context of the supply chain should not be limited to logistical
and quality issues (i.e. zero defect product, right time, right place and right cost), or
activities that could be considered to be within the order fulfillment process.
Currently, the sources of innovation in the supply chain are largely limited to the
NPD departments along the chain. It is ideal to enable all processes along the extended
IJPDLM value stream (Womack and Jones, 1996) to play a role in creating unique,
37,3 individualized sources of consumer value.

Supply chain effectiveness vs supply chain efficiency

It is our belief that supply chain performance is two-dimensional, consisting of
effectiveness and efficiency (Figure 1). Simply put, efficiency is doing things right and
230 effectiveness is doing the right things. Supply chain effectiveness is measured in terms
of consumer satisfaction (Zokaei and Simons, 2006a). Supply chain efficiency, however,
relates to the performance of the individual processes; it is the reciprocal of the
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resources absorbed by the supply chain (Hewitt, 1994). As shown in Figure 1,

effectiveness can be improved through enhancement of the value proposition; for
instance new features could be added to a product to fulfill an unmet consumer need or
a supply chain setup could be altered to deliver the exact requirements of the
final-consumer. On the other hand, efficiency is improved through waste elimination,
i.e. reducing the input levels while increasing the output levels. It is argued that the
efficiency of the supply chain is contingent upon alignment to the overall effectiveness
of the value proposition. This paper focuses on the effectiveness improvements in the
supply chain and introduces a new technique for enhancing the consumer value at the
supply chain level.
As suggested by the literature review, the focus of many supply chain improvement
efforts has, so far, solely been on efficiency gains, i.e. lowering the supply chain costs,
better use of capacity, on-time/in-full deliveries and reducing inventories. It is obvious
that such improvements will have often positive repercussion in terms of
consumer satisfaction and supply effectiveness. For example, JIT applications can
simultaneously reduce inventory costs and improve deliveries. Although there is an
ever increasing need for more efficient supply chains, it is not sufficient to solely focus
on waste elimination. Successful value chains such as Tesco and Toyota have devised
S.C. Effectiveness (ValueEnhancement
/ Measure: Consumer Satisfaction)

Equilibrium line

Figure 1. Under-performing
Two-dimensional supply System
chain performance
model supply chain S.C. Efficiency
effectiveness vs supply (Waste Reduction / Measure: Process Performance)
chain efficiency
Source: Hines et al. (2004)
methods to deliver superior value to their end-buyers. In fact, some have argued that Achieving
the primary aim of Toyota Production System has been to improve consumer consumer focus
satisfaction and service levels rather than cutting costs (Rich, 1999). Similarly, Tescos
core purpose is to create value for customers to earn their life-time loyalty; for Tesco in supply chains
(2006) profit is only a lag indicator of success. It is the intention of this paper to broaden
the scope of consumer value in the context of supply chain from logistical criteria (e.g.
on-time/in-full deliveries) to that of other processes. To illustrate this we will focus on 231
few marketing and NPD techniques, by way of example. The basic instances of supply
chain ineffectiveness are the activities which are unnecessary from the consumers
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point of view or duplicated. More subtle effectiveness improvements relate to

situations where the value chain exceeds the expectations of the end-user. The
following case-study demonstrates a tool for improvement of supply chain
effectiveness deployed in a commodity sector.

Background research: evidence of misalignment of supply chain activities

with consumer value in the FMCG sector
There is a lack of focus on the requirements of the end-consumer at the supply chain
level in the FMCG sector. This problem is cited by Zokaei and Simons (2006a) as a
lack of supply chain effectiveness. Zokaei and Simons (2006a) provide evidence from
five supply chains in the UK Red meat industry showing disconnections between the
supply chain activities and/or product specifications with the actual consumer
requirements. Table II provides further evidence from the red meat, cereals and
dairy sectors in the UK. The evidence shows that although the consumer
requirements are often captured through sophisticated methodologies and are
reflected in the design of new products, the consumer value is not communicated or
acted upon along the whole supply chain. Observations show that suppliers at the
various tiers of the supply chain generally took great care to produce to the
specifications required by their direct customers but these specifications do not
reflect the consumer needs in many cases. Therefore, sources of innovation (and
value enhancement) in the supply chain are rarely in the order fulfillment process
and as other processes are often poorly aligned innovation tends to result from
optimization of individual firms (such as the retailer) rather than using the skills,
competences and potential of the complete supply chain. Consequently, the rest of
the supply chain is not often, and even then frequently only by chance, active in
delivering or enhancing consumer satisfaction.

