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Lings, Ian (2001) Internal marketing and supply chain management. Jour-nal of Services Marketing, 14(1), pp. 27-43.

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Internal Marketing And

Supply Chain Management.

Ian N. Lings

Keywords

Service quality, internal marketing, internal customers, value chain, supply chain.

2

ABSTRACT

This paper presents a model of service quality which is based on both internal and external customer and supplier groups in supply chain partners. Two possible types of internal customers are proposed in intra-firm inter-departmental relationships and two types of interaction are proposed in inter-firm inter-departmental relationships. The management of these interactions using tools originally developed in the field of internal marketing is discussed and the implications for service quality between supply china partners are explored.

The use of SERVQUAL to monitor the quality of service provided across these interactions is discussed and a research agenda to test the propositions developed in the paper is presented.

INTRODUCTION

Many developed countries have seen a dramatic increase in the importance of services to

national economies (Burgess, 1995), and to the individual consumer (Lewis, 1995, Stuart et

al, 1996). Industry and academe have responded by investing considerable resources in

efforts to improve service quality (Stuart et al, 1996, Procopio and Fairfield-Sonn, 1996). The

concept of internal marketing has arisen from these efforts (Gummesson, 1987) and has been

discussed in the academic literature for more than a decade, (see for example Azzolini and

Shillaber, 1993, Bak et al, 1994, Bhote 1991, Davis 1992, Foreman and Money 1995,

George, 1990, Grönroos 1985, Gummesson, 1987, Harari 1991 and 1993, Harrell and Fors

1992, Piercy and Morgan 1990 and 1991, Piercy 1995). Despite this attention there is still

confusion over the scope and nature of the subject, (Rafiq and Ahmed, 1993) although most

authors agree that internal marketing should improve service quality (George 1990,

Gummesson 1987, Berry and Parasuraman 1991, Grönroos 1985, Piercy 1995).

A review of the internal marketing literature identified that there are three main areas of

deficiency within the current literature.

Firstly there has been little empirical research to assess the effect of internal marketing on

service quality. See for example Richardson and Robinson (1986).

3

Secondly current conceptualisations of internal marketing which focus on internal customers

and suppliers have not differentiated between the different types of internal customers which

may exist within the firm and their differing internal service expectations. As a consequence

of this internal marketing efforts aimed at increasing internal service quality have not

specifically targeted internal customers but have been undifferentiated and aimed at all

internal customer groups. There is a need to explore the service expectations of different

internal customer segments within the internal market and identify any differences between

these segments. This knowledge can then be applied to the internal marketing programme to

maximise its effectiveness.

Thirdly the applicability of internal marketing approaches to external relationships needs to

be addressed. The supplier and customer groups discussed within the internal marketing

literature are limited to those which exist within the firm. However such an approach may be

appropriate to supplier customer marketing relationships within the supply chain, especially

where several departmental relationships exist between supplier and customer.

Service quality, and in particular its measurement, have been extensively discussed in the

literature (see for example Parasuraman et al 1985, 1994a, and 1994b, Cronin and Taylor

1994, Teas 1994, McDougall and Levesque 1994, Johnson et al 1995) and SERVQUAL

(Parasuraman et al 1985) has emerged as one tool which can be used for this purpose. The

tool has been extensively used and is readily modified to different service situations (Lam

1995, Nelson and Nelson 1995, Chaston 1994).

THEORETICAL DISCUSSION AND CONCEPTUAL DEVELOPMENT

This section examines existing literatures which relate to internal marketing, supply chain

relationships and service quality.

4

The value chain (Porter 1985) is used to develop an internal customer structure of the firm,

which differentiates between different types of internal customer. This concept is then

developed further to encompass the different types of inter-firm relationship which exist

between supply chain partners.

The measurement of service quality between supply chain partners in these inter-firm and

intra-firm transactions is discussed and a model of these supplier-customer interactions is

presented.

