What is Supply Chain Planning Process?
A supply chain planning process is a business strategy that outlines the steps a company will follow to manage its supply chain. The plan can include details about inventory levels, product flow, and delivery schedules so that all parties involved in the process are kept up to date. A supply planning process can be a best-practice template that can be customized to fit your company’s needs. It can also be a foundation for an improvement plan since it can be customized to provide metrics for every stakeholder within your company.
- Simply put, the supply planning process is one of the best strategies that you have to maintain the balance between supply and demand. The truth is that it includes many different factors including the use of specific tools for production, sales, and inventory.
- Overall, supply chain planning systems are crucial for every business. This is the way that businesses have to monitor, automate, and control all processes with the use of modern tools.
- Ultimately, this allows businesses not only to cut costs but also to work more efficiently.
1. Why Do You Need a Supply Chain Plan?
During the planning stage of the supply chain, organizations need to monitor the status of each step in the process and ensure that each of them is in order to avoid any delays and other issues that can jeopardize the success of the operation. To do this, you need to know what your suppliers are doing, what the performance of your inventory is, and how long it will take for the product to reach the customer. A supply chain plan will provide you with all this information and more. It will show you the current state of the operation, forecast when problems may occur, and let you know how to remedy the situation with the right tools and resources.
Students of AIMS’ MBA with Logistics and Supply Chain Management program learn to plan and implement supply chains using the supply chain planning steps. The master’s program may also lead to PhD – Supply Chain Management and Logistics.
2. How to Plan for a Supply Chain?
The modern supply chain is a magical combination of technology and business processes that allows companies to efficiently source, produce, and deliver goods to customers. When everything is working as it should, the supply chain makes sense of raw materials, manufacturers, distributors, stores, and consumers. It manages all of these inputs through different stages and movements until they reach the customer. With such complexity comes a challenge for supply chain professionals who have to plan the entire process accurately and in a way that minimizes risks while maximizing potential. Read on to learn more about what a Supply Chain Planning Process entails and how you can successfully plan your own supply chain.
Supply Chain Planning Steps:
1. Make Sure That it is Made in Real-Time:
While in the old days businesses needed to rely only on historical data, this is no longer enough. The reality is that businesses need to create different scenarios and plan for each one of them. This makes sure that you are able to take control when any disruption occurs.
2. Integrate the Supply Chain Planning process with the Company Planning:
A business needs to be managed with common goals. So, you need to make sure that all the goals are perfectly aligned. The integrated supply chain management – horizontal and vertical will ensure that your business is able to synchronize your short-term operation planning with supply, and inventory forecasts, among others.
3. Learn More About Your End Customer:
In case you sell directly to consumers, the more you know what they want and when the better you can plan. With the use of different supply chain planning processes, you can discover more about your end consumer and quickly adapt the supply of your product, based on the right supply chain network design.
4. Use Real-Time Data to Gain An Edge:
When you use real-time data, you will be able to reduce the risk of having too much inventory and reduce the risk of stock-outs. Ultimately, you will plan with more accuracy.
5. Keep Adapting:
One of the most important steps in using the system is that you need to keep adapting, and fast. This is why it is so important to have the right technology that allows you to know what is happening in real time and that any disruptions that may occur won’t affect you because you already forecasted this scenario. So, you’ll be able to make all the necessary changes quickly which will not only save you time and money as it will also increase profitability.
So, what are the key supply chain planning systems that you can use to make your processes more efficient and effective?
Supply Chain Planning Systems:
In our opinion, there are two main key systems that we believe are the most important ones in what concerns supply chain planning systems:
1. Training and Motivating Employees:
Supervisors need to be furnished with the right knowledge and tools to run successful planning. This is the only way they can then make sure that the employees have the right tools to succeed. When the supervisor knows what is happening in real-time and knows how he should act in case of a disruption, he will be able to pass on the information to his employees, ensuring that the process is still in place.
2. Understanding the Future Demand:
While this is easier said than done, there are different methods that you can use to ensure that you can reduce inventory, minimize waste, and improve in-shelf availability. One of the best strategies to implement this is by taking advantage of the forecasting methodology.
Benefits and Disadvantages of a Supply Chain Planning Process:
Advantages:
- Planning and optimizing the supply chain within an organization can help to improve productivity, increase customer satisfaction, and lower costs. In return, successful supply chain planning steps will result in a more resilient organization that is better equipped to compete with fierce global competition.
- When implemented correctly, a supply chain plan can help to reduce uncertainty and complexity, helping to improve the predictability and control of processes along the supply chain.
- It can also help to minimize risks and reduce costs while achieving faster growth and expansion.
- It can help to increase employee engagement and satisfaction. A robust process that involves stakeholders from all levels of an organization will likely result in a better understanding of the needs and expectations of every person in the company. As a result, more people will be able to feel like their input matters, and the overall success of the organization will be improved.
Disadvantages:
One of the most important aspects of a successful supply chain planning process is the ability to identify and minimize the risks that may occur throughout the operation. Without the proper insight into where problems may arise, it is difficult to effectively plan for them.
There may be several disadvantages to the use of a supply chain planning process. For example:
- Some may argue that it is unnecessary, as the human brain is extremely good at scanning the environment and quickly identifying problems.
- Another disadvantage of a supply planning process is that it is expensive. This is a common problem in many organizations, as they struggle to deal with the costs associated with the process while simultaneously trying to catch up with their competitors. If a company cannot afford to invest in the process, then it will likely struggle to implement any benefits.
CONCLUSION:
When implemented correctly, a supply chain planning process can help to reduce uncertainty and complexity, helping to improve the predictability and control of processes along the supply chain. It can also help to minimize risks and achieve faster growth and expansion. However, supply chain planning is not an easy task, as it requires a significant amount of time and effort from the entire organization. This is why it is often beneficial to partner with an organization that specializes in supply chain management. A well-implemented supply chain plan can improve the efficiency and profitability of a company, helping to lower costs and increase the overall return on investment.
- With a good forecast, you will have fewer missed sales, lower working capital, higher and better customer service levels, less waste and spoilage, more efficient manufacturing, and a reduced effort of everyone involved in the process.
- As you can see, supply chain planning is one of the best strategies that you can use to minimize waste and costs and increase profitability at the same time.
- While there are multiple tools that you can use, the truth is that one of the most important things to have in mind is to ensure that you have access to real-time data.