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Who’s in charge?: sales and operations planning governance and alignment in the supply chain management of multinational industrial companies Richard Markoff To cite this version: Richard Markoff. Who’s in charge?: sales and operations planning governance and alignment in the supply chain management of multinational industrial companies. Business administration. Université Panthéon-Sorbonne - Paris I, 2017. English. NNT: 2017PA01E015. tel-01827322 HAL Id: tel-01827322 https://theses.hal.science/tel-01827322 Submitted on 2 Jul 2018 HAL is a multi-disciplinary open access L’archive ouverte pluridisciplinaire HAL, est archive for the deposit and dissemination of sci- destinée au dépôt et à la diffusion de documents entific research documents, whether they are pub- scientifiques de niveau recherche, publiés ou non, lished or not. The documents may come from émanant des établissements d’enseignement et de teaching and research institutions in France or recherche français ou étrangers, des laboratoires abroad, or from public or private research centers. publics ou privés. Who’s In Charge? Sales & Operations Planning Governance and Alignment in the Supply Chain Management of Multinational Industrial Companies ESCP Europe Ecole Doctorale de Management Panthéon-Sorbonne ED 559 WHO’S IN CHARGE? Sales & Operations Planning Governance and Alignment in the Supply Chain Management of Multinational Industrial Companies THESE En vue de l’obtention du DOCTORAT ÈS SCIENCES DE GESTION Par Richard MARKOFF Soutenance publique le 13 Novembre 2017 JURY Directeurs de Recherche : Mme. Valentina CARBONE Professeur, ESCP Europe M. Philippe ZARLOWSKI Professeur, ESCP Europe Rapporteurs : Mme. Nathalie FABBE-COSTES Professeur agrégé des universités en sciences de gestion Université Aix-Marseille M. Nicolas MOTTIS Professeur, Ecole polytechnique Suffragant : M. Jean-Marc LEHU Richard Markoff PhD Thesis 1 Who’s In Charge? Sales & Operations Planning Governance and Alignment in the Supply Chain Management of Multinational Industrial Companies Maître de Conférences, Université Paris 1 Panthéon Sorbonne L’Université n’entend donner aucune approbation ou improbation aux opinions émises dans les thèses. Ces opinions doivent être considérées comme propres à leurs auteurs. Richard Markoff PhD Thesis 2 Who’s In Charge? Sales & Operations Planning Governance and Alignment in the Supply Chain Management of Multinational Industrial Companies QUI EST RESPONSABLE ? Gouvernance du Processus S&OP et Alignement de la Gestion de la Supply Chain des Compagnies Industriels Multinationales Le processus S&OP est souvent considéré comme un processus d'alignement de l'offre et de la demande dans les chaînes d'approvisionnementsimples et linéaires, avec un seul marché et une seule usine. Les entreprises multinationales présentent aujourd'hui des configurations de chaînes d'approvisionnement plus complexes possédant des usines spécialisées qui desservent plusieurs marchés. Ce papier analyse comment les entreprises multinationales configurent leurs processus de gouvernance S&OP pour relier les usines et les marchés, ainsi que l'influence de cette gouvernance sur leur capacité à obtenir un alignement entre l'offre, la demande, et les plans financiers. Au travers d'entretiens menés avec des entreprises, une typologie est définie pour les modèles de gouvernance S&OP observés. Cette typologie suggère qu'un type de gouvernance S&OP exerçant une autorité, à la fois dans les usines et dans les marchés, conduit à des résultats S&OP plus probants. Un lien est également établi entre l'efficacité des S&OP et les mesures formelles d'alignement pour la planification financière. A partir de ceci, les éléments de Contrôle de Gestion sont précisés pour permettre la conceptualisation des S&OP en reconnaissant l'influence de la comptabilité sur la gouvernance du processus S&OP pour assurer la transparence et l'engagement multifonctionnel dans les contextes de la chaîne d'approvisionnement multinationale. Il en découle quatre règles normatives pour la réussite de la gouvernance et de l'alignement du processus S&OP dans un contexte de configuration de la chaîne d'approvisionnement multinationale. WHO’S IN CHARGE? Sales & Operations Planning Governance and Alignment in the Supply Chain Management of Multinational Industrial Companies S&OP is often seen as a process for alignment between supply and demand in simple, linear supply chains with one market and one factory. Multinational firms today have more complex supply chain configurations that have specialized factories serving multiple markets. This research explores how multinational companies configure their S&OP governance linking factories and markets and the influence this governance has on their ability to obtain alignment between supply, demand and financial plans. Through company interviews, a typology for observed S&OP governance models is developed, and suggests that an S&OP governance type exerting authority simultaneously into both factories and markets leads to more successful S&OP outcomes. A link is also drawn between S&OP effectiveness and formal policies for alignment with financial planning. From this, elements