INTERNAL MARKETING

This review of the literature relating to internal marketing supports an earlier review (Rafiq

and Ahmed, 1993) which indicates that some debate exists as to the nature and application of

the subject. Many definitions of internal marketing are found within the literature of the past

decade with some authors viewing internal marketing as either a concept, a philosophy or a

management practice, (e.g. Grönroos 1985, George 1990 and Wilson 1991), as either relating

to human resources management, (e.g. Berry and Parasuraman 1991, Berry 1981, 1983 and

1984, Van Haastrecht and Bekkers 1995 and George 1977 and 1990), services marketing

(e.g. Gummesson 1987 and Grönroos 1985), or change management, (Piercy 1995).

Various reviews of the literature have resulted in alternative classifications of internal

marketing. Bekkers and Van Haastrecht (1993) suggest three approaches to internal

marketing: hierarchical exchange process, internal supplies, exchange process

organisation/employee. Foreman and Money (1995) classify internal marketing according

who the internal marketer is, and who the target of the internal marketing effort is.

The arguments presented in this paper are based upon the view that the internal market

consists of groups communicating to other groups within the organisation and internal

5

marketing is considered to be the process of creating market conditions within the

organisation to ensure that internal customers’ wants and needs are met. (e.g. Bekkers and

Van Haastrecht 1993). It is this relationships between internal customers and their internal

suppliers that is the focus of the internal marketing effort.

Reynoso and Moores, (1996) have identified six common steps in internal marketing

campaigns. These are;

1. The creation of internal awareness.

2. The identification of internal customers and suppliers.

3. The identification of the expectations of the internal customers.

4. The communication of these expectations to internal suppliers in order to discuss their

own capabilities and / or obstacles to meeting these requirements.

5. As a result of the previous point, internal suppliers should work to make the necessary

changes so as to be able to deliver the level of service required.

6. And finally, obtain a measure for internal service quality. Feedback should be given to

internal suppliers if services are to be improved. (Reynoso and Moores, 1996)

The importance of communications as a motivational device within the internal marketing

campaign has been identified by several authors. See for example Piercy and Morgan, 1990,

1991, Piercy 1995, Rafiq and Ahmed, 1993, Bekkers and Van Haastrecht 1993.) By

identifying internal customer and suppliers as part of the internal marketing campaign,

interactions between internal suppliers and customers can be identified and the

communications associated with these interactions can be examined to identify possibilities

for improvement. These may be the communications between departments in the value chain

or those originating in the hierarchical structure of the organisation and directed at all

employees.

6

Piercy and Morgan (1991) suggest that internal marketing programmes should be directed at

chosen internal segments to complement the external marketing programme and that these

segments are the functions played by groups of people. This relates closely to the concept of

internal customers and suppliers, and is based on the premise that the internal environment of

the organisation can be divided into distinct internal market segments with different wants

and needs, a view supported within the literature, (see for example Piercy and Morgan 1990

and 1991, Piercy 1995, Harrell and Fors 1992, Trumbly and Arnold 1989, Burgetz 1991,

Comm 1989).

Next operation as a customer, NOAC, (Denton 1990), is a natural progression from the

identification of these internal market segments or groups within the organisation. NOAC is

based on the idea that each group within the company should treat the recipients of their

output as an internal customer and striving to provide high quality outputs for them. (e.g. Lee

and Billington 1992, Barrett 1994, Denton 1990, Bhote 1991, Lukas and Maignan 1996). In

this way quality will be built into the service offering to the external customer.

This concept of the internal supplier and the internal customer can encompass all other

definitions of internal marketing. For example if the reader takes the view that internal

marketing is the design of better job products to meet the needs of employees (Berry and

Parasuraman 1991), hence satisfying them and motivating them to better meet the needs of

their customers, internal or external, then personnel or departmental managers are the internal

suppliers (of jobs) and the employees are the internal customers. Similarly if we view internal

marketing to be the promotion of a strategy or plan (Piercy 1995), then the internal marketer

is the person or department who wishes the plan to be implemented and uses marketing

techniques to gain acceptance of the plan from the employees or departments involved, the

internal customers.

