Supply Chain Planning- A Simple Guide to Plan and Forecast

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Supply Chain Planning- A Simple Guide to Plan and Forecast

Consider a picnic, a simple event that is viewed with great anticipation of good food, good company, and fun.

Consider a picnic, a simple event that is viewed with great anticipation of good food, good company, and fun. It will last for a few hours, and then it’s over. But those few hours will be preceded by a few days of planning - the venue, the crowd, the food, the ancillary needs like blankets, plates, utensils, bug spray, the weather forecast, a rain date, and more.

Any one of those aspects of a picnic can throw the event into chaos, whether momentary or fatal. The crowd may change because of a conflict in scheduling; the weather forecast may change because an error was made in the analysis. The market may not have something that was essential to the menu planning.

Now, magnify that by a factor of thousands, and a magnitude of components in the chain from raw materials, to production, to shipping and delivery logistics, to marketing, to sales, to consumer demands, to seasonality in the marketplace, and more. The picnic planning is the microcosm to the macrocosm of supply chain planning, and even that is an understatement.

Supply chain planning is the crystal ball process of coordinating assets in order to optimize the delivery of goods and services from the supplier to the ultimate consumer, all while balancing the “supply and demand” of things. And yes, that’s a mouthful. There are five main components of supply chain management:

  • Planning
  • Sourcing raw materials
  • Manufacturing
  • Delivery
  • Returns

and within each of those components, there are multiple aspects that play an integral part in the process of that management.

Supply chain planning is the tactical approach to management that when well done optimizes the manufacture and delivery of products to consumers. That well-done planning can help control production costs and increase sales, and facilitate relationships with suppliers.

It represents the entire process that includes manufacturing, distribution, procurement, and inventory management operations according to demand forecasting and considering the elements of capacity limitations and the availability of materials.

This planning extends from the raw material stage all the way to the end consumer. When done well, it helps reduce costs, improve efficiency, and enhance profit margins. Poor planning results in bad decision-making and lost profits. The components of a successful plan will include:

Supply management. The actual supply of goods and services; maintaining the balance between supply and the real demand; staying within financial objectives; and, how best to meet the requirements of a demand plan.

Demand Management. The forecasting of future demand to ensure timely delivery of product to meet that demand; accurately guiding manufacturing that follows financial calculations; helping maintain adequate inventory to meet the demand and anticipated trending; and, satisfying bottom line performance for particular products and services.

Production Planning. The actual production process to determine real operations on the factory floor; appropriately allocating worker resources in production; and, the scheduling of materials used in production and determination of production capacity.

Operations Planning. Developing appropriate processes to create an efficient supply chain function; creating an outline to define the timeline and necessary resources to perform that operational analysis; how to most effectively gather information for ongoing analysis; and use that analysis to measure reporting, and cost + benefits analysis.

Sales Planning. Helping an organization focus on the crucial supply chain drivers; the aggregation of information concerning actual sales, marketing, coordination of demand, production planning, inventory control, and the introduction of new products; and, how to guarantee consumer demand is actually met.

Both within these elements and as an integral part of all the processes, an overall success to supply chain planning will come from:

➔ Demand-driven planning that is based upon real-time data;

➔ Insight planning that relies upon the ability to adapt supply chains to changing trends, changing opportunities, and the possibility of alternatives;

➔ Integration of sales planning and strategic business planning to keep everything on the same trajectory running as a well-tuned machine;

➔ Product management decisions based upon the right designs in order to maximize both profits and innovation to keep steady with current marketplace trends; and,

➔ Creating a reliable and sustainable supply of goods and services that will meet current and anticipated consumer preferences.

With all stakeholders at the “table” for these processes and their integration into a unified vision, supply chain planning that is aligned with demand planning and demand forecasting is the engine driving the organization’s success.