of Management Control are deployed as a framework to furthering S&OP conceptualization by recognizing the influence of accounting on S&OP governance in achieving transparency and multi-functional engagement in multinational supply chain contexts. The result is four normative rules for successful S&OP governance and alignment within a multinational supply chain configuration context. Richard Markoff PhD Thesis 3 Who’s In Charge? Sales & Operations Planning Governance and Alignment in the Supply Chain Management of Multinational Industrial Companies WHO’S IN CHARGE? Sales & Operations Planning Governance and Alignment in the Supply Chain Management of Multinational Industrial Companies PhD Thesis – Richard Markoff Research Directors: Valentina Carbone and Philippe Zarlowski ABSTRACT S&OP is often seen as a process for alignment between supply and demand in simple, linear supply chains with one market and one factory. Multinational firms today have more complex supply chain configurations that have specialized factories serving multiple markets. This research explores how multinational companies configure their S&OP governance linking factories and markets and the influence this governance has on their ability to obtain alignment between supply, demand and financial plans. Through company interviews, a typology for observed S&OP governance models is developed, and suggests that an S&OP governance type exerting authority simultaneously into both factories and markets leads to more successful S&OP outcomes. A link is also drawn between S&OP effectiveness and formal policies for alignment with financial planning. From this, elements of Management Control are deployed as a framework to furthering S&OP conceptualization by recognizing the influence of accounting on S&OP governance in achieving transparency and multifunctional engagement in multinational supply chain contexts. The result is four normative rules for successful S&OP governance and alignment within a multinational supply chain configuration context. Richard Markoff PhD Thesis 4 Who’s In Charge? Sales & Operations Planning Governance and Alignment in the Supply Chain Management of Multinational Industrial Companies TABLE OF CONTENTS PROLOGUE .................................................................................................................................... 8 1. INTRODUCTION ................................................................................................................... 16 1.1 Introduction to the Thesis ......................................................................................... 17 1.2 Thesis Construction ................................................................................................... 23 1.3 Literature Review ...................................................................................................... 26 1.3.1 The State of S&OP Literature .................................................................................... 26 1.3.2 S&OP as a component of Supply Chain Integration ................................................. 32 1.3.3 Tracing S&OP in the Supply Chain Management Literature .................................... 36 1.3.4 The Bullwhip Effect, a precursor to S&OP................................................................. 42 1.3.5 Supply Chain Networks and S&OP ............................................................................ 48 1.3.6 S&OP Governance and Matrix Organizations .......................................................... 53 1.3.7 Placing S&OP in the Context of the Firm .................................................................. 58 1.4 The Research Question ............................................................................................. 61 2. RESEARCH DESIGN AND METHODOLOGY .......................................................................... 66 2.1 PhD Approach: Roadmap To Address The Research Question ................................ 67 2.2 Operationalization of Supply Chain Governance ...................................................... 70 2.3 Operationalization of S&OP Alignment .................................................................... 76 2.4 Research Methodology ............................................................................................. 83 2.5 A Word on Epistemology .......................................................................................... 89 3. RESULTS & ANALYSIS .......................................................................................................... 97 3.1 Presentation of Data ................................................................................................. 99 3.2 S&OP Governance Typology ................................................................................... 105 3.2.1 S&OP Governance Typology Matrix ....................................................................... 105 3.2.2 Examples of Each S&OP Governance Type ............................................................. 114 3.3 Discussion: Obtaining S&OP Alignment with S&OP Governance .......................... 134 4. FURTHERINGS&OP CONCEPTUALIZATION ...................................................................... 