7

DEVELOPING INTERNAL CUSTOMER STRUCTURE

The need for effective exchange between internal suppliers and customers has been widely

discussed in the literature. (Lings and Brooks 1998, Heskett et al, 1984, Magidson and Polcha

1992, Azzolini and Shillaber 1993, Hart 1995, Brooks and Smith 1993, Brooks 1992, 1993,

1995, and Davis 1992). These authors agree that better service to internal customers should

result in better service to external customers. Heskett et al (1994) provide an example of this

from industry. They suggest that a customer, when placing a telephone order, benefits from

the organisation having identified internal customers and suppliers and recognising good

internal service between them. This is manifest in the customers having orders processed in

less time and not being passed between service operators unnecessarily. George (1990) states

that these effective internal exchanges are a prerequisite for successful exchanges with the

external market, a view which is restated by Pfau et al (1991) as a lack of attention to internal

supplier-customer relationships can jeopardise external customer satisfaction.

Denton (1991) proposes a horizontal management theory where customer specifications pass

through internal customers to internal suppliers eventually on to the external supplier. This

theory provides an indication of how some of the internal supplier-customer groups should be

structured within the organisation. Denton (1991) also implies that some internal suppliers

will exist because of the internal services which they provide, such as IT.

This view of different internal suppliers and customers, some which deal directly within the

service delivery process and some which provide support services to the service delivery

process, appears to be closely related to the concept of the value chain, (Porter, 1985), and the

basic model of the value chain can be modified to provide a map of internal suppliers and

customers as shown in fig 1.

8

[TAKE IN FIG.1]

Fig.1 represents the different elements of the value chain, now separated by internal supplier-

customer boundaries. For example, one internal supplier would be the firm infrastructure and

one of the customers of this internal supplier would be outbound logistics.

Porter’s value chain differentiates between internal groups which are involved directly in the

satisfaction of external customers’ quality requirements as they pass along the value chain,

value adding functions, and those which are not directly involved in this process but which

support those groups which are, support functions. Interactions between these groups can be

classified as follows.

Internal Supplier Internal Customer Code

Support Function Support Function S→S

Support Function Value Adding Function S→V

Value Adding Function Value Adding Function V→V

Value Adding Function Support Function V→S

Value adding function to Value adding function interaction. (V→V)

This is the interaction which exists between adjacent functions which are involved directly

with the creation of value for the external customer. These occur typically in the direction of

flow of the customer quality specification from order taking to order delivery, denoted (b) in

fig 2. The supplying function passes this process specification further down stream in the

value chain. There may also be a reverse exchange where the supplying cell expects some

sort of feedback or information for it to do its job correctly (a). In essence the supplier

function becomes a customer at the same time, a reverse interaction.

9

Support function to Value adding function interaction. (S→V)

An example of such an interaction is the IT support provided to the logistics and other

functions involved directly with creating value for the external customer. These exchanges

are denoted (e). As in the example above the supplier may stipulate requirements upon its

internal customer.

Value adding function to Support function interactions. (V→S)

Such interactions exist where a function which is involved in the direct creation of value for

the external customer performs an activity for a support function, such as accounts, also the

reverse of the interaction above. These exchanges are denoted (f) in Fig. 2.

Support function to Support function interaction. (S→S)

Such interactions exist for example between the IT department and other support departments

such as human resources. These exchanges are denoted (c) and the reverse interaction (d).

[TAKE IN FIG.2]

These interactions can be classified into six major types, typified by a, b, c, d, e and f.

Whilst (c) and (d) are identical, (a) and (b) may be different. If the flow of work within the

company is one way, in the direction of the value chain, then interaction (a) is not an internal

supplier to internal customer interaction, rather it is a feedback loop which acts to facilitate

the main interaction (b) between the supplier and the internal customer. As such it will not be

explored further as a customer - supplier interaction.

