For you to meet the requirements created from the demand plan, supply planning offers balance to the supply and demand system. It does this in a way that achieves the goals of both overall enterprise service and finances.
The Supply Chain Planning Process Explained
Supply chain planning allows requirements to be met that are set out from the demand plan. However, other factors set these requirements. Such as:
- Production Planning
- Demand Planning
- Sales & Operations Planning
Let’s first address Production Planning. This takes an approach to the manufacturing and production modules inside a company. It considers the distribution of resources such as employees, production capacities, and materials.
Next is Demand planning. This process estimates the demand for a product, and then it ensures reliable delivery. If you plan out demand correctly, you can see an improvement in accuracy in revenue predictions and inventory volume.
Now to look at Sales & Operation Planning. This is a monthly management process that should be integrated into the business. It will encourage the focus of leadership on critical supply chain drivers, such as:
- Demand Management
- Inventory Management
- New Product Introduction
Once you have unified your supply chain with enterprise planning, your next step is to connect the traditional supply chain plan with sales & operations. You are also going to need to connect it with financial planning. Inventory forecasts and supply updates in real-time can be made by combining the short-term operational planning with the broader business plan process. When you deploy the real-time solutions of sales & operation planning, as long as they enable enterprise-wide collaboration, stakeholders throughout the business can quickly assess their resources and create new scenarios. Doing this will optimize their profitability in the event of the unexpected happening.
Anticipating Customer Demands
For many packaged goods, businesses can anticipate what your customers are wanting, and when they want, it can be a challenge. A business solution such as Anaplan can help you with end-to-end visibility throughout the supply chain. Whenever you can identify changing sentiments for consumers, then you can learn how it can change the demand for products. Doing so will benefit your company, business partners, and a consumer through the improvement of lead time, profitability, and margins.
Real-time Data Supply Chain Leveraging
Supply chain planning will often involve multiple channels, suppliers, pricing schemes, and customers. Eventually, the models will become excessively large and confuse if you are only using spreadsheets as a planning tool. When you use a solution that can use real-time data, it can allow you to start planning with accuracy, which reduces risks of overstocked inventory or stock-outs.
Ensuring Flexibility for Change
When you have a solution that can allow for efficient planning that allows for quick reactions, there are fewer disruptions. That is due to less forecasting and replanning that can cost money and time while decreasing profits.
A rational way to understand supply chain management is to understand the planning phases. The levels of planning can provide an understanding of processes in supply chain management. These levels are:
This is the planning that uses long-term decision making. It can create procedures and policies for getting, making, and shipping to meet plans of the business. It will create foundations for processes that are needed for the supply chain to work efficiently and effectively. The choices made during this phase are selected carefully due to impacts on the business. It is an integral part of supply chain management. Examples of decisions during this phase can include things such as:
- Supply chain configuration
- Mergers and acquisitions for market share expansion
- 10% revenue increase
Creating a plan that is broken into small parts so that it can be achieved is where tactical planning works best. The goal is to increase efficiency in short-term operations with limitations. The short-term objectives need to create value to support the strategic planning of the business. Examples of tactical planning can include things such as:
- Product production levels
- Supplier selection
- Reduction policies for inventory
- Semi-annual and quarterly forecasts
These activities are done daily or weekly, that help to complete tactical goals. Activity control policies are made to ensure that everything creates value and is optimized. Most of these processes are seen during daily operations. Examples of this include:
- Generate packing lists
- Weekly inventory count cycles
- Production schedules
- Customer orders
Critical Elements for Supply Chain Planning
Operation and Sales Planning
A key element for business planning is sales and marketing to work with supply chain suppliers and financers. It is during this step that you can get input from your business regarding the material requirement and capacity use at manufacturers, performance expectations, customer demand, and promotions.
It is here where there are higher levels of inaccuracy and confusion than others. To improve the performance of supply chains, it is done here. Demand forecasting accuracy includes things like:
- Better financial management
- Less waste
- Cost control
- Customer order fulfillment accuracy
- Working capital and inventory management accuracy
- Manufacturing network usage accuracy
- Inbound material management accuracy
Here, you will work with suppliers and customers to promote value through a supply chain in your business.
When it comes to low demand planning effects, you notice:
- Supply management has to generate contingency plans for delivery and purchase of materials for factories, which wastes time, money, and performance of the MRP system.
- Incorrect product supplies in the wrong facilities which result in interfacility waste and freight costs
- Inaccurate supply planning, as well as overstock, causes inventory waste, decrease in working capital and warehouse space
- A decrease in customer satisfaction
When all of the elements of supply chain performance creates the supply plan, here is where you will generate increased performance in manufacturing, inventory management, and transportation. In the production network, whether through third-party or network manufacturers, the source for greater accuracy, conversion cost expenses in the supply chain can lead to fewer line changeovers, higher asset usage, correct quantities for inventory, longer run sequences, and increased on-time deliveries. There may be times when the accuracy of planning allows you to reduce expenditures caused by capacity requirements.
When downtime waste, less overstock, material flow coordination, inbound freights, customer requirement knowledge, and marketing promotion directions are removed, it becomes a classic form of lean manufacturing and operations. Waste reduction is what provides the foundation for high profitability and increased margins.
Supply Chain Execution
Supply chain execution technology will use information created by tools for supply chain planning to guide raw material movement, storage, physical production, assembly components, and completed products. These applications can be added to the supply chain planning interface along with types of management systems to determine your production capacity along with time and cost constraints, capacities, along with production plan calculations that fit requirements.
Supply execution applications can help to adapt your plans quickly for changing variables. It helps with logistics, transport management, warehouse management, inventory management, and order management. They can also track the physical status’ of products along with financial information and material management.
Warehouse Management Systems
These systems will manage your warehouse operations and distribution centers. It includes functions like automated material handing equipment interfaces, labor management, shipping, packing, replenishment, order picking, order allocation, wave planning, task interleaving, cycle counting, inventory management, put-away, and receiving. It uses RF or radiofrequency technology with the help of barcodes to provide the foundation of Warehouse Management systems to deliver accurate, real-time information.
Transportation Management Systems
These systems are used to manage the activities of your freights in your business. It includes freight audit, payments, freight management, visibility, carrier selection, routes, shipping modes, ratings, freight movements, and planning.
These are used to support the tactical planning of material and plant resources to create a production schedule. They often contain integrated functionalities for multiple areas like maintenance management, process management, quality management, labor management, document control, detailed scheduling, resource status, and resource allocation. It may also provide you with feedback from the production floor with real-time information and interfaces for Supply Chain Event Management and Supply Chain Planning along with accounting software.
This process is not a specific market. A lot of the functionality that comes with this is through what order management handles within the SCM, ERP, and CRM markets because it guides the services and products through tracking, processing, and order entry.
Procurement and Sourcing
This application will be used to support management and automation for purchasing, also called procurement and sourcing of indirect and direct goods, content, and suppliers such as supplier directories, databases, catalogs, and more.