Sales and Operations Planning: The effect of coordination mechanisms on supply chain performance

Abstract

Sales and Operations Planning (S&OP) is a means of facilitating cross-functional coordination, such as across the marketing-operations interface, but adopters of S&OP have not all benefited from S&OP to the same extent. This paper investigates the effect of S&OP on supply chain performance using the perspective of coordination and contingency theories. A structural equation model was developed in which six S&OP coordination mechanisms were hypothesized to contribute to improved supply chain performance. The model was tested using a global survey of 568 experienced S&OP practitioners. Our results indicate that Strategic Alignment and Information Acquisition/Processing are the mechanisms that most significantly enable superior S&OP outcomes. However, we find that a highly formalized S&OP Procedure inhibits supply chain performance. Furthermore, using a contingency theory perspective, increasing firm size and increasing experience in S&OP amplify the negative effect of a standardized S&OP Procedure upon supply chain performance. Our results suggest that organizational bricolage may be a coordinating mechanism of effective S&OP programs and that managers should empower ambidextrous S&OP teams to maintain balance using self-governing event-driven processes. This paper makes a novel contribution to the S&OP literature by providing evidence of a theoretical construct (organizational bricolage), which may trigger a re-evaluation of the efficacy of prescriptive S&OP procedures that have been advocated by some researchers and practitioners.