Supply chain planning involves planning a product from when it is still a raw material form to the final product received by the consumer. Therefore, supply chain planning is a forward-looking process for the coordination of assets to optimize the delivery of services, goods, and information from suppliers to customers by balancing supply and demand.
Supply Chain Planning Modules
Supply chain planning is part of a transactional system that considers scenario analysis, constraints, and demand commitments. Some supply chain planning modules include the following
- Sales and operations planning:this is an integrated process that helps management focus on the critical supply chain drivers, such as sales and marketing.
- Demand planning:the focus is on forecasting demand to ensure reliable product delivery. Effective demand planning will improve revenue forecasts and profitability as inventory levels will align with customer demand.
- Production planning:the focus is on the production of products in a company by considering the resource allocation and production capacity
Principles Of Supply Chain Planning
Companies should adhere to the following principles in their supply chain planning:
- Systematic management of master data fields, such as critical data fields for customers, suppliers, and manufacturing resources.
- Synchronized long-term execution, planning horizons, and data refresh intervals.
- Mature collaborative processes for essential suppliers and customers to reconcile forecasts and orders.
- Data-focused understanding of the forecast’s inputs, such as forecast errors, new products, and cumulative bias.
- Intense focus on sell-through and point-of-sale data instead of sales orders and sell-in data.
- A controlled product lifecycle management process to bridge the gap between the supply chain and product development
- Ongoing improvement in understanding consumer behavior.
Connected Supply Chain Planning
Companies need to connect their supply chain planning from the beginning to the end to be successful. The following steps will facilitate connected supply chain planning:
- Move to real-time supply chain planning: Supply chain planning should be flexible enough to consider disruptions in demand and supply immediately to allow companies to respond more effectively to these disruptions.
- Consolidate supply chain and enterprise planning: Supply chain planning should connect to sales, operations, and financial planning to have real-time optimization of profitability, even when unforeseen events happen.
- Anticipate the demand of the customer: A supply chain planning system should anticipate changes in the needs of customers.
- Companies should leverage real-time data from different supply chain points: Real-time data allows more accurate inventory planning.
- Enhance the flexibility to handle change: A robust supply chain planning system makes re-planning and re-forecasting easy when disruptions occur and should increase profitability over time.
Supply chain planning should result in a robust supply chain management strategy. The supply chain management strategy forms a critical base for a company’s business strategy, which ultimately focuses on long-term sustainability.