A theory framework was discussed in the literature review suggesting that supply
chain improvement is two-dimensional: effectiveness and efficiency. The literature
review showed that the existing supply chain literatures are primarily focused on
efficiency improvements. The lack of attention to supply chain effectiveness is clearly
shown by the research in the UK FMCG sector (Table II). The literature review and the
background research layout the need for a rigorous effectiveness improvement
technique to realign the supply chain with the consumer value. That is, leveraging
innovation and enthusiasm along the whole chain to deliver difficult to imitate
consumer value and to exceed the explicit needs of the end-users.
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Table II.

UK food industry
consumer needs in the
chain activities and the
Misalignment of supply
Chain Concern Cause Counter measure

1. Red meat Although focus groups continuously revised Lack of communication and Boneless loin was listed as an option
characteristics of the final products and satisfaction of transparency in the supply chain. for the end-consumers. The canteens
the end consumers, the products specifications (spec Confusion around product are expected to gradually move
communicated with the suppliers) were not reviewed specification as it pertains to away from the wasteful bone-in
since established in 1962. For example, the Bone-in Loin consumer satisfaction product allowing the de-listing
product mapped during the study, needed to be trimmed
at the canteen. Not only the bone added no value to the
end-consumer, but also created unnecessary economic
and environmental waste, too. Moreover, there was a
small value to the bone at the processor
Pork chops were reassembled into the shape of a loin at Lack of communication and No reforming of the loin at the
the processor. Historically, there were reasons for transparency in the supply chain supplier
reforming, including preserving meat for longer periods
of storage. This was no more necessary from the
consumer point of view. There was a 0.5 percent saving
on consumer price by eliminating the reassembly
2. Dairy The final product was fresh milk from a local farmer to a Lack of communication and Kano model and supply chain QFD
local outlet. Although local sourcing was potentially a transparency in the supply chain. techniques were applied. A supply
commercial advantage for the chain, the product did not The consumer valued local products chain continuous improvement team
bear a local brand and this potential was not and the retailer was aware of the was established to market and
communicated to the consumers importance of a regional brand emphasize the local supply base
image. On the other hand, the
processor/bottler was aware of the
local production base. However,
neither sides of the chain were aware
of the other side of the equation
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Chain Concern Cause Counter measure

3. Cereals The farmers choice of wheat (variety) and husbandry Lack of communication and Improve communication. Improve
largely influence the final products quality (e.g. bread). transparency in the supply chain farmers awareness of the market
The farmer, however, does not have a clear trends and the immediate consumer
understanding of the requirements of the end-users or needs
shoppers. The specifications used by the farmer are
driven by wheat merchants and ultimately by the
millers; but hardly relate to the end-users needs or even
bakers requirements. Grain merchants, millers and
bakers have no means of communicating the right
variety of wheat for future drill
4. Fresh produce In this fruits supply chain, the consumers were not the Confusion in identifying the Further investigation to be carried
arbiter of value. Value was determined and consumer and the consumer value. out by the public organization
communicated to the supply chain by a public The two end-customers of this
organization that sponsors delivery of fruits; consumer supply chain are the general public
value is seen as long-term public health through improved (improving the long-term public
dietary. The public organization has NOT gathered health) and the final consumers in
focus group information to determine what the actual the catering locations. Needs of both
consumers like in their daily portion of fruit. On the customers should be taken into
surface this may sound OK. However, since only 74 account
percent of the fruits delivered were consumed (while the
supply chain aims to deliver 99.9 percent on-time in-full
into the public organization canteens spread across
England) the preference of the consumers is very
relevant to the overall success of the supply chain as
well as the future public health
5. Cereals The grain breeder has to wait up to five years to get Lack of communication of the Underway
national recommendation accreditation status from the customer and consumer needs along
authorities. Farmers treat the national recommended list the chain
as a bible for choosing varieties. However, the same list
is only an aide memoire for the millers buying different
Source: Authors

