This study explores how supply chain strategies should be aligned with demand/product characteristics and market requirements. A review of the product-driven supply chain literature suggests that there is a lack of analytically proven guidelines to help strategy makers confidently design their supply chains. In this paper, we provide a mathematical validation for Fisher’s (1997) framework which is extensively cited in the literature and matches supply chain strategies (i.e., efficient or responsive) with product type (i.e., functional or innovative). Specifically, we analyze the impact of demand variability, product life-cycle, and contribution margin on the supply chain capabilities, i.e., efficiency and responsiveness. Our analysis starts with an initial discussion on the two inventory models, newsvendor and continuous review, and then develops the continuous review model into a multi-echelon supply chain structure where optimality is mathematically explored to demonstrate how it would change when product/demand characteristics change. The results confirm that optimal lead-time decreases in demand variability and contribution margin, but increases in product lifecycle. Moreover, optimal order size increases in demand variability and contribution margin (and so does in average stock-out cost), but decreases in product lifecycle.