This view is consistent with Porter’s value chain. All specifications originate from the

external customer and flow into the organisation via the supply functions i.e. customers’

10

requirements are passed to the first supply function in the value chain, service, and are then

passed back along the value chain. Where support is required by the supply functions the

support functions become involved.

Given these different, bi-directional, interactions it is necessary to decide criteria to assist in

the determination of who the internal customer is and who the internal supplier is.

Recognising that the interaction between two internal functions is two way, the

internal customer in the transaction is the one who is defining the specifications to be

met for that internal customer to be satisfied. The internal supplier is the one who

satisfies this requirement and can, in the interest of satisfying the internal customer,

request information or a service as if the internal customer were acting as an internal

supplier.

These criteria simplify the six individual internal service interactions, (a)-(f), discussed

earlier, to four general internal service interactions; (b), (c/d), (e) and (f). The existence of

these interactions implies that, potentially, there exists two internal markets within the firm.

The direct internal market, interactions between adjacent departments in the value chain, and

the indirect internal market, interactions between support departments and supply

departments in the value chain. Furthermore there may be a different emphasis on the

dimensions of service quality which are used in direct and indirect internal markets. The

literature does not give any indication of how these dimensions would differ.

Proposition 1: Internal customers which operate in direct and indirect internal

markets will have different service expectations.

11

Each of the internal transactions, and the transaction with the external customer, may be

examined to identify the service expectations of the recipient and to obtain a measure of the

quality of the service provided in these interactions.

SUPPLY CHAIN PARTNERSHIPS

The discussion so far has concentrated on the internal market of the firm and has assumed the

external market to be homogeneous in its requirements. This may indeed be so in the case of

a company serving consumer markets, where the market has been segmented into groups with

broadly similar wants and needs. However in the case of firms serving industrial markets this

‘traditional’ marketing approach is inappropriate (Gummesson 1987.) The reciprocal

arrangement and two way communication of wants and needs between supplier and

customer, which has been discussed in the case of the internal customer and supplier is not

addressed by the existing marketing paradigm.

More recent marketing thinking places considerable emphasis on the formation of long term

interactive relationships between customers and their suppliers. Morgan and Hunt (1994)

identify the need to manage relationships between internal customers and their internal

suppliers simultaneously with the management of relationships between the firm and its

suppliers and customer. These external supplier and customer relationships fall into the

domain of supply chain management and have been explored by Gummesson (1987), who

suggests that the relationship between a customer and it’s supplier is a complex one which

can be considered to consist of several simultaneous individual relationships between

departments in the supplier organisation and departments in the customer organisation which

deal directly with each other.

12

These complex and wide reaching relationships which exist between the supplier and

customer organisations have been examined by Gummesson (1994) who notes that not all of

these marketing relationships are under the direct influence of the marketing department. For

example in the case of the relationship between supplier and customer engineering

departments. Gummesson (1994) stresses the need for the firm decide on a relationship

portfolio for it’s business and to ensures that these relationships are managed skilfully.

For example: supplier outbound logistics may deal directly with departments in the customer

firm such as inbound logistics, to arrange delivery, finance, to arrange payment or invoicing,

procurement, to confirm despatch etc. Similarly in partnership firms there may be

considerable contact between operations or engineering departments in attempts to minimise

the repetition of engineering or machining tasks. These inter-firm, inter-departmental

relationships are represented in Fig. 3.

[TAKE IN FIG 3]

Such inter- firm inter-departmental relationships have similarities to the intra-firm inter-

departmental relationships which are the focus of internal marketing and are discussed above.

In both cases there is a need for the recipient department to communicate requirements to the

supplier department and there is also a need for there to be a feed back loop whereby the

supplier may request information or a service as if the customer were acting as a supplier.

The importance of these supply chain relationships is also identified by Handfield and

Nichols (1999) who suggest that they are probably one of the most important interfaces

within the entire supply chain and communications must be established and utilised on a

regular basis in order to establish trust between partners. IN their discussion Handfield and

Nichols (1999) also identify several elements of trust which include reliability, competence,

13

openness and the importance of the primary interface between the firm and the supply chain

partner. These factors which Handfield and Nichols (1999) identify as important in the

development of trust between supply chain partners are similar in nature to those identified

by Parasuraman et al (1988) as important components of service quality.

