Supply Chain Management: How to Improve Your Planning Process

supply chain management

Supply chain management is a term often used in the business world to describe the “chain” of events that occur in between a company’s manufacturing process and its customers. One key component of supply chain management is the planning process, which includes determining how much inventory should be stocked, when it will be needed, and where it shall be located. In this article, you’ll learn about various ways to improve your company’s supply chain management process to save time and money!

Supply Chain Management

What is Supply Chain Management?

Supply Chain Management is the process of managing an organization’s supply of materials and its related processes. It includes the stages from procuring raw materials to distributing the finished product. The goal of Supply Chain Management is to increase an organization’s efficiency, maintain low inventory costs, and keep a healthy relationship with suppliers.

Why does SCM Matter?

Supply chain management matters because it can have a huge impact on your company. The most important process in the supply chain is the procurement process. Manufacturing raw materials or parts is expensive, so you want to make sure they are available when you need them.

What are the Components of Supply Chain Planning?

Supply chain planning includes four separate components: inventory management, forecasting, demand analysis, and capacity. Inventory management is the process of using data such as sales history and supplier lead times to determine how much stock to maintain. Forecasting is the process of determining what products will be needed in the future and when they will be needed. Demand analysis is the process of analyzing supply and demand for a given product to ensure that customers can be served and suppliers can be paid. Capacity is the ability of a business to meet customer demand for a product over time by managing its resources.

The Supply Chain Planning Process

Supply chain planning is a strategic process that helps organizations develop a plan for the future. It coordinates the various functions in the supply chain, which includes sourcing materials, production, and distribution. The goal of this process is to have a plan for managing inventory levels and demand to prevent stock outs and overstocks.

Identify trends that are worth following

Every supply chain has some level of end-to-end unpredictability. The idea is to identify trends that are worth following and, if possible, take steps to reduce unwanted risks or costs. A good example would be the legalization of marijuana. This trend will likely have an effect on inventory, packaging, and labeling requirements for many companies in the near future.

Determine input needs

The first step in supply chain management is to determine your input needs. Determine if you need products, services, land, labor, machinery, equipment, or raw material for your production process. This will help you identify what partners you might need to have a successful business.

Forecast the forward demand for input supplies

It’s important to forecast the forward demand for input supplies. You can use statistical analysis and regression forecasting tools such as Red Sash, SAP Crystal Reports, and Excel for this. To protect your company from disruptions of critical supplies, it’s also essential to use a variety of sourcing strategies such as multi-sourcing and long-term contracts with suppliers.

Develop alternative courses of action to meet the forecasted need for inputs

The success of your company’s supply chain is dependent on the ability to plan ahead to reduce unexpected disruptions in the supply chain. The ability to have alternative courses of action will help reduce these disruptions, by ensuring that there are alternatives available. Developing multiple scenarios for how the market will respond to your forecasted need for inputs will also allow you to plan ahead, because you’ll have a better understanding of what could happen.
Bullet Point: Determine Your Company’s Supply Chain Strategy
Paragraph: There are three basic strategies for managing your company’s supply chain: push, pull, and combined. Push strategies involve purchasing all inventory before it is needed, while pull strategies involve buying only what you need when it is needed. Combined strategies use some

supply chain management

Execute chosen course of action monitoring

The act of monitoring chosen course of action is one important step in executing. You need to track how well you are performing against the plan. Whenever there is a deviation, it needs to be addressed immediately. The importance can’t be stressed enough when it comes to planning and execution in the supply chain business.

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