in supply chains
consumer focus


Table II.
IJPDLM The choice of research methodology is dependent upon the set of research questions
37,3 under consideration and the state of knowledge development (Pettigrew, 1990).
Following Ahlstrom and Karlsson (2000) in deciding the most appropriate approach,
consideration was made of:
The focus, which was the process of improving a given supply chain based on
creating value effectively for the end consumer.
234 . The fact that the study concerned change and adoption of new understanding of
consumer needs, it was best to study this as it happened in their natural field
settings (Van de Ven and Poole, 1995).
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As the approach is new it was felt best to gain a deep understanding of what was
happening by using it; it was necessary to take a significant amount of time in field
research. As such it was only possible to study a single supply chain case where it was
felt that the change process would be likely to be transparently observable (Eisenhardt,
1989). This choice, however, does limit the ability to generalize from this research.
In order to gain an appropriate level of research access, the choice was made of the
clinical methodology where researchers take an active role in and study the change
(Stymne, 1970).
A case study research methodology is adopted in this paper focusing on the UK
dairy industry. This approach is useful to research phenomena in their real-life context
and to answer why and how questions (Yin, 2003). The following case-study
demonstrates how the supply chain improvement team came-up with a solution for
enhancing consumer satisfaction with no real cost or alterations to the actual product.
The case-study explains how and why deployment of the Kano-QFD technique
enhances supply chain effectiveness.

Results and discussions

Fresh milk is considered to be a basic commodity and, as many other FMCG
commodity products, there is an intense price competition in this sector in the UK. The
average milk farm-gate prices have decreased from 25 pence per liter (ppl) in 1997 to
about 18.5 ppl in 2005 (MDC, 2006).
However, in recent years, supermarkets and brand owners have formulated ways to
differentiate in the fresh milk category (e.g. organic and local brands). Differentiation
and de-commoditization are of massive importance to the UK FMCG sector in general
and the Dairy sector in particular. With so many dairy farmers struggling to cover
their production costs at the basic farm gate prices, the need for higher value products
is urgent. This case-study reports on the findings from a project involving a dairy
farmer, a milk collection and distribution company, a small- and medium-sized
enterprise milk processing and bottling firm, and a convenience retail store. The farmer
was a member of a dairy cooperative, one of the largest in the UK, which also owned
the milk distribution company and the dairy plant. However, the distribution company
and the dairy firm were, to a large extent, autonomously managed. The supermarket
was part of a franchise retail chain, one the largest convenience brands in the UK. The
project was facilitated by academic researchers. The facilitators deployed a standard
value chain improvement methodology (Taylor, 2005) consisting of the following four
(1) Team building and introduction. At this stage, the team was familiarized with Achieving
the mapping and analysis techniques deployed during the project and the basic consumer focus
principles of SCM. At least one representative from each participating firm
committed to walk the whole value chain from farm to supermarket. Also, a in supply chains
benefit sharing agreement was put in place to ensure that the potential benefits
are fairly shared. The early team building meetings are of immense importance
to the overall success of such supply chain improvement projects. 235
(2) Inter-firm and intra-firm data collection. During this stage, a current state map
of the physical and information flows along the whole supply chain was
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constructed with a specific focus on the time data (Rother and Shook, 1998). The
team walked the whole supply chain and collected the necessary information
over a period of three months. The key units of analysis in this exercise were
time, delivery and quality. The team looked at operations and logistics
efficiency measures such as demand amplification, on-time/in-full delivery
performance, lead-time and defective parts per million units of production.
Financial data were not collected to ensure maximum buy-in from all
participant companies.
(3) Evaluation of the current state against the consumer value and suggestions for
the future state of the supply chain. The team worked towards gaining a clear
understanding and categorization of the consumer needs. Mapping of the
end-to-end supply chain and collection of the current state data (Stage 2)
required four fieldwork days, while identification of the consumer value was
carried out in a one-day workshop. Having gained a clear understanding of the
consumer needs, the team compared and contrasted the current state activities
against consumer value to identify the potential improvement opportunities
towards a more effective future state for the whole value chain and the
individual firms. Gaining a thorough understanding of the consumer
value enabled the team members to connect their role in the chain with the
ultimate satisfaction of the consumers. Table III illustrates the key
improvement opportunities identified during the project. Clearly these issues
were partly identified as a result of the detailed efficiency mappings (Stage 2);
and partly were exposed after the team connected the supply chain activities
with the true requirements of the consumers (Stage 3).
(4) In the final stage of the project, an action plan was developed to take the supply
chain from the current state to the future state based on the immediacy of the
actions, the size of the prize, availability of change resources and the relevance
of the identified improvement opportunities to consumer satisfaction.

