Cross-Functional Alignment in Supply Chain Planning

Topics: Supply chain management, Management, Forecasting Pages: 39 (13178 words) Published: June 6, 2013
Cross-Functional Alignment in Supply Chain Planning: A Case Study of Sales and Operations Planning Rogelio Oliva Noel H. Watson

Working Paper
07-001

Copyright © 2007, 2008, 2009 by Rogelio Oliva and Noel H. Watson Working papers are in draft form. This working paper is distributed for purposes of comment and discussion only. It may not be reproduced without permission of the copyright holder. Copies of working papers are available from the author.

Cross-Functional Alignment in Supply Chain Planning: A Case Study of Sales and Operations Planning Abstract In most organizations, supply chain planning is a cross-functional effort. Functional areas such as sales, marketing, finance, and operations traditionally specialize in portions of the planning activities, which results in conflicts over expectations, preferences, and priorities. We report findings from a detailed case analysis of a successful supply chain planning process. In contrast to traditional research on this area, which focuses on incentives, responsibilities, and structures, we adopt a process perspective and find that integration was achieved despite an incentive landscape that did not support it. By drawing a distinction between the incentive landscape and the planning process, we identify process as an additional mediator beyond the incentive landscape that can affect organizational outcomes. Thus, organizations may be capable of integration while different functions retain different incentives to maintain focus on their stakeholders’ needs. Through iterative coding, we identified the requisite attributes of the planning process that drive planning performance—informational, procedural, and alignment quality— but hypothesize that achieving alignment in the execution of plans can be more important than informational and procedural quality. In addition to process attributes, we also identify social elements that influenced the performance of the planning process and place the information processing attributes within a broader social and organizational context. Keywords: Operations interface, sales and operations planning, supply chain planning, case study.

1. Introduction
In most organizations, supply chain planning—the administration of supply-facing and demand-facing activities to minimize mismatches and thus create and capture value—is a cross-functional effort. In most cases, this means that each functional area, such as sales, marketing, finance, and operations, tends to specialize in its own portion of the planning activities. Such specialization is notorious for generating conflicts over differing expectations, preferences, and priorities with respect to how the matching of demand and supply should be accomplished (Shapiro, 1977). The reconciliation of these conflicts is generally referred to as coordination. Coordination in the operations management literatures generally assumes some agreement in the assessment of the firm’s environment and on the options available for an organizational response: the challenge centers on the details of the organizational response. But supply chain planning requires something more: cross-functional collaboration to assess the state of the supply chain and the needs of the organization and then to determine an approach for creating and sustaining value based on that collaborative assessment. In other words, beyond coordination, organizations must define the problem, ascertain the options available for dealing with the problem, and create an agreeable solution with collaboration across differentiated functions. Such an approach usually involves detailed evaluations, planning, and execution at the strategic, operational, and tactical levels (Anthony, 1965). Both the operations management and organizational behavior literatures refer to this type of collaboration as integration (Barratt, 2004; Ellinger, 2000; Griffin and Hauser, 1996; Kahn, 1996; Kahn and Mentzer, 1998; Lawrence and Lorsch, 1986). With...
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