Supply chain planning is a part of supply management that coordinates assets to optimize the delivery of goods, services, and all information flowing from a supplier to a customer while balancing supply and demand. Show
A supply chain refers to the network between an organization and its suppliers that allows it to manufacture and distribute a particular product to buyers. This network comprises several activities, people, entities, information, and resources. The supply chain represents all the steps taken to get a product or a service from its unprocessed state to a finished one for the consumer. Companies create supply chains to reduce costs and remain relevant and competitive in the business landscape. Supply chain planning refers to the whole process of planning a product from its raw material stage to the final one delivered to the consumer. It is inclusive of supply production and demand planning as well as sales and operations planning. The TIBCO Supply Chain Nervous System How to deliver resilient supply chains with a system of connected intelligence. Download Whitepaper How Does Supply Chain Planning Work?The process of supply planning begins with an approved plan of demands. The plan includes a complete review of all sales, the approved channel- and regional-level forecasts, and customer forecasts. This plan then goes through a demand for a translation step. If supply chain planning software is used, the demand plan is automatically allocated to the location where the demand for that specific client or item relationship is usually fulfilled. The automated software uses customer orders to create records that identify the ship-from location. This record is used to generate a forecast for that specific location. The software makes it easy to transition the demand from one location to another in parts. With the translation step complete, the supply plan is next used to create a finished goods master production schedule for each item and by location. The supply plan documents all related attributes of the product being made. It also has data on the numbers available in inventory, how many orders are open, those that are in the pipeline, lead times for manufacturing, minimum order quantities, buffer stocks, and more. With this detailed supply plan on hand, the user can run a requirements and capacity review to develop an in-depth understanding of the impact of demand and supply plans on resources. Where needed, the plan can be altered to address any issues. When supply planning is complete, the user can approve the plan and generate a master plan that is pushed into the enterprise resource planning (ERP) for execution. The master plan can also be used in supply chain planning software to run everyday product planning and ordering. Such a planning suite is placed over a transactional system that enables planning and deals with real-time demand commitments while considering constraints. Some typical modules included are:
Supply Chain Planning Strategies and MethodsThese are some of the supply chain planning strategies and methods that are employed by organizations to enable a seamless, thorough supply chain: Data GatheringReal-time data with precise figures and information allow for deep insights into the supply chain, enabling quick decision-making. Lean PrinciplesWith a supply management system based on the just-in-time concept, management can reduce inventory costs. Orders are fulfilled faster and overhead costs are reduced. This makes way for a smooth inventory flow. Heightened VisibilityEvery supply chain runs the risk of accidents resulting in waste. With better operational visibility, the amount of inventory loss can be reduced. StandardizationWith an enterprise resource system that enables higher efficiency, the supply chain enhances its revenue streams in the long and short run. With a planning system, identifying software that is easy to understand for the team encourages better collaboration and reduces the chances of future mistakes. Benefits of Supply Chain PlanningWith an effective supply chain planning system in place, a business can enjoy several benefits that can enhance its competitive edge. Some of these benefits may include: Reduction in CostsThere are several crucial areas where a business can enable reduced costs. Lower costs can result in:
Improved EfficiencyWhen a business develops the capacity to incorporate supply chains, creative product strategies, and integrated logistics, it puts the organization in a better position to predict demand and take the right actions. This is the biggest benefit. When an organization has a robust supply chain in place, it can deal with a dynamic market and adjust itself accordingly with no constant micro-management or extra analysis. Increased OutputWith an improvement in supply chain systems, communication is also better. This improvement leads to enhanced coordination and collaboration between companies that manage shipments and transportation, including vendors and suppliers. Better CooperationSuccessful businesses usually have superior communication. With a lack of clear communication, the business’s vendors, distributors, and employees may not be able to understand your plans clearly. Supply chain planning results in better communication between all entities, and this results in better cooperation. Technology has enabled communication channels to be open even in remote working environments or multiple international offices and time zones. Increased ProfitsWhen businesses open up to high-end technology and implement better collaboration in all areas, efficiency and productivity are improved, leading to higher profit levels. Enhanced Supply Chain NetworkIntroducing a mix of lean practices such as stock control or waste reduction helps create a continuous improvement system. Data from multiple areas of business enhances your company's supply chain network. Reduce DelaysA well-planned communication system can reduce delays in supply chain processes. With every person in the system understanding their role in the business accurately, several production line issues can be mitigated. Five Core Principles for the Digital Factory of the Future Gain the agility to integrate your manufacturing systems in the cloud. Download Whitepaper Challenges in Supply Chain ManagementThere are three common pitfalls to supply chain planning. These issues are usually seen in the supply chain management system in general; they also apply to the sub-categories, such as planning.
Achieving optimal supply chain planning is not easy, but it is integral to helping a business grow. As with every system, there can be some pitfalls and challenges that will need to be addressed. Smart workarounds can help businesses create the perfect supply chain planning system. What is demand and supply process?The law of supply and demand combines two fundamental economic principles describing how changes in the price of a resource, commodity, or product affect its supply and demand. As the price increases, supply rises while demand declines. Conversely, as the price drops supply constricts while demand grows.
How is planning used to coordinate demand and supply?The term “sales and operations planning” implies that demand and supply planning are connected. As a best practice, demand planners work with marketing and sales to accurately forecast future demand, while supply planners anticipate the resources needed for the operation to fulfill the demand.
What is supply planning and demand planning?Demand planning mainly concerns predicting consumer demand to manage supply chain operations. Meanwhile, supply planning primarily involves managing inventory to meet the projected demand.
What is demand planning process?Demand planning is the process of forecasting the demand for a product or service so it can be produced and delivered more efficiently and to the satisfaction of customers. Demand planning is considered an essential step in supply chain planning.
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