Supply Chain Planning

Supply Chain Planning: the process of coordinating assets to optimize the delivery of goods, services and information from supplier to customer, balancing supply and demand.

The starting point is Demand planning which 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 the backbone of supply chain planning.

The importance of good Inventory Management can’t be stressed enough. Poor inventory decisions lead to an increase in Working Capital, potential customer service issues and higher operational costs, be it expediting costs, storage costs, set up costs or even efficiency losses.

Every company wants to build a sound production and distribution plan to optimize efficiency, service and inventories. The key is obtaining a feasible plan that ensures materials, equipment and human resources are available in due time and requirements and resources are aligned.

The plans also need to support the flexibility requirements as requested by the market and defined by management. Flexibility can be built into the plan through the correct use of Inventory, (Over)Capacity and Lead Times. Building flexibility has a cost. It has to be well thought through to stick to the market expectations in order to balance revenue and cost and maximize margins.

Sales & Operations Planning (S&OP) is must have to align all stakeholders. This management process needs to focus, align and synchronize all functions of the organisation: General Management, Sales, Supply Chain, Operations, Product Development, Finance and Human Resources. Typically, S&OP runs a process set up around 4 different meetings considering performance, future plans and action plans: New Product Development meeting, Demand meeting, Operations meeting and S&OP meeting.