Planning in supply chain

From CEOpedia | Management online

Planning in supply chain management is the process of anticipating customer demand and forecasting the resources necessary to meet that demand. It involves developing a strategy for the entire supply chain, including production, inventory, transportation, and warehousing, as well as setting goals, creating budgets, and adjusting operations to ensure they are aligned with the overall strategy. It also involves optimizing the flow of materials and information throughout the chain to maximize efficiency, minimize cost, and provide customers with the desired level of service.

Example of planning in supply chain

  • Demand Forecasting: Demand forecasting is an important part of supply chain planning. It involves predicting customer demand for products and services and preparing the necessary resources in advance. For example, a company may use historical sales data to predict future demand for specific products and then plan production and inventory levels accordingly.
  • Resource Planning: Resource planning involves determining the amount of resources, such as labor and materials, needed to meet customer demand. This includes determining the number of employees and materials required to produce a certain product, as well as budgeting for the necessary capital investments.
  • Capacity Planning: Capacity planning is the process of determining how much of a certain resource can be produced or delivered by a given time frame. This includes determining how many products can be produced in a given period of time, as well as how much space and labor is required.
  • Inventory Planning: Inventory planning is the process of determining how much inventory should be kept on hand in order to meet customer demand. This includes determining the optimal levels of inventory for each product, as well as setting policies for when to restock.
  • Transportation Planning: Transportation planning involves determining the most efficient and cost-effective way to move goods from one location to another. This includes deciding what mode of transportation to use, as well as the best routing and scheduling of shipments.

When to use planning in supply chain

Planning in supply chain management can be used in a variety of situations. It is a critical component of overall supply chain management, as it helps to ensure that resources are used effectively and efficiently to meet customer demand in a timely manner. Specifically, it can be used for:

  • Creating a supply chain strategy: Planning in supply chain management helps to define the overall objectives of the supply chain and develop a strategy to meet those objectives. It involves setting goals, creating budgets, and adjusting operations to ensure they are aligned with the overall strategy.
  • Forecasting customer demand: Planning in supply chain management helps to anticipate customer demand and determine the resources necessary to meet that demand. It involves forecasting customer demand based on historical data and market trends, as well as monitoring customer demand to adjust the supply chain strategy as needed.
  • Optimizing the flow of materials and information: Planning in supply chain management helps to optimize the flow of materials and information throughout the chain. It involves analyzing the current system and identifying any areas of inefficiency or cost-savings, as well as developing and implementing strategies to improve the flow of materials and information.
  • Coordinating supply chain activities: Planning in supply chain management helps to coordinate supply chain activities. It involves coordinating the activities of suppliers, manufacturers, distributors, and retailers to ensure that materials are delivered and products are available when customers need them.

Types of planning in supply chain

Planning in supply chain management is the process of anticipating customer demand and forecasting the resources necessary to meet that demand. It involves developing a strategy for the entire supply chain, including production, inventory, transportation, and warehousing. There are several types of planning in supply chain management, including:

  • Demand planning: This is the process of forecasting customer demand for products and services and setting goals to meet those demands. It involves understanding the customer's needs and working with suppliers to ensure that the necessary resources are available.
  • Production planning: This is the process of determining the most efficient and cost-effective way to produce a product or service. It involves setting production schedules, determining which resources to use, and making adjustments when needed.
  • Inventory planning: This is the process of forecasting and managing inventory levels to ensure that enough product is available to meet customer demand. This involves setting inventory goals, determining what inventory to purchase and how much to keep in stock, and making adjustments as needed.
  • Transportation planning: This is the process of determining the most cost-effective routes and methods for transporting goods. It involves setting transportation goals, evaluating carriers and routes, and making adjustments when needed.
  • Warehousing planning: This is the process of determining the most efficient way to store and manage inventory. It involves setting warehousing goals, determining which resources to use, and making adjustments when needed.

Steps of planning in supply chain

  • Develop a Supply Chain Strategy: The first step in the planning process is to develop a supply chain strategy that aligns with the overall business objectives. This strategy should include an assessment of current resources and capabilities, customer needs and expectations, supplier relationships, and competitive environment.
  • Set Goals: After the strategy is established, the next step is to set measurable goals and objectives for the supply chain. Goals should be specific, achievable, and time-bound.
  • Establish Budget: A budget should be established to ensure that the supply chain operations remain within the allocated financial resources. The budget should include expenses for materials, labor, transportation, and technology.
  • Monitor Performance: Once the goals and budgets are set, the supply chain should be monitored on a regular basis to ensure that the strategy is being implemented as planned and that the goals are being met.
  • Make Adjustments: As needed, adjustments should be made to the supply chain operations to ensure that the strategy is still being followed and that the goals are achievable.
  • Plan for Growth: The supply chain should be planned for future growth and changing customer needs. This includes anticipating new opportunities and risks, preparing for potential disruptions, and looking for ways to improve efficiency.

Limitations of planning in supply chain

Planning in supply chain management can be limited by a number of factors, including the complexity of the supply chain, the availability of data, and the ability to anticipate customer demand.

  • The complexity of the supply chain can make it difficult to develop an effective plan as there are many variables to consider.
  • Data availability can be limited due to the lack of visibility into the supply chain, leading to inaccurate forecasts and inadequate planning.
  • Anticipating customer demand can be difficult as the market is constantly changing and it can be difficult to predict what customers will want in the future.
  • The global nature of supply chains can also complicate planning, as different countries have different regulations and laws that must be taken into account.
  • Finally, the cost associated with planning can be prohibitive, leading to inadequate resources and insufficient plans.


Planning in supply chain — recommended articles
Supply chain modeling — Allocation of resources — Capacity management — Project cash flow — Departmental planning — Small business management — Strategy maintenance — Supply chain networks — Cost management strategy

References

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