Pain in the (Supply) Chain (HBR Case Study and Commentary)

It's the end of the quarter, and the sales staff at Exceso Corp. is scrambling to meet CEO R. Foley Vinton's overheated 9% sales target. Sure, the sales team has always hit its target in the past, and yes, that number was based on its forecast data. But the fact is, the projection was based on raw data. And as Martin Wu, the company's head of sales, warns Vinton, sales will do well to hit 3%. Vinton remains unconvinced. He has already given that number to the analyst community, and, he thinks, if he keeps up the pressure, Wu will find a way to make it, just like he always does. So Wu and his sales team do what they have done in the past--discount the heck out of their product and load up the distribution channel. That's great news for Alice Dias over at Flemings ValuMart. She just stocked up on 3,000 cases of ClickZipPlus at a 6% discount to the standing price, with the idea of shipping most of it to diverters and to other ValuMarts in regions that haven't been offered such a good deal. But it's bewildering to analyst Andrea Valdini who, after Vinton has just shepherded her through a plant cranking at full production, can't find any eight-packs at a store near the very offices where she and her colleagues are pondering the health of Exceso's stock. "They can't keep this up much longer," suggests a ValuMart manager, pointing to the empty shelves that are the ClickZipPlus display. As he falls asleep that night, Vinton thinks they'll be able to kick the loading habit--someday, when the timing's better. But should they? In R0205A and R0205Z, four commentators offer advice in this fictional case study.

• Operations strategy
• Information systems
• Supply and demand
• Production