The role of supply chain planning in manufacturing today is a multifaceted task underpinning production line flow. Without it, the various links in the value chain would be a mess, the flow of products would be affected, deadlines would be missed, and customers would be unsatisfied. But what does the term supply chain planning mean, and why is it crucial in the production environment?
On the other hand, supply chain planning is managing the material, information, and services flowing through the supply chain network to the end consumer. In manufacturing, it refers to a coordinated plan for the production calendar, raw materials, and demand forecasts to function as efficiently as possible. When practiced, it leads to the smooth running of the business, its low expenses, and the timely obtaining of the products.
Tactical Planning in Supply Chain
To get a proper grasp of what is supply chain planning process is, it will be necessary to delve deeper into the components. The supply chain planning process typically includes:
1. Demand Planning
Demand planning is a demand forecasting process. Demand is also forecasted using past sales, market trends, and inventory to guess what products will likely be required at what time and in what quantities. This step is crucial because misjudging demand can lead to two undesirable outcomes: improper stocking, which includes overstocking or understocking.
Having large inventories consumes cash in products that cannot be sold, while, on the other hand, having low inventories limits sales and makes customers unsatisfied. In other words, the right demand planning will help match the company’s inventory with the actual customer demand, creating efficiency around inventory storage and customer satisfaction.
2. Supply Planning
After the demand plan is well developed, supply planning is next on the planning pyramid. This includes considering how the predicted demand will be satisfied regarding raw materials, manpower, and production capabilities.
Integrated supply planning involves suppliers, lead times, and available stocks should be considered. The key objective is to design a flexible value-creation network that quickly reacts to demand fluctuations or supply disruption. This flexibility is imperative in achieving high production quality while maintaining manufacturing times.
3. Production Planning
Production planning relates to how best to achieve the manufacturing process of producing finished goods from raw materials. This step consists of choosing the work rate or timetable for manufacturing the product, selecting the facilities or instruments to be used in the manufacturing process, and choosing the distribution of maintenance within the manufacturing process.
Production planning for supply-chain manufacturing controls costs, shortens lead times, and produces to the demand and supply plan schedules. Resources should thus be used efficiently to ensure that manufacturing remains unhindered and not characterized by process backlogs.
4. Sales and Operations Planning (S&OP)
The last hierarchy we will consider is Sales & Operations Planning (S&OP), which merges with all the others. S&OP is a continuous planning process in which all functional areas, such as sales, marketing, finance, and operations, participate to ensure business strategy matches operations execution capacity.
S and OP, in simple terms, mean achieving the right supply at the right time. Supply should be able to match demand, and the production plan for a particular product should align with the selling plans for the same product. This integrated function allows organizations to harmonize long-term planning with other short-term business decisions.
Implementing Effective Supply Chain Planning Strategies
Knowing what is supply chain planning might be the starting point In reality. The real issue is adding components to the plan to optimize your supply chain management. Here are some key strategies that can help:
1. Just-in-Time (JIT) Delivery
Just-in-time is a procurement technique that aims at the acquisition of goods only when these are required in the manufacturing line. This helps cut costs as one is not able to store big inventories and also helps reduce any form of wastage. However, JIT means that there has to be near-perfect integration with the supply chain, as any delay in delivery results in an immediate stoppage of production.
2. Safety Stock
As JIT reduces inventories to an absolute minimum, there is always a provision for stocks to be kept to meet the risk factors associated with supply and demand. This backup inventory allows organizations to resume production after being supplied with inadequate raw materials or when demand increases. The issue is to strike a proper balance between cutting costs on inventory and strengthening the supply chain.
3. Material Flow Analysis
Material flow analysis charts the distribution of material throughout the manufacturing process from the input to the output. From this flow, manufacturers can quantitatively define bottlenecks and streamline their processes to enhance throughput rates at lower costs.
4. Bottleneck Analysis
Every supply chain owner needs to understand that there are constraints within the process, and certain aspects of the products take longer to produce than others. The bottleneck analysis identifies such challenges well, and a business can deal with them to enhance general production flow.
5. Simulations
Business games or simulations are essentially live models of your supply chain where various hypothetical scenarios are run and tried out without interference with how the supply chain works. Using these models, businesses can forecast the impacts of shifts in demand, an unsuitable supplier, or a delay in the production line. Scientists widely use simulations to make choices for better outcomes when facing possible losses.
Advantages of Supply Chain Planning
When implemented correctly, supply chain management planning offers numerous benefits, including:
- Cost Reduction: It eliminates wastage and the overall cost associated with holding inventory and is good for utilizing resources.
- Increased Productivity: This helps increase throughput and lessen items’ days to move from one process point to the next.
- Better Customer Satisfaction: Serving customers without such a delay in demand helps to meet their needs on time and, hence, improves their satisfaction.
- Risk Mitigation: Subway stocks and recreations are important in minimizing the production process disruption caused by supply chain disruptions.
Managing Supply Chain Network with Technosoft Engineering
Coordination of supply chain planning is always challenging and requires certain skills and tools. Technosoft offers several well-managed supply chain management solutions for would-be manufacturers to ensure that the different business processes of a manufacturer are effectively handled. You may be trying to optimize supply chain production planning or require help creating an accurate demand forecast—we can help!
Are you going further with your supply chain planning now? Technosoft Engineering is here waiting to assist you in cutting costs and increasing efficiency and effectiveness in your business processes.