As explained in the above, the deployed value chain analysis and improvement
approach is two fold. On one hand, the team analyzed the efficiency of the supply
chain, using quality, time and delivery measures, to identify improvement
opportunities such as time reduction and transport improvements. On the other
hand, the team focused on understanding the consumer requirements to find-out how
better SCM can contribute to delivery of superior consumer value (i.e. more effective
supply chain). This paper focuses on the latter area of the identified opportunities to
consumer satisfaction and a technique for supply chain effectiveness improvement.
No. Improvement opportunity Description
1 Promotion of local fresh milk and local The consumers were concerned whether the
branding strategy products were locally supplied. However, the
supply chain was not communicating the fact
that the product is 100 percent locally sourced
236 and processed
2 Improve ordering system between the It was possible to reduce the lead-time between
convenient store and the dairy firm to raise the two companies by up to 24 hours. The
efficiency and to reduce the replenishment time analysis also showed that the dairy firm needed
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to improve the overall alignment of its order

taking system to the end customer demand
3 Introduce on-farm key performance indicators Price of the milk was based on its quality. The
farmers needed to introduce a standard set of
on-farm measures linked into the product
quality to track long-term individual farm
performances. This allowed the farmers
cooperative to provide pro-active feedback
about farm performances and to give support
through improvement forums
4 Improve production efficiency at the processing Issues of high wastage, low-equipment
plant utilization, lack of work standardization, lack of
visual management, change-over times and
Talk-time problems (Simons and Zokaei, 2005)
were observed at the dairy firm. The team also
recommended standardized design for labels to
reduce product complexity
Table III. 5 Implementing clearer transport efficiency Better quantification of delivery performance to
Supply chain measures for milk collection the processor and vehicle turn-around time at
improvement the farm to reduce transport losses at the
opportunities distribution company

This area of the potential improvement projects to consumer satisfaction is established

through the Supply Chain Kano-QFD technique.
Opportunities 2-5 were identified through mapping and analysis of the efficiency
information. The first opportunity, however, was identified and added to the list after
comparing the supply chain activities against the implicit and explicit needs of the
consumers. This paper does not intend to delve into how the efficiency opportunities
were identified. This aspect of the method is well researched and documented by
several authors (Hines and Rich, 1997; Zokaei and Simons, 2006b; Simons and Zokaei,
2005; Taylor, 2005). The paper focuses on the relevance of the identified opportunities
to consumer satisfaction and a technique for supply chain effectiveness improvement.
The relation of the potential improvement projects to consumer satisfaction is
established through the Supply Chain Kano-QFD technique.