145 4.2 The Miller/Power Framework and S&OP: A Way Forward .................................... 163 4.3 Territorialization ..................................................................................................... 165 4.4 Mediation ............................................................................................................... 174 4.5 Adjudication ............................................................................................................ 181 Richard Markoff PhD Thesis 5 Who’s In Charge? Sales & Operations Planning Governance and Alignment in the Supply Chain Management of Multinational Industrial Companies 4.6 Subjectivization ....................................................................................................... 185 4.7 Finance Influence: Too Much of A Good Thing ...................................................... 190 4.8 The Challenges of Horizontal Alignment: Transfer Pricing and Total Cost of Ownership ............................................................................................................................. 196 4.9 Context Matters ...................................................................................................... 205 5. CONCLUSIONS ................................................................................................................... 209 5.1 Addressing the Research Question ......................................................................... 211 5.2 The Four Rules for Linking S&OP Governance to Alignment .................................. 215 5.3 Furthering S&OP Conceptualization: S&OP Maturity ............................................ 225 5.4 Another Way To Look at S&OP KPI ......................................................................... 229 5.5 Contributions Beyond S&OP ................................................................................... 232 5.6 Limitations of the Research .................................................................................... 235 5.7 Practitioner Reception ............................................................................................ 240 5.8 In Summary: The Key Takeaways .......................................................................... 242 6. FURTHER RESEARCH.......................................................................................................... 245 7. ACKNOWLEDGEMENTS ..................................................................................................... 251 8. APPENDIX A ....................................................................................................................... 255 9. REFERENCES ...................................................................................................................... 259 10. INDEX OF FIGURES ......................................................................................................... 275 11. INDEX OF TABLES ........................................................................................................... 277 Richard Markoff PhD Thesis 6 Who’s In Charge? Sales & Operations Planning Governance and Alignment in the Supply Chain Management of Multinational Industrial Companies Richard Markoff PhD Thesis 7 Who’s In Charge? Sales & Operations Planning Governance and Alignment in the Supply Chain Management of Multinational Industrial Companies PROLOGUE Richard Markoff PhD Thesis 8 Who’s In Charge? Sales & Operations Planning Governance and Alignment in the Supply Chain Management of Multinational Industrial Companies I have over 20 years’ experience in supply chains for a major multinational consumer goods firm: L’Oréal. At the start of my career the term ‘supply chain’ didn’t really exist. The most common term was ‘logistics’. But logistics didn’t really capture what my responsibilities were at the time. My title was ‘Director of Logistics’, but the scope of my responsibilities went far beyond the factory warehouse and docks. My team was responsible for all of the coordination and planning that kept the factory running and the customer orders filled. We managed the production planning that determined what we made in response to sales forecasts, identified capacity constraints and helped the production teams size their staffs and working hours. We were also responsible for the supply of packaging materials, a key element as this was the biggest bottleneck in our factory. Every month I would meet with the executive committee of L’Oréal Canada, joining them for sessions where launches and service issues were reviewed. Ultimately, the senior management at L’Oréal Canada looked to me as the guarantor of their inventory health and service level. And this made sense, because almost everything they sold came from my factory, and almost everything we made at our factory was for them. Our factory was complex, rigid and expensive. L’Oréal would soon decide – as did many consumer goods companies – to rationalize their production and specialize factories by technology for a region or even for the whole world in some cases. There were countless benefits, with returns so Richard Markoff PhD Thesis 9
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