As an operations management professional, I live on the “supply” side of things. My orientation has always been toward focusing resources to 
produce what the marketing and sales (demand) side of the business says that they need. Similarly, anyone on the demand side is likely to be oriented toward satisfying whatever demand they can find. Demand is often considered to be a given — it is what it is and all we can do is try to satisfy it. But that’s not the best way to run a business, and it’s not the truth of the matter in any case.
Demand can be influenced; companies do that every day. In truth, whatever you do in sales and marketing is aimed at influencing demand; convincing people that they want and need your product, and getting the orders. Too often, however, there is a disconnect between supply and demand. Sales is highly motivated (through quotas, commissions and other incentives) to sell whatever they can, whether or not it is good (profitable) for the company. And operations is continually asked to produce whatever has been sold, no matter whether it fits in the schedule or makes the best use of resources. The result is disruption and expediting, quality problems, missed promise dates, and reduced profit.
In manufacturing, the process of linking supply and demand is called “Sales and Operations Planning” or S&OP. A demand management function prepares a forecast, operations develops a production plan, and the two sides get together (usually monthly) to work out the differences. The essential element of S&OP is this coordination process. Operations gets to develop a production plan that makes best use of resources while it satisfies demand, and the demand side gets a clear picture of exactly what they will have available to sell.
The first version of this plan is seldom an exact match between what production would like to do and what sales thinks they will sell. Compromises can then be drawn, in a controlled environment rather than in the heat of battle when customers are waiting for product or complaining about late delivery. And the company can make reasoned decisions about pricing, margins, lead times and availability.
Once the plan is agreed to (locked into place), both sides know what to do. If there is too much or too little product in stock at the end of the month, it should be relatively easy to identify which side did not keep up its end of the bargain by simply looking back at the plan. The S&OP plan is essentially a contract between supply and demand, and both should be held accountable. This should eliminate finger-pointing to assign blame. The final piece of the puzzle is to provide sales with information and guidelines so that they can make realistic (and profitable) promises to customers.
Reprinted from Portsmouth Herald / Seacoastonline.com – May 6, 2013