Supply Chain Planning
Supply chain planning involves the development of various resource plans to support the efficient and effective production of goods and services. Four key processes are generally supported by supply chain planning modules:
- Demand Planning and Forecasting
Supply chain planning begins with product demand planning and forecasting. To develop demand forecasts, SCM modules examine historical data to develop the most accurate forecasts possible. The accuracy of these forecasts will be influenced greatly by the stability of the data. When historic data are stable, plans can be longer in duration, whereas if historic data show unpredictable fluctuations in demand, the forecasting time frame must be narrowed. SCM systems also support collaborative demand and supply planning such that a sales representative can work together with the demand planner, considering data provided by the organization’s point-of-sale system, pro- motions entered in the customer relationship management system, and other factors influencing demand. Demand planning and forecasting leads to the development of the overall demand forecast.
- Distribution Planning
Once demand forecasts are finalized, plans for moving products to distributors can be developed. Specifically, distribution planning focuses on delivering products or services to consumers as well as warehousing, delivering, invoicing, and payment collection. Distribution planning leads to the development of the overall transportation plan.
- Production Scheduling
Production scheduling focuses on the coordination of all activities needed to create the product or service. When developing this plan, analytical tools are used to optimally utilize materials, equipment, and labor. Production also involves product testing, packaging, and delivery preparation. Production scheduling leads to the development of the production plan.
- Inventory and Safety Stock Planning
Inventory and safety stock planning focuses on the development of inventory estimates. Using inventory simulations and other analytical techniques, organizations can balance inventory costs and desired customer service levels to determine optimal inventory levels. Once inventory levels are estimated, suppliers are chosen who contractually agree to preestablished delivery and pricing terms. Inventory and safety stock planning leads to the development of a sourcing plan.
As suggested, various types of analytical tools such as statistical analysis, simulation, and optimization are used to forecast and visualize demand levels, distribution and warehouse locations, resource sequencing, and so on. Once these plans are developed, they are used to guide supply chain execution. Additionally, it is important to note that SCM planning is an ongoing process as new data are obtained, plans are updated. For example, if shortages in the capacity for manufacturing touchscreen displays suddenly become evident, Apple must dynamically adjust its plans to obtain the needed quantities to meet customer demand.
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