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What Is Supply Planning?

In a world where products change hands quickly and customers are always asking for more, it's essential for supply chain professionals to have a firm handle on forecasting. The ability to accurately predict how many sales you'll have enables you to increase or decrease production accordingly, without abruptly halting your manufacturing processes to avoid overproduction or scrambling to supply enough to meet the demand. Demand and supply planning represents a two-way street and requires a bit of a balancing act; there must be enough demand to warrant continuous production, but there must also be enough products available to meet demand.

What is supply planning?

Supply chain planning works in tandem with demand planning. If an organization's demand plan indicates the need for high product volumes, its supply plan must detail the process of actually manufacturing and supplying enough of that product. Here, balance is key, and considerations must be made to ensure that costs are kept low while value is enhanced for the customer or end user.

supply chain planning

Supply planning process

To understand the supply planning process and develop a plan that supports the goals of your organization, it's important to first put together a data-driven demand plan. This will indicate the expected number of products that will be needed based on several factors such as trends, specific holidays, geographical location, customer interest, brand awareness and more. Using software to track and make sense of this data is extremely helpful and can aid in the creation of a solid supply plan. Supply chain planning incorporates everything from manufacturing and distribution to procurement and resource management and takes into account multiple factors, including the availability of raw materials and employee responsibilities. Essentially, a good supply plan answers all of the "who, what, when, where and why" questions involved in serving customers.

As products sell and move through an organization's inventory and fulfillment stages, software can be used to keep track of sales metrics and how they relate to the demand plan. These calculations provide valuable data keeps supply planning activities updated so that any changes in demand are reflected on the supply end. In the case where the organization has multiple fulfillment locations, software can also be used to keep track of supply and demand based on the geographical location of the warehouse as well as the customer base (where the orders are coming from) and then coordinate fulfillment based on the inventory at a given location.

Supply planning process

Supply planning innovations

Supply planning is getting smarter, especially with artificial intelligence and machine learning. As these technologies are further developed, they can help supply chain professionals automate various processes and streamline workflows while harvesting copious amounts of data that can be used to further improve performance. Blockchain is also having a meaningful impact by increasing the speed with which products can be delivered and adding advanced traceability, trust and process automation.

How to use supply planning effectively

Supply chain planning must consider more than simple cost reduction. Reliability of suppliers, employee performance and various other factors contribute to the success of supply planning, and organizations that focus on the entire picture — not just the bottom line — are the ones that achieve greater success. This means analyzing data on a continuous basis and making alterations that yield better performance and increased value for all stakeholders. Sustainable supply planning should be approached as a team, where all members understand their roles and tasks are delegated with employee wellbeing in mind.

Supply planning

Expresspoint case study

Moving 1.6 million global shipments each year, the industry-leading depot repair organization Expresspoint found that their supply chain processes were due for some improvements. One of these was to integrate their supply chain planning strategy so that they could lower costs, increase inventory turns and enhance perfect line delivery.

Optimize and streamline supply planning

For organizations seeking better integration of supply planning into their core processes, ASCM’s Certified in Planning and Inventory Management (CPIM) designation can help by teaching individuals how to optimize and streamline supply planning in an effort to increase productivity, timeliness of fulfillment and the overall effectiveness of supply chain activities. Visit our product page to learn more about this certification.

Learn More

If you are not ready for a full Certification, get started with an ASCM Supply Chain Planning Certificate.

ASCM’s Certified in Planning and Inventory Management (CPIM)

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