5 Trade-offs Why Production and Sales Divisions Never Get Along? Here’s Why

Hi Sismanity!

Do you know why the joke often comes up, “production says push, sales says sell to where?” Because behind that joke lies a real, systemic trade-off. Let’s unpack it.

Source: https://ollozaqr.elementor.cloud/sales-and-production-connection/

Conflicts between production and other functions, particularly supply chain and sales, often arise because system design choices force trade-offs. Here are five key trade-offs that often lead to “disagreements” between production and supply chain, plus an analysis of how the Manufacturing Systems Lab can quantify and teach them.

1. Inventory level vs Service level

Production tends to favor line stability and large batches for efficiency; sales demand high product availability. Holding high inventory improves service levels but increases holding costs and the risk of obsolescence. In the lab, experiments simulate reorder policies and batch sizes on small models, measuring the trade-off between fill rate and inventory cost [1].

2. Speed (throughput) vs Cost

Accelerating throughput often requires overtime, faster machines, or buffers. This increases costs. Sales wants shorter lead times; production wants cost efficiency. In the lab, conduct takt time and line balancing studies, calculating the cost per unit across multiple throughput scenarios to determine the optimal operating threshold [2].

3. Centralize vs Decentralize production (cost vs responsiveness)

Centralized production lowers unit costs through scale, but increases lead times and supply chain risk; decentralization increases responsiveness but increases costs. Labs can use digital twins to simulate factory networks with location, lead time, and transportation cost parameters, then analyze total landed cost versus service level [3].

4. Quality control strictness vs Throughput

Strict quality inspections reduce defects but slow production. Sales want speed, but production must maintain quality and avoid recalls. In the lab, run an inspection intensity vs. throughput trade-off experiment, recording the reject rate, rework time, and total cost of quality.

5. Flexibility vs Efficiency

How can the Manufacturing Systems Laboratory help resolve this “disagreement”?

1. Build a simulation module for inventory and batch size policies so students can visualize the impact of policies on service levels and costs.
2. Implement a digital twin for network design experiments: change factory location, lead time, and transportation costs to see how they affect total cost and responsiveness.
3. Use practical experiments of SMED and line balancing to empirically demonstrate the flexibility vs. efficiency trade-off.
4. Use integrated metrics (OEE + Days of Inventory + Fill Rate + Cost of Quality) in a dashboard to facilitate cross-functional decisions.

Conflicts between production and sales are often not about who is at fault, but rather about system architecture choices and KPI priorities. The Manufacturing Systems Lab can be a safe space to test policies, assess trade-offs, and train students to become mediators who understand technical and business trade-offs. With data and simulations, “disagreements” can be transformed into productive discussions for systemic solutions.

Reference

[1] M. Christopher, “The Triple-A Supply Chain,” Harvard Business Review, Oct. 2004, https://hbr.org/2004/10/the-triple-a-supply-chain.

[2] McKinsey & Company, “Capturing the true value of Industry 4.0,” https://www.mckinsey.com/capabilities/operations/our-insights/capturing-the-true-value-of-industry-four-point-zero.

[3] L. Alfaro et al., “Global Supply Chains: The Looming ‘Great Reallocation’,” Harvard Business School, 2023, https://www.hbs.edu/.

[4] Gartner, “Supply Chain Management overview,” https://www.gartner.com/en/supply-chain.

Writer: Mohammad Hilmi Hidayatullah

Editor: Brian Arga Prasidio Putra

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