A detailed supply chain planning mechanism can help supply chain planners with critical elements for Research shows that 79% of organizations with high-performing supply chains achieve greater revenue growth compared to the industry average. Also, companies with optimal supply chains benefit with 15% lower supply chain costs, less than 50% of inventory holdings and 3x faster cash-to-cash cycles. Show
It is evident that a well-orchestrated supply chain mechanism starts with an efficient supply chain planning process. Why do organizations need an effective supply chain plan?Today, most supply chain managers are under the constant pressure to reduce costs, improve supply chain efficiency, and enhance revenue margins. With a lack of clear visibility into their supply chains due to manual reactive operational approaches and poor demand planning tools, they miss out on the much needed deep insights. This keeps them from creating smooth, synchronized and responsive supply chain plans to achieve the desired operational excellence. A robust supply chain plan can provide further contingency sub-plans which can help firefight common points of failure and create strong strategies for demand planning in supply chain management. What is supply chain planning?Supply chain planning is the process of accurately planning the journey of a material or a product right from the raw material stage to the final consumer. A detailed supply chain planning and supply chain forecasting mechanism can help organizations with critical elements for operational success including material management, waste elimination, and working capital optimization. The process involved in orchestrating supply chain planningSupply chain planning itself involves multiple steps to achieve optimal supply chain goals. The process involved is as follows: 1. SUPPLY MANAGEMENTThe first step in supply chain planning is to manage the actual supply of goods or services. Key questions answered with this:
The next step is demand management which is the process of forecasting or predicting the future demand to ensure goods and services can be accurately delivered based on the needs. It also creates a smooth platform for accurate demand planning in supply chain management. Key questions answered with this:
The next step is production planning which relates to the actual production and manufacturing processes and their dynamics. Key questions answered with this:
Operations planning is the step that addresses the need to develop specific operational processes for an effective supply chain function. Key questions answered with this:
Sales planning is the next step which includes a periodic integrated operations and warehouse management process that can help the organization to focus on key supply chain drivers. Key questions answered with this:
Strategies for effective supply chain planning1. DEMAND DRIVEN PLANNING BASED ON REAL-TIME INSIGHTSSupply chain strategies that are purely demand-driven are always more successful than those which are not. The key indicators :
As organizations get clarity on the demand forecasting aspects, they next need to adapt their supply chains to fluctuating market scenarios, changing opportunities and possible alternatives. The key indicators :
Although the objective of sales and operations planning is to run all just in time management in supply chain processes together like a well-oiled engine with good coordination among sales, distribution, logistics, etc., many times this doesn’t happen. The key indicators here are:
Very often, product-oriented decisions directly impact the level of innovation and profitability for an enterprise. The key indicators here are:
All of the above strategies will only work if there exists a reliable and continuous supply of goods or services to help meet agreed customer SLAs. The key indicators here are:
Benefits of a well-orchestrated supply chain plan:A well-balanced supply chain planning mechanism that touches all the revenue influencing factors within an organization can help improve the overall competitive advantage. This goes a long way in benefiting the organization in several ways: 1. ENHANCED THROUGHPUTA well-planned supply chain directly influences the ability of an organization to increase its production capacity that results in greater throughput, better yield, and superior output. 2. BETTER OPERATIONAL EFFICIENCY + EXECUTIONWith accurate planning, relevant information about customer demand and market conditions helps demand & supply planners make proactive decisions that influence the operational capacity directly. This helps boost efficiencies and become more agile in responding to customer demands. 3. DECREASED COSTSA good supply chain plan can directly help decrease several costs including inventory costs, unplanned breakdown/damage costs, shipment costs, operational running costs, etc. Similarly, planners also see improvements in system responsiveness, customer/ vendor relationships, logistical issues, etc. 4. BETTER RESOURCE ALLOCATIONWith effective supply chain planning, planners become more perceptive about the actual resource allocation across the operations value chain. They make more informed decisions about resource shortages/ excess resources which could save them millions of dollars in channelizing efforts in the right direction. 5. REDUCE OPERATIONAL DELAYSA well-planned supply chain with good two-way communication and collaboration can directly reduce operational delays across the supply chain processes. With everyone who is involved is more clear of their role and responsibilities, redundant processes can be avoided and issues like late shipments, logistical confusions, and delivery delays can be completely eliminated. The Power of AI-driven supply chain planningWith IoT and artificial intelligence (AI) lead technologies rapidly gaining momentum especially in the global logistics and supply chain management industries, supply and demand planners stand to benefit from these in several ways. The powerful evolution in artificial intelligence, machine learning, and data science has the potential to bring in massive disruption and meaningful innovation across these industries. With specific reference to supply chain planning, AI can help to a great extent in reducing supply chain costs, managing inventory, and eliminating potential bottlenecks. AI in supply chain can help obtain new insights into several areas to boost productivity and optimize resources as well. As a result, floor operators and planners are able to create more agile, flexible, and profitable supply chain plans to deliver goods and services as per customer expectations. One such important application of AI in supply chain planning is the process of eliminating bottlenecks across the supply value chain to ensure supply chain planners and managers can meet their revenue targets easily. Eliminate operational bottlenecks with ThroughPutFor safer, smarter and better supply chain planning ThroughPut’s Demand-driven Supply chain planning software is a fully-automated, scalable, enterprise-ready Kaizen Artificial Intelligence product based on the digitalization of the world’s leading continuous improvement operations principles. It enables your operations managers ineffective supply chain planning to achieve unprecedented productivity and operational excellence. ThroughPut analyzes existing industrial data in real-time to detect, identify, prescribe and prevent potential bottlenecks saving millions in delays and lost revenue It helps meet your supply chain goals by nailing down bottlenecks and eliminating inventory waste to achieve end-to-end efficiencies. You ultimately benefit from an efficient and optimal smart supply chain plan along with time, money, and resource savings. Which of the following enables a firm to generate demand forecasts for a product and to develop sourcing and manufacturing plans for that product?A supply chain planning system enables a firm to generate demand forecasts for a product and to develop sourcing and manufacturing plans for that product.
Which of the following are the four key drivers in supply chain Performance?Five supply chain drivers, Production, Inventory, Location, Transportation, and Information, influence the performance of the supply chain.
Which of the following best describes supply chain planning systems?Which of the following best describes supply chain planning systems? Supply chain planning systems enable the firm to model its existing supply chain, generate demand forecasts for products, and develop optimal sourcing and manufacturing plans.
What can effective and efficient supply chain management systems enable an organization?Effective supply chain management systems minimize cost, waste and time in the production cycle. The industry standard has become a just-in-time supply chain where retail sales automatically signal replenishment orders to manufacturers.
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