Cross‐functional alignment in supply chain planning: A case study of sales and operations planning

• Author: Rogelio Oliva,Noel Watson
• Date: 01 July 2011
• Published date: 01 July 2011
• DOI: http://doi.org/10.1016/j.jom.2010.11.012

Journal of Operations Management 29 (2011) 434–448

Contents lists available at ScienceDirect

Journal of Operations Management

journal homepage: www.elsevier.com/locate/jom

Cross-functional alignment in supply chain planning: A case study of sales and

operations planning

Rogelio Olivaa,b,∗, Noel Watson b

aMays Business School, Texas A&M University, College Station, TX 77843, USA

bZaragoza Logistics Center, C/Bari 55 PLAZA, Zaragoza 50193, Spain

article info

Article history:

Available online 25 November 2010

Keywords:

Operations interface

Sales and operations planning

Supply chain planning

Case study

abstract

In most organizations, supply chain planning is a cross-functional effort. However, functional areas such

as sales, marketing, finance, and operations traditionally specialize in portions of the planning activi-

ties, which results in conflicts over expectations, preferences, and priorities. We report findings from a

detailed case analysis of a supply chain planning process that seemingly weathers these cross-functional

conflicts. 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 formal

functional incentives that did not support it. By drawing a distinction between the incentive landscape

and the planning process, we identify process as a mediator that can affect organizational outcomes.

Thus, organizations may be capable of integration while functions retain different incentives and orien-

tationsto maintain focus on their stakeholders’ needs. Through iterative coding, we identify the attributes

of the planning process that can drive planning performance—information, procedural, and alignment

quality—but also find evidence that achieving alignment in the execution of plans can be more impor-

tant 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.

© 2010 Elsevier B.V. All rights reserved.

1. Introduction

In most organizations, supply chain planning—the administra-

tion of supply-facing and demand-facing activities to minimize

mismatches, and thus create and capture value—requires a

cross-functional effort (Braunscheidel and Suresh, 2009). Such

cross-functional collaboration facilitates an assessment of the state

of the supply chain, of the needs of the organization, and the deter-

mination of an approach for creating and sustaining value based on

that collaborative assessment. Such an approach usually involves

detailed evaluation, planning, and execution at the strategic, oper-

ational, 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). In some cases, this integration must

overcome the specialization of functional areas, such as sales, mar-

keting, finance, and operations, and their focus on their own portion

∗Corresponding author at: Mays Business School, Wehner 301C - 4217, Texas

A&M University, College Station, TX 77843-4217, USA.

Tel.: +1 979 862 3744; fax: +1 979 845 5653.

E-mail addresses: roliva@tamu.edu (R. Oliva), nwatson@zlc.edu.es (N. Watson).

of the planning activities. Such specialization or differentiation

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). With

increased competition and globalization creating new opportuni-

ties and challenges for supply chain planning (Raman and Watson,

2004) and fostering further differentiation within the organization,

it is clear that firms will struggle even more with supply chain inte-

gration as they attempt to manage and respond to the increasing

complexity of markets, suppliers, and investors.

We expect integration in supply chain planning in a highly

differentiated organization to require quite an explicit and broad

cross-functional reach. Although particular cross-functional inter-

faces have been developed—e.g., marketing and logistics (Ellinger,

2000; Stank et al., 1999), and purchasing and manufactur-

ing (Fawcett and Magnan, 2002)—very few organizations have

achieved the broader-reaching integration that consistently devel-

ops multi-functional plans that are executed in a coordinated

fashion (Barratt, 2004; Fawcett and Magnan, 2002). Furthermore,

very little empirical research has been done on functioning inte-

gration approaches (Malhotra and Sharma, 2002) and a detailed

understanding of interdepartmental integration based on micro-

level data has yet to be established. Therefore, a comprehensive

understanding of cross-functional integration is lacking in the lit-

0272-6963/$ – see front matter © 2010 Elsevier B.V. All rights reserved.

doi:10.1016/j.jom.2010.11.012