It appears that the management of supply chain relationships may have important similarities

to the management of internal value chain relationships and that the tools developed above

for the identification and management of different intra-firm inter-departmental relationships,

(those between internal suppliers and their internal customers) may also be useful in the

management of inter-firm inter-departmental relationships, (those between supplier

departments and their customer departments in the supply chain relationship.)

As has already been stated there is a need for a two way communication of wants and needs

between customer and supplier departments in both the inter-firm and intra-firm inter-

departmental transactions. These inter-departmental transactions may then be monitored to

identify how the customer departments perceive the quality of service provided by the

supplier departments as has been discussed by Reynoso and Moores (1996) in the internal

marketing context. The management of these relationships may not always be in the direct

control of the marketing function. For example, in fig 4 it can be seen that outbound logistics

in the supplier organisation deals directly with inbound logistics in the customer organisation.

This is denoted by interactions h-i and h-o. In such interactions the inbound logistic in the

customer firm will have a perception of the level of service which they receive from the

outbound logistics in the supplier department. This service perception may be monitored and

any areas of poor service quality can be addressed by the manager of the supplier department.

[TAKE IN FIG 4.]

14

As each department identifies its internal and external customers and suppliers a relationship

network is identified. Such networks can be expected to be complex and as such the

responsibility for the management of these interactions should be that of the departmental

manager rather than the marketing function. In this way the whole organisation becomes

responsible for the creation and maintenance of marketing relationships in which individuals

in different departments can physically relate to their customers. This provides all individuals

in the firm with easily identifiable customers, both internal and external, and a clear

responsibility to maintain the quality of the service which is provided to those customers.

The objective is to increase service quality across the intra-firm inter-departmental

transactions, (those which exist between value chain departments, within the internal market,)

with the aim of increasing the quality of service which is delivered to the supply chain

customer.

Measuring the service quality of these interactions is discussed in the next section.

SERVICE QUALITY.

The measurement of service quality has been extensively debated within the literature. (See

for example (Parasuraman et al 1985, 1988, 1994a and 1994b, Cronin and Taylor 1994, Teas

1994, McDougall and Levesque 1994, Johnson et al 1995, Grönroos 1982). The view that

service quality can be assessed by comparing customers' expectations of the service prior to

the service encounter and their perceptions of the actual service delivered (Parasuraman et al

1985), led to the development of the SERVQUAL tool for measuring the quality of services,

This has been critiqued (Teas, 1994 and Cronin and Taylor, 1994) who suggest that

perceptions of service quality alone need to be measured and expectations are unimportant.

This view is also supported by Smith (1995) who reports that perceptions are as accurate in

15

measuring service quality as the P - E score of the SERVQUAL scale. SERVQUAL has also

been examined by Buttle (1996) who concluded that despite the serious concerns over the

validity of the SERVQUAL scale it is still a useful tool for the operationalisation of service

quality measurement. This supports an earlier view of the usefulness of the SERVQUAL

dimensions as a list of the attributes of a service in for use in the first instance, reported by

Rust and Zahorik (1993). Despite the concerns of the authors mentioned above, and others,

SERVQUAL has been extensively adopted for measuring service quality and has been found

to be acceptable for this purpose (Lam 1995, Pitt 1994, Nelson and Nelson, 1995).

Parasuraman et al (1988) have categorised the dimensions which are important in shaping the

consumers expectations and perceptions of as service as: tangibles, reliability,

responsiveness, assurance and empathy. These form the basis of the SERVQUAL

questionnaire, a 22 item scale, which can be used to assess the level of service quality which

the consumer experiences. SERVQUAL measures the difference between consumers'

perceptions and expectations of a service. Most consumers expect a higher level of service

than they receive so the SERVQUAL score for each dimension is usually negative, i.e.

expectations > perceptions, however in cases where the service provider exceeds expectations

the score will be positive. This is a case of service overkill. In most situations, when

measured over all dimensions, expectations will be greater than perceptions and SERVQUAL

will record a negative score.

