To compete in different strategic segments with different products at the same time, companies need close coordination between the sales side of their business and their supply chain operations.
But within many companies, a divide exists between the sales and supply chain functions. “As remarkable as it might seem in this age of big data and just-in-time delivery, our research suggests that the divide between demand and supply” remains a serious problem, write Wendy L. Tate, Diane Mollenkopf, Theodore Stank (all three of the Haslam College of Business at the University of Tennessee, Knoxville), and Andrea Lago da Silva (Federal University of São Carlos) in “Integrating Supply and Demand,” an article in the summer 2015 issue of MIT Sloan Management Review.
This divide is both complicated and significant. The researchers note that the divide “is a key reason that companies are so often trapped into selling excess products well below market rates.” It’s also a reason that companies lose sales because of inventory shortages.
To help companies assess the current stage of their own demand and supply integration, the authors developed a five-question self assessment. Features of the online tool include:
- The self-assessment lets users rate their company in five aspects of demand and supply integration: relevant value focus; integrated knowledge sharing; strategic resource allocation; integrated behavior; and capacity and demand balance.
- At the end of the assessment, the authors offer specific recommendations for improvement in each target area.
- Users’ scorecards and recommendations can be printed out.
- Users also can download a printable version of the scorecard (in PDF form).
“Without an understanding of which customers matter most, every decision within a company becomes a territorial battle across the demand and supply divide,” the authors note. They add that “our research suggests that demand and supply integration offers one. . . pathway to creating a culture that recognizes that an organization cannot simultaneously be all things to all customers.”