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Supply Chain Management Planning
Supply chain management planning (SCMP) is the forward-looking process of coordinating assets to optimize the delivery of goods, services and information from supplier to customer, balancing supply and demand. An SCMP suite sits on top of a transactional system to provide planning, what-if scenario analysis capabilities and real-time demand commitments, considering constraints. Typical modules include:
- Available/capable to promise.
- Sales and operations planning/integrated business planning.
- Collaborative planning (including forecasting and replenishment).
- Vendor-managed inventory/direct point of sale.
- Event planning (promotion, life cycle).
- Demand planning.
- Inventory planning.
- Production/factory planning and scheduling.
- Distribution planning (unconstrained, distribution requirements planning [drp] and deployment).
- Strategic network design.
- Inventory strategy optimization (simultaneous, multi-tiered).
- Supply planning (optimized, DRP and deployment).
- Production/multi-plant capacity planning (master production scheduling, rough-cut capacity planning).
Supply chain management has undergone large-scale transformation in the past few years. In the past, companies primarily used enterprise resource planning (ERP) systems for collaboration and data tracking across the entire business. Today, some companies do their planning with a mix of spreadsheets and erp systems, and others use cloud-based planning platforms.
Supply Chain Planning Process:
Supply chain planning is the process of planning a product from raw material to the consumer. It includes supply planning, production planning, demand planning, and sales and operations planning.
- Supply planning determines how best to fulfill the requirements created from the demand plan. The objective is to balance supply and demand in a manner that achieves the financial and service objectives of the enterprise.
- Production planning addresses the production and manufacturing modules within a company. It considers the resource allocation of employees, materials, and of production capacity.
- Demand planning is the process of forecasting demand to make sure products can be reliably delivered. Effective demand planning can improve the accuracy of revenue forecasts, align inventory levels with peaks and troughs in demand, and enhance profitability for a particular channel or product.
- Sales and operations planning (s&op) is a monthly integrated business management process that empowers leadership to focus on key supply chain drivers, including sales, marketing, demand management, production, inventory management, and new product introduction.
Make the move to real-time supply chain planning. When using ERP systems and spreadsheets for planning, companies typically rely only on historical data, resulting in little wiggle room for changes should any disruptions occur in demand or supply. For example, based on the previous year’s numbers, a company can estimate the number of products it will sell in the next quarter. But what if a massive hurricane destroyed a key distribution center, leading to too little supply on the shelves? With real-time connected supply chain management solution, we can create “what-if” scenarios and plan more effectively so we’re ready when disruptions occur.
- Unify supply chain planning with enterprise planning. A vital second step is connecting traditionally supply chain planning to sales and operations planning and financial planning. Companies can benefit from synchronizing their short-term operational planning with their wider business planning processes to make real-time updates to inventory forecasts and supply. Deploying real-time s&op solutions that enable enterprise-wide collaboration means key stakeholders across the business can create new scenarios and quickly assess how to use their resources wisely to optimize profitability when an unforeseen event happens.
- Anticipate the demand of the end customer. For consumer-packaged goods companies, anticipating what customers want and when they want it is an ongoing challenge. A solution allows end-to-end visibility across the supply chain, and beyond their existing network of wholesalers and retailers to sense demand signals from customers. When we can rapidly identify changing consumer sentiments and assess how that changes demand for product, it benefits company, partners, and customers by improving profitability, margins, and lead time.
- Leverage real-time data across all points of the supply chain because supply chain planning typically involves a myriad of suppliers, channels, customers, and pricing schemes, models soon become large and potentially unwieldy especially when spreadsheets are primary planning tools. Incorporating a solution that uses real-time data allows we to plan with more accuracy and reduces the risk of stock-outs or having too much inventory.
- Ensure we have the flexibility to cope with change. When we have technology that lets we plan efficiently and react quickly, disruptions aren’t disruptive because re-planning and re-forecasting is easy resulting in time and money saved and increased profitability.
Disruptive technology is the new normal emerging technologies like, artificial intelligence, and machine learning are generating massive amounts of hype and attention in the supply chain management world. It can be difficult to find way through the hype, but as they’re becoming ubiquitous, supply chain planners need to understand how to harness them for maximum benefit. For example, supply chain management for smart contracts, for maintaining ethics and sustainability, and for better security, traceability, and efficiency. If we can effectively integrate this emerging technology into supply chain, the sky’s the limit. A new supply chain planner for a new supply chain. Along with new technologies and practices comes the need for a supply chain leader with a new set of skills. To lead the way into a trans-formative future, they need to combine technical and business knowledge with collaboration and communication skills. The ability to influence department leaders that partner with supply chain is key, as well as the skills to interact intelligently with leaders across the organization is essential, because supply chain initiatives often reach across business units. And strong business acumen is a must-have. we’ll be more effective working with counterparts in finance, sales, and marketing if we can speak their lingo.
The effective supply chain leader of tomorrow is tech-savvy and comfortable working alongside the world of “machines.” Some have said that artificial intelligence won’t replace managers, but managers who work with AI will replace managers who don’t. This highlights the transformation taking place in supply chain: humanity is essential, but so is technology. And this leader is a storyteller—digging into the countless layers of the supply chain to find the issues and weaving the right story together to help solve them. By effectively adapting to the supply chain digital revolution and following the steps to connected supply chain planning above, we’ll be ready to collaborate across the enterprise, quickly adjust to market changes, and reap benefits, including lower costs and increased efficiency.
