Supply chain planning: What you need to know
What is supply chain planning (SCP)?
Supply chain planners use demand forecasting and material availability to anticipate the future needs of their customers. They can then map out how products in demand will move through the supply chain to the customer.
The goal is to balance supply and demand, covering core activities like what-if scenario analysis and real-time demand commitments.
What’s the difference between supply chain planning and supply chain strategy?
The main difference between supply chain planning and supply chain strategy is that planning is a subset of strategy.
One person might oversee the supply chain strategy, whereas multiple people will handle the supply chain planning subtasks. Strategy aims to reduce costs and speed up the process by optimising the entire supply chain, while supply chain planning dives deeper into each stage to understand what assets are required and what needs to happen next.
What are the benefits of supply chain planning?
Supply chain planning identifies activities that can reduce costs, like:
implementing an enhanced inventory system
improving system responses to customer needs
optimising stock space.
A robust supply chain plan helps companies predict demand, make data-driven decisions and adapt to dynamic markets quickly and effectively.
The more effective a supply chain plan is, the easier it is to communicate between stages. This leads to better coordination and collaboration between manufacturers, distributors and vendors, ultimately improving the customer experience.
A thorough supply chain plan defines how all parties will communicate, and in what way so that every party knows what’s expected of them and where things are currently at.
Better collaboration means increased efficiency, more informed decision making and higher productivity levels, leading to increased profitability.
Seamless communication between each stage of the supply chain can help reduce delays as parties have visibility of any roadblocks and can take action to manage them.
What are the barriers to supply chain planning?
Lack of buy-in
Supply chain businesses may have different priorities, strategies and goals, which may hinder successful supply chain planning. Not having buy-in can lead to miscommunication and a lack of transparency.
Collaboration is key to an optimised supply chain, and poor collaboration makes supply chain planning more complex than it needs to be.
Without modern, cloud software, organisations can fail to collect and interpret the data they need to make informed and strategic decisions.
What are the 4 elements of supply chain planning?
Integration connects various supply chain functions and activities to collect valuable data and insights. Overseeing supply chain integration means creating seamless communication between each stage and storing and analysing data to make better decisions. This creates a single-view source of information that can reduce human error and mitigate potential disruptions.
Collecting data is good, but it’s what you do with that information that matters. Businesses should constantly evaluate and optimise their supply chain for better performance. An accurate, real-time representation of inventory and schedules can help you minimise wastage and run your business in the most efficient and profitable way.
Purchasing the right products at the right time is critical to the success of any supply chain. Effective planning and the right software platform can improve the procurement process and help you get the most competitive pricing. A supply chain strategy plays a key role here — it helps you keep track of the best suppliers, track and respond to demand cycles and reduce overall costs.
Distribution describes the activities at the end of the supply chain, including logistics, transport and delivery. Using a central source of truth to oversee the distribution phase provides a real-time view of inventory, order status and stock location to maintain that critical balance between supply and demand.
What are the 6 primary supply chain models?
1. Continuous flow
The continuous flow model is a traditional form of supply chain planning and is perfect for companies that operate with demand stability or produce a uniform set of goods. The clue is in the name: Goods move through the supply chain continuously thanks to relatively stable market demand.
The agile supply chain model is a better fit for companies that produce specialty items, as it allows the manufacturer to fine-tune the product according to what the market wants. This supply chain model responds to demand rather than to forecasts.
The fast supply chain model is a relatively new term in the industry and is well-suited to companies that have product lines with short, often seasonal life cycles. This model helps give a company an edge in highly competitive markets.
The flexible model can quickly adapt to meet high and low demand. It’s a good fit for companies that experience different levels of demand throughout the year or have products with unpredictable life spans.
This supply chain model focuses on efficiency and is ideal for competitive industries. Companies must create accurate production forecasts to ensure the right levels of stock, inventory, machinery, raw materials and other resources are available.
The custom supply chain model combines elements from the agile and continuous flow methods to create custom setups throughout each stage. It’s ideal for companies with products needing extra customisation or those that manufacture products in small batches.
How do you implement and improve a supply chain plan?
1. Use data as a foundation
Data is the bedrock of supply chain planning. Systematically collect and manage data to access information throughout the supply chain.
This might include data about:
resources you use
2. Focus on relationships
Foster seamless connections with your suppliers and customers, so you can adjust forecasts and orders to account for availability and demand. Prioritise transparent communication between different areas of the business to keep all stakeholders informed of any changes or disruptions.
3. Continuously analyse
Use the data you have to determine demand and look ahead. Continuously analyse the product lifecycle and create a culture of improvement to better understand customer needs and behaviour.
Software to help organise your supply chain
With MYOB's inventory management software, you can get control of your stock and gain insights into your supply chain to inform your strategy and reduce or eliminate expenses.
Try MYOB FREE for 30 days today.