Interrelationship Between Operations and Marketing in Reducing Demand Risk

Abstract

Organizations today have a daunting task of managing varied demand needs of customers to be delivered at doorstep and also at a competitive price. Researchers have suggested different ways to counter the bullwhip effect in the supply chain through factoring for safety stock, countering behavioral forecasting inefficiencies through coordination stock, and setting up a single view of the global supply chain with the aid of technology, to name a few. However, the lack of a well-defined and organized, process-driven approach in managing the demand and supply planning process leads to demand–supply imbalance. In this article we discuss the practices followed by the best-in-class organizations in managing the critical link between the marketing and operations departments in reducing demand risk. We conclude that through a process-driven approach, organizations could enhance efficiency of the outbound supply chain by interlinking the marketing and operations departments and at the same time meet the long-term strategic goals and maximize customer value. The scope of this article has been restricted to the outbound supply chain only.