Capturing and understanding the consumer value

Ideally everyone within a supply chain should have the same view of what consumers
needs are based on good market research and communication along the chain.
Nonetheless, as illustrated in Table II, often different parts of the chain have differing
opinions of what consumers value and this can lead to conflicting behavior and poor
overall consumer satisfaction. The understanding of consumer value should come from Achieving
the consumers themselves and the businesses cannot assume what the end-buyer consumer focus
needs (Hauser and Clausing, 1988). Many methods of capturing consumer needs have
been developed and used within marketing circles such as the use of focus groups in supply chains
(Floyd et al., 1993). However, it appears to the current authors that this is rarely used
effectively to focus complete supply chains. Sometimes direct consumer data might
seem irrelevant to a single company in the chain; or the volume of data and science 237
behind the analysis can be daunting for smaller firms with limited resources.
In this case, we consider here, all the participating businesses were small- to
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medium-size firms and had limited resources on their own to commit to carry-out
sophisticated market research. However, when the supply chain joined forces, and with
some help from the academic facilitators, it was possible to establish a supply chain
continuous improvement office and to look at the consumer needs. In the first step, the
team looked at market information provided by a third-party market research
company to gain the basic understanding of the shopping patterns and preferences of
the consumers. Then the team applied the Kano model of consumer value to capture
and categorize the consumers requirements (Kano et al., 1984). The Kano model
(Figure 2) shows the relationship between consumer satisfaction and the performance
of products or services. The Kano model provides an effective categorizing of the
consumer value into three distinct dimensions: attractive value elements,
one-dimensional attributes and must-be attributes (Matzler and Hinterhubur, 1998).
Figure 2 shows the teams view of which attributes contribute to consumer satisfaction.
Must-be attributes. These are the basic criteria for consumer satisfaction. These
value elements or hygiene factors are taken for granted by the consumer. When these

Satisfaction One-dimensional
Low Food Miles
Speed of in-store
Local Origin transaction

Ease of identification
Attractive value elements
(delighters) More than 3 days shelf life

Available in right size & fat content

-be attr
Must Right Price

Correctly chilled
Atleast 2-3 days
No Leakage
Figure 2.
Dissatisfaction Safety Right taste and odor The Kano model of
consumer value
Feature Absent Feature Fulfilled
IJPDLM needs are not fulfilled the consumers are extremely dissatisfied; however, excelling in
37,3 fulfillment of these elements can only result in a state of not dissatisfied and nothing
more. For example, in this case, the consumers took it for granted that the milk should
have the right color and taste, a minimum of 2-3 days shelf-life, no leakage and to be
safe to consume. Any defect in any of these aspects meant extremely dissatisfied
238 One-dimensional attributes. The one-dimensional requirements are generally
explicitly expressed by the customers. They result in consumers satisfaction when
fulfilled and dissatisfaction when missing with the higher the level of fulfillment the
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higher consumers satisfaction. For example, in the studied chain, availability in the
right size and the right fat-content, speed of the transaction in store, ease of
identification from other fat-content products and other brands, and more than three
days shelf-life were recognized as the one-dimensional value elements.
Attractive value elements. The value attributes under this dimension of the Kano
model, are neither explicitly demanded nor expected by the customer but are latent.
Their absence does not cause dissatisfaction since the consumers are not aware of
them; however, strong fulfillment in this dimension delights the consumers resulting in
more than proportional satisfaction as shown in Figure 2. The team highlighted two
possible delight factors: the local brand and low-food miles as an environmental factor.
The product was locally sourced and, naturally, traveled relatively fewer miles
compared to the competitors products. The consumers, also, highly valued the fact
that the product was sourced from a local farm.
It must be mentioned that the limitation of this stage of the study was that the team
had no direct contact with the end consumers; this categorization was entirely based on
market research information and the experience of the retail and marketing teams in
the respective firms.

Linking improvement opportunities to consumer satisfaction

The role of the supply chain in fulfillment of the identified consumer requirements is
not always clear. The Voice of Consumer (VoC) could often be abstract and not
meaningful to the supply chain managers. In the studied chain, it was necessary to
translate the identified value elements into a supply chain language meaningful for the
team members.
QFD is a technique, often deployed in NPD, for deriving specific product (and
production) attributes from the consumer requirements (Akao, 1990; Hauser and
Clausing, 1988). It is equally valid to think of QFD as a way of identifying the true
voice of the customer (Knowles, 2002, p. 58) as it pertains to product and process
engineers. QFD is a mechanism through which companies ascertain that the product
which is designed and produced is the product that the consumers require.
The value chain team adapted the QFD method to the supply chain to convert the
VoC (classified under Kano categories) into supply chain improvement projects.
In other words, the supply chain QFD helps to establish the impacts of the identified
supply chain improvement opportunities (Table III) in terms of consumer satisfaction.
It also helps to find-out if there are any value elements which are not addressed by the
supply chain improvement projects. If so the team needs to look into potential changes
in the way the supply chain operates to make sure that the supply chain is, to its full
capacity, contributing to the delivery of various consumer needs.
Figure 3 shows the proposed Supply Chain Kano-QFD technique for improving Achieving
and creating effective value chains. To the left of the model (Section 1 in Figure 3) are consumer focus
the consumer value elements; and at the upper-end of the model (Section 3) are the
supply chain improvement opportunities. In the middle (Section 4) is a relationship in supply chains
matrix which shows the impact of each improvement opportunity on consumer
satisfaction. At the bottom (Section 5) are the cumulative importances of each
improvement opportunity which demonstrate the priority for implementation. The 239
action plan should take into account this relative prioritization; but it also needs to look
at availability of change resources (Stage 4 of the method). The following explains how
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the method was deployed in the fresh milk chain.