Although generally used to measure the service quality delivered to the external customers,

and despite the criticisms mentioned above and more specifically by Reynoso and Moores,

(1996), SERVQUAL may also be an appropriate tool to measure the quality of service

delivered by internal suppliers to their internal customers. The dimensions which are

16

important to internal customers when evaluating the service quality may, however, differ

from those which are important to the external customers.

Proposition 2: Internal and external customers will have different service

expectations.

Furthermore each department within the customer firm may have their own set of

requirements, different from those of other departments, which need to be fulfilled for

perceptions of service quality to be high, and these expectations may differ for services

provided by different supplier departments either internally or externally.

Proposition 3: Perceptions of quality service will be different for different

departments.

Proposition 4: Departments will have different service requirements from each of

their supplier departments.

The service expectations of customer departments arise due to the nature of the work which

that they undertakes, and the type of service which they require in order to complete their

functional tasks. Departments with similar functions, in different firms, can be expected to

display some similarities. They will have a shared knowledge base and work on similar

projects and may display similarities in culture. For this reason departments with similar

functions within the supplier and customer firms may expect different levels of service from

each other compared to the service which is expected from departments with different

functions, either internally or externally.

For example the expectations of the IT department in the customer firm which is dealing

directly with the IT department in the supplier firm, perhaps on a direct data link between the

two firms, may have very different service expectations of the supplier IT department than it

17

would have for other internal or external supplier departments. At the very least one would

expect that that two departments would communicate in a similar language and have similar

competencies and skills. This would not necessarily be the case if the IT department were

interacting with a operations department in either the supplier firm or the home firm.

Proposition 5: Service expectations of customers will be different when dealing with

supplier departments which are similar in function to themselves and other

departments which are dissimilar in function to themselves.

In addition to difference which may exist between service expectations arising from

similarities in function between departments, there may also be difference in expectations

arising from the proximity of the supplier department to the customer department. For

example in the case of the IT department discussed above the expectation for quick response

for information or easy access to information may be higher when the department is dealing

with internal suppliers and a slower response may be expected from external suppliers.

Proposition 6: Departments will have different service expectations from their

internal suppliers than from their external suppliers.

Furthermore the internal marketing campaign proposed by Reynoso and Moores (1996)

suggests that internal customers and suppliers will become more responsive to the wants and

needs of the external customer. Information relating to external customer wants and needs

will be communicated from customer contact personnel back through their internal suppliers

in the form of increased expectations necessary for these departments to meet the needs of

their customers. These internal suppliers will in turn make demands of their internal

suppliers, again in the form of increased expectations, so that they in turn can satisfy the

needs of their internal customers, as discussed by Denton (1991).

18

This sequential communication of wants and needs in the form of increased service

expectations leads to a further proposition.

Proposition 7: Service expectations of departments closer to the external

customer will increase more than the service expectations of departments further

from the external customer during the period of the internal marketing

campaign.

RESEARCH AGENDA

In order to test the conceptual model of intra and inter-firm supplier-customer transactions

preliminary investigations will take the form of case studies.

The first stage of the investigations will focus on developing a full understanding of the

internal customer structure of the supply chain partners and identifying the inter and intra-

firm supplier customer interactions which occur within this structure. From the preliminary

investigations these supply chain relationships can be modelled as shown in Fig 4.

Following on from the modelling of the supply chain firms the propositions developed in the

article may be tested. All of the propositions relate to the differing service expectations of the

departments in their interactions with other departments inside and outside of the parent

organisation. Service expectations can be measured using similar methodology to that used

by Parasuraman et al (1985) in their identification of the elements of service quality.

