Introduction to Supply Chain Planning
Supply chain planning (SCP) is a part of supply chain management which is used to predict future requirements for raw materials, components, etc; to help balance supply and demand. If the SCP is not adequately managed and planned for, the entire supply chain can be affected. Staff need to ensure they are well equipped to deal with the planning aspects of SCP.
A core part of SCP will be effectively managing master scheduling. Effective master scheduling will give management the needed information to plan and control manufacturing timetables and processes. As a result the organisation can increase its efficiency and accuracy in manufacturing within the supply chain.
Material Requirements planning
MRP is a system (often computer software based) which is used to manage the production planning, scheduling and inventory aspects of the manufacturing processes. MRPs cover a few main objectives:
- Maintain as low a level of stock as possible without impacting on supply and demand
- Plan manufacturing activities, delivery schedule and any other purchasing activities
- Ensure availability of materials for production
- Ensure products are available for delivery
This is a process the organisation uses to determine their ability to meet the changing demands for products. Capacity planning involves considering how effectively current processes are working and how to improve them through introducing new manufacturing techniques, increasing workers or machines, etc.
Product life-cycle management
Product life-cycle management (PLM) is an extensive process in which the entire life-cycle of the product is managed from inception through to production. The PLM processes require involvement from a wide range of parties and departments.
Planning time horizons
As part of supply planning, planning time horizons are crucial to ensuring processes are either evaluated or have come to an end. A time horizon is a set period of time that organizations will use to look to the future when preparing a strategic plan. The average is around one year.
Sales and operations planning (S&OP) is a key process used to manage all key functions of the organisation that relate to the supply chain. This process will include sales plans, production plans, inventory plans right through to product development plans.
A well implemented S&OP process will help to manage the supply and demand for products and resources so the sales targets are met effectively and profitably.
Creating a balanced supply plan
A well-balanced supply chain involves several vital planning elements. Without these elements, organizations may struggle with managing the supply chain and risk losing profit.
A balanced supply plan will involve looking at the demand and how much the organization can supply to its customer, and then match this up with the demand plan. If these figures match the next step can be planned.
Delivering customer value with S&OP
In order to ensure that customers are gaining the best value from the products, organisations will need to implement a successful S&OP framework that will ensure clear direction and collaboration across departments and processes to achieve production goals and greater profitability.