The first step in this approach is to capture the VoC and to categorize consumer
value under the Kano dimensions. This was shown in this case in Figure 2. In some
areas such as the speed of in-store transaction, the supply chain might have no impact
or very little influence. In other areas such as shelf-life and freshness, the supply chain
plays a vital role. So, the next step is to establish the relevance of the supply chain
processes to delivery of various Kano requirements. Table IV shows what value
elements could be delivered through improved SCM. A series of relevant supply chain
metrics and objectives are set against consumer requirements. This can be regarded as
translating VoC into a meaningful supply chain language. In Figure 3, the supply
chain metrics are shown in Section 2. As illustrated in Table IV, it is possible, and often
desirable, to have more than one metric against each consumer value. For example, in

Correlation of
the S.C. attributes

Supply chain attributes
(improvement opportunities)
1 2 6 7
Satisfaction of value element

Kano category (A, O, M)

Consumer Supply chain Relations
value metrics matrix

Prioritization of the projects

Figure 3.
Kano Categories: A = Attractive, O = One-dimensional, M = Must-be. Supply Chain Kano-QFD
Boxes not addressed in the case-study are distinguished with dashed lines.
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Table IV.

in delivering the
consumer requirements
Role of the supply chain
Can SC
Consumer value Kano category influence? Supply chain objective Supply chain metric

Low food miles Attractive Yes Reduce total transport miles Total food miles
Local sourcing Attractive Yes Total SC traceability Changes in supply chain market share
Speed of in-store transaction One-dimension No Good store operations and housekeeping In-store housekeeping score
Ease of identification One-dimension Yes Good store housekeeping (e.g. In-store housekeeping score
More than three days shelf-life One-dimension Yes Reduce end-to-end lead-time Supply chain lead-time
Available in right size and fat One-dimension Yes React quickly to changes in demand OSA per line
content (flexible production and transport)
Effective ordering system across the On-time/in-full delivery performances in
whole chain the chain
Right price Must-be Yes Cost effective production, transport and Average ppl farm costs
farming Equipment efficiency and utilization at
processor (overall equipment effectiveness
Right first time quality at the processor
Farm quality indicator
Transport efficiency measures at
Correctly chilled Must-be Yes Not break the chilled chain Customer complaints (ppm)
At least 2-3 days shelf-life Must-be Yes Reduce end-to-end lead-time Customer complaints (ppm)
Supply chain lead-time
No leakage Must-be Yes Improve quality at the processor (every Customer complaints (ppm)
time with no variation)
Handling practices in the chain
Product safety Must-be Yes Correct quality at processor (every time Customer complaints (ppm)
with no variation)
Not break the chilled chain
Right taste and odor Must-be Yes Correct quality at farm and processor Customer complaints (ppm)
Table IV, two metrics are set against availability in right size and fat-content, i.e. Achieving
on-shelf-availability (OSA) and on-time/in-full delivery along the chain. The reason is consumer focus
that the combination of the two measures works better in terms of pointing to root
causes of out-of-stock situations. in supply chains
The next step in the Supply Chain Kano-QFD approach is to build a relationship
matrix between the supply chain metrics, which were set against the consumer value,
and the supply chain improvement opportunities as already identified in Table III. The 241
resultant matrix (Figure 4) would demonstrate the relevance of the improvement
projects in terms of consumer satisfaction. The existing supply chain improvement
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methods often fail to acknowledge the need for such comparison. Therefore, plenty of
supply chain improvement projects remain limited to efficiency gains and fail to realize
the true potentials of the supply chain in terms of creating individualized sources of
consumer satisfaction. Figure 4 shows the relationship matrix as suggested for the
studied chain. The team excluded one of the attractive consumer value elements (i.e.
low-food miles) in Figure 4. The team decided that very sophisticated environmental
branding was outside the remit of the work and a strong local brand could convey the
positive messages the consumers require. However, the authors recommend that direct
involvement of the shoppers is needed at this stage to select the right value attributes
for the SC Kano-QFD model to ensure no effectiveness opportunities are missed.