However the ten dimensions of service quality which are important to the external customer,

(Parasuraman et al, 1985) cannot be assumed to be the same as those which are important to

the supply chain or internal customer. Despite the advantages of collecting data using focus

groups, which are discussed by Stewart and Shamdasani (1990), and the fact that focus

groups were used by Parasuraman et al (1985) when establishing the external service quality

19

dimensions of SERVQUAL, they should not be used to establish the internal and supply

chain service quality dimensions for 3 reasons.

1.The responses from members of the group are not independent of each other, which will

restrict the generalisability of the results. (Stewart and Shamdasani, 1990)

2.In the case of internal customers inter-functional groups can not be used as different

internal customers are expected to have different expectations and hence may identify

different dimensions of service quality. It is important to know if the dimensions are common

to all internal customer groups or if they differ between these internal customers.

3.The results obtained from the focus group may be biased by a very dominant or

opinionated group member. (Stewart and Shamdasani, 1990). Strong interpersonal

relationships are expected to exist within the internal customer groups and these may affect

the responses of the interview subjects who may act in roles determined by the hierarchical

structure of the group and may provide responses which they consider correct to their role

and position within the group. Such responses will be biased by the respondents consideration

of the views of the rest of the peer group, rather than volunteering their personal views of the

important dimensions of service quality. These concerns relating to the use of focus group

research where the participants have a common background and are acquainted are reflected

by Smith (1972) and Payne (1976).

Once the important service quality dimensions for each internal and supply chain customer

have been identified it will be possible to examine these and explore the propositions that

they differ according to the nature of the supplier-customer interaction.

MANAGERIAL IMPLICATIONS

By using marketing knowledge to construct the interaction network and identify the service

expectations of each department, levels of service quality delivered by individual departments

20

to both internal and external (supply chain partner) departments can be measured. This

information can then be used to direct departmental managers’ efforts at improving and

maintaining the quality of these services according to the firms’ priorities. In this way all

departmental managers become customer and marketing focused and the firm may become

truly marketing oriented.

Maximising internal service quality will have the effect of increasing employees motivation

to perform their tasks. The improved support delivered from other departments in the

organisation will make it easier for individuals to fulfil their roles in the value chain and

provide higher levels of service quality to the external consumer or supply chain customer.

In the case of supply chain partners, and by using the same approach in constructing the

network map as in the internal customer approach, external relationships can be targeted for

improvements in service quality at a departmental level. This has the added advantage of

allowing departments to identify the people with whom they deal directly in the supply chain

customer organisation and to focus on measuring and improving the quality of the services

delivered in these interactions. The overall service in the supplier -customer relationship will

then increase as the service quality of the departmental relationships which constitute the

organisational relationship increases.

LIMITATIONS OF THE STUDY AND DIRECTIONS FOR FURTHER RESEARCH.

The model described here does not take into account the effects of informal communications

and work flow through the organisation and the supply chain. There are almost certainly

some informal pathways which exist within all organisations and supply chains although the

effect of these on the management of the internal market and the supply chain market are not

included in the model developed here.

21

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Firm Infrastructure

Human Resources Management

Technology Development

Procurement

InboundLogistics

Operations OutboundLogistics

Marketingandsales

Service

Fig. 1 Internal suppliers and customers,adapted from the value chain, (Porter, 1985)

Firm Infrastructure

Human Resources Management

Technology Development

Procurement

InboundLogistics

Operations OutboundLogistics

Marketingandsales

Service

Fig. 2 Internal interactions, adapted from the value chain, (Porter, 1985)

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29

Fig. 3 Some possible Inter-firm Inter-Departmental Relationships,

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Operations

Outbound

Logistics

Marketing

andsales

ServiceFirm InfrastructureHuman Resources ManagementTechnology DevelopmentProcurement

InboundLogistics

Operations

Outbound

Logistics

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30

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Procurement

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Service

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SUPPLY CHAIN SUPPLIER

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SUPPLY CHAIN CUSTOMER

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Fig 4. Model of some possible inter and intra-firm, inter-departmental relationships.

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