S.C. Metrics Kano Promotion Ordering Farm Production efficiency
categories of local milk system KPIs efficiency measures

Locally sourced Changes in supply

product chain market share Attractive 9x4
Ease of In-store house keeping One-
identification score dimensional 3
More than 3 One-
days shelf-life Supply chain lead-time dimensional 1
On-shelf-availability One-
Available in (OSA) per line dimensional 9
right size and On-time / in-full delivery
fat-content performances along the One-
chain dimensional 9 1
Average ppl farm costs Must-be 9 x 0.5
Overall Equipment
Must-be 9 x 0.5
Right first time quality at
Right price Must-be
the processor and farm 9x 0.5 3 x 0.5 3 x 0.5
Farm Quality Indicator Must-be 9 x 0.5
Transport efficiency
Must-be 1 x 0.5 3 x 0.5 1 x 0.5 9 x 0.5
measures at distribution
Customer complaints
Correctly chilled Must-be
(ppm) 1x 0.5
Customer complaints
No leakage Must-be
(ppm) 1 x 0.5
Customer complaints
Product safety Must-be
(ppm) 1 x 0.5
Right taste & odor Customer complaints
Figure 4.
(ppm) 1 x 0.5 Fresh milk supply chain
Relative impact of projects on KPIS 36.5 28.5 11.5 8 4.5
IJPDLM Each box in the relationship matrix (Figure 3) shows the impact of a supply chain
37,3 improvement project on satisfaction of a consumer value attribute. In order to get
meaningful importance rating, it is proposed to assess the importance of each
improvement project to each consumer requirement on a numerical scale of 1, 3 and 9
where 9 represents strong impact, 3 represents medium impact and 1 represent weak
influence. Such rating method is biased on stronger relationships, which are far more
242 important to be taken forward to the action plan. The ratings are arrived at from
discussions among the team and represent panel consensus. It must be noted that the
priority ranking of the improvement opportunities is sensitive to the ratings. Care must
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be taken in obtaining the consensus view of the supply chain panel to make sure the
final rankings represent team consensus. Since, the same panel of supply chain experts
will implement the improvement opportunities, the consensus-based approach ensures
due consideration at the implementation stage.
Then, the numerical values in the relationships matrix are given an importance
weighted according to the respective Kano category. In Figure 4, the
attractive attributes are multiplied by 4, one-dimensional by 1 and the must-be
attributes are multiplied by 0.5 which biases the relationship towards the attractive
value elements considerably. The cumulative ratings, at the bottom of Figure 4, clearly
show the relative importance of the improvement opportunities in terms of impact on
consumer satisfaction and the priority implementation.
Based on this ranking, the supply chain team is able to make informed decisions
regarding the future action plan. In the studied supply chain, the action plan reflected
and directly followed on from the rankings in Figure 4, i.e. re-branding of milk as the
top priority project and so on. It was decided to implement the improvements through a
supply chain continuous improvement office (supply chain Kaizen). However, it should
be noticed that the other factors which need to be taken into account when putting
together the action plan are ease of implementation and availability of resources.
These parameters can, also be taken into account in the Kano-QFD method, in the form
of additional weightings. In this case, none of the five projects in the action plan
required heavy investment. The action plan should clearly identify the team members
involved and responsible for the execution of each project. On this chain, two senior
managers, from the dairy firm and the retail store, were assigned as the owners of the
re-branding project with the whole team involved in the delivery of the project.
There are other theoretical features in the presented Kano-QFD model (Figure 3)
which were not deployed during the project (i.e. Sections 6, 7 and 8 in Figure 3). It is
proposed that future work should cover these areas. Feature 6 in Figure 3, shows the
cumulative satisfaction of each value element. If any aspects of the consumer value are
rated low (or zero) in Section 6, the improvement team needs to investigate whether
superior sources of consumer value can be developed to deliver better consumer
satisfaction, in the context of the supply chain. Feature 7, shows the performance of
direct competitors in terms of satisfying the value attribute. It is argued that the supply
chain should at least match the performance of the key competitors. The values in
Section 7 should come from the consumers and not the supply chain group. Feature 8,
highlights the potential correlations between supply chain improvement opportunities.
For example, a low-inventory strategy may lower the prices while having a potential
negative impact on availability. The correlation analysis is particularly useful for the
future action plan.
Conclusions and recommendations for future research Achieving
The existing body of literature on supply chain improvement is largely focused on the consumer focus
mapping and analysis of efficiency constraints. This paper put forward a systematic
and structured process for improvement of supply chain effectiveness, i.e. alignment in supply chains
and enhancement of the consumer value through capturing the capabilities and
enthusiasm of all supply chain participants. This approach draws upon an existing
techniques in NPD, i.e. Kano-QFD (Matzler and Hinterhuber, 1998), and builds on the 243
supply chain improvement (Stevens, 1989; Womack and Jones, 1996; Zokaei and
Simons, 2006b) and value stream mapping (Hines and Rich, 1997; Rother and Shook,
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1998) body of literature. This technique is best implemented when deployed by a panel
of experts from across the supply chain. It is proposed that the team should first
walk the end-to-end supply chain to identify all waste elimination opportunities
including the activities misaligned with the consumer requirements (Womack and
Jones, 1996). The Supply Chain Kano-QFD technique can then be deployed to identify
opportunities for value enhancement and superior consumer satisfaction.
The conventional value chain improvement methodologies lack the rigor for
improving effectiveness of the supply chains. The proposed technique will allow the
improvement team to make informed decisions taking into account supply chain
effectiveness as well as supply chain efficiency. For example, in the presented
case-study the opportunity for a new local milk brand was revealed only when the
team applied the technique. The Kano model enabled the team to gain an insight into
the consumer delighters (e.g. the local brand). Moreover, the end-to-end mapping
allowed the team to connect all aspects of the supply chain together and revealed that
the product was 100 percent locally sourced which matched the consumer needs.
Finally, the Supply Chain Kano-QFD method translated the consumer requirements
into supply chain improvement projects and showed their relative impact on consumer
The proposed method can be further adapted in design of new supply chains;
further work is underway in this area.

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About the authors

Keivan Zokaei is a Research Fellow at the Lean Enterprise Research Centre (LERC) in Cardiff
Business School in UK and Visiting Scholar at Eli Broad College of Business in Michigan State
University. Keivan is currently investigator and lead researcher of an Industry-government
funded project the Cereals Value Chain Analysis Programme. He is a regular contributor to
international conferences and has published articles in journals such as International Journal of
Logistics Management and Int. Food and Agri-business Management Review. Keivans research
interests are: SCM, value stream improvement in the FMCG industry, inter-company relationship
and performance mapping, score-carding and logistics management, and sustainable Achieving
development. Keivan Zokaei is the corresponding author and can be contacted at:
ZokaeiAK@cardiff.ac.uk consumer focus
Peter Hines is a Professor of SCM at Cardiff Business School in UK. He is the Director of the in supply chains
LERC and also a Director of the Cardiff University Innovative Manufacturing Research Centre
(CUIMRC). Peter followed a successful career in distribution and manufacturing industry before
joining Cardiff Business School in 1992. He has written several books including Creating World
Class Suppliers (Pitman, 1994). He has also both written and spoken widely on an international 247
stage. He currently supervises seven PhD students or staff colleagues in a range of areas relating
to lean thinking. He is an editorial advisor for a range of purchasing, logistics and supply chain
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journals. E-mail: HinesPA@Cardiff.ac.uk

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