A lack of a proper plan can expose your company to various risks. Choosing supply Chain Planning Functions are worth mentioning in this aspect, as it fulfills the demand commitments in real-time. In addition to increasing business efficiency, it plays an integral role in reducing operating costs on a wide scale. At present, supply chain planning is of paramount importance as it changes the business environment faster. If the business does not have sufficient visibility beyond Tier 1, it indicates that it has no idea about what happens at the end of the supply chain. If there is no proper backup plan, it might lead to troubles, just as businesses encountered supply chain disruptions for a significant part of 2020. The supply chain leaders faced a lot of troubles because of the restrictions and lockdowns on the movement of crowds and goods for a prolonged time.
What are Supply Chain Planning Functions?
The process of anticipating demand, planning the components and materials that will help meet demand, and coordinating distribution, marketing, production, and sales is referred to as supply chain planning. To begin with, we will talk about the anticipation of the product’s demand. It indicates that there is a system with accurate project demand, so you can be assured that 50 percent of the job is already done. Thus, supply Chain Planning Functions will be easy. The goal of planning is to balance demand and supply, ensuring that revenue and sales opportunities will be properly exploited.
Supply Chain Planning Functions indicate the forward-looking techniques to coordinate different assets. It plays an integral role in the optimization of the information, services, and goods delivery from the supplier to the customer. Apart from the synchronization of demand and supply, the Supply Chain Planning control process offers different scenario analysis capabilities. It offers assistance to the business in accomplishing the demand commitments in real-time.
If you want to take a logical approach to the supply Chain Planning Functions, you need to look at the specific results. The same is applicable to supply chain planning, which starts with the demand planning process. Production, marketing, sales, and members of various teams accomplish and estimate the demand according to historical data and different factors. The demand projections afterward get passed on to logistics, production, and other teams. The goal of anticipating demand is to maintain optimal inventory while avoiding the costs associated with surplus inventory maintenance.
Key Elements of Supply Chain Planning Functions
If you are planning to implement supply Chain Planning Functions successfully, you should ensure seamless coordination between various processes and teams. In this section, we will talk about the integral elements of Supply Chain Planning Functions:
1. Demand planning
Demand planning is the first step of supply Chain Planning Functions, which form the basis of different supply chain processes subsequently. It includes an assessment of the varied data, which forecasts the demand accurately. It is used to store and maintain the optimum inventory. Moreover, it helps to avoid the costs that are related to the surpluses. It is possible to perform demand planning by taking market conditions, projected sales, historical data, and different parameters into account. It is possible to accomplish demand planning using advanced technology. The advanced supply Chain Planning Functions are equipped with machine learning capabilities and artificial intelligence, which help predict demand with precision. It assists in sensing demand while taking real-time events, market conditions, data, and point-of-sale data. There will be an increase in the use of predictive analytics for demand forecasting. It plays an integral role in understanding buying patterns, consumer behavior, and different factors that affect demand effectively.
2. Supply Planning
Now, you should come up with a supply chain that synchronizes with the demand plan. It will help accomplish the business’s overall needs. The supply Chain Planning Functions include the acquisition of raw materials, components, and various objects required for production. The objective of the supply Chain Planning Functions is to plan the supply, which helps accomplish the product demands in an efficient manner.
3. Production Planning
It involves production capacity, materials, and employee allocation. The production plan’s goal is to reduce waste. It generates what is necessary to ensure optimum inventory availability. It can be realized with the use of a supply chain plan, which enhances cross-functional visibility through the use of effective inventory management.
4. S&OP (Sales and Operations Planning)
S&OP, or sales and operations planning, offers diverse business teams with various objectives. It is useful for the marketing and sales leaders to assess and combine the plans with the operations. The various teams’ allies aid in coordinating the capabilities and assets required to meet demand in the long and short term. Sales and operations planning is performed in a few companies as an integral part of the broader process, which is referred to as integrated business planning. It integrated the plans of different departments, like HR and finance, into a company-wide single plan.
Advantages of Supply Chain Planning Functions
Supply Chain Planning Functions have become the need of the hour, as it helps streamline operations. It is also beneficial for avoiding delays and increasing efficiency. It also plays an important role in lowering overall operating costs. If supply chain planning is performed accurately, it also helps decrease the costs, which are related to different control processes, like inventory management, production, purchasing, and logistics. Supply Chain Planning Functions assure that the customers can get the products at the proper time at the proper place. It helps boost customer satisfaction. It can help businesses increase customer loyalty. In the business environment today, it is essential for businesses of different sizes to engage in supply chain planning.
It is a prerequisite to draft a comprehensive plan, which will synchronize production, supply, demand, delivery, and shipping. In addition, it includes the risks and contingency sub-plans for the common failure points. If you do not have a proper plan, there are risks that your business will not be able to make the right preparations to handle the what-if scenarios effectively. When there are unforeseen events like a pandemic, which might lead to an uninterrupted interruption, the business might be exposed to specific risks. If there are no specific preparations, you will not be able to respond properly. It assures seamless business preparations.
Why do businesses need Supply Chain Planning Functions?
The supply Chain Planning Functions planners with critical elements can benefit from a detailed supply chain planning methodology. According to research, the majority of businesses with high-performance supply chains can see a higher increase in their bottom line than the average industrial standard. Furthermore, businesses with optimal supply chains have 15% lower supply chain costs. So, the cash-to-cash cycle will increase by up to three times.
At present, the majority of supply chain managers remain under constant pressure to decrease costs. It plays an integral role in increasing the profit margin and improving supply chain efficiency. There is a risk that in-depth insights will be missed if there is no clear visibility in supply chains due to poor demand planning tools and manual, reactive operational approaches. Thus, they might not be able to create responsive, synchronized, and smooth supply chain platforms to seek the prerequisite operational excellence. In this regard, selecting a strong and effective supply chain plan is important because it provides enhanced contingency sub-plans. It is useful in fighting the firefight common failure points.
The supply Chain Planning Functions mechanism has become a necessity as it touches different revenue-influencing factors in a business enterprise. It is useful in standing ahead of competitors. In this article, you can find the reasons why businesses need supply chain planning:
Improved operational efficiency
With proper and accurate planning, the related market conditions and customer demand are useful to the supply and demand planners in taking proactive decisions. They affect the operational capacity directly. The supply Chain Planning Functions are beneficial in increasing efficiency so that it can respond more quickly to customer demands.
A well-planned supply Chain Planning Functions have become the need of the hour as it enhances the capabilities of the business enterprise. It boosts production capacity, which enables enhanced throughput. It leads to supreme output and enhanced yield.
A decrease in the operational delays
Choosing a well-planned supply Chain Planning with collaboration and two-way communication will decrease the operational delays across different supply chain planning control processes. In this regard, it is possible to avoid redundant processes and problems, like logistics confusion, late shipments, and delivery delays.
Efficient resource allocation
As businesses opt for supply Chain Planning Functions, supply chain planners have a more positive perception of the original resource allocation across the specific operations value chain. It helps to make better-informed decisions about excess resources and resource shortages. Thus, it helps to save an ample amount of money to channel the efforts in the proper direction.
Selecting a proper supply Chain Planning control process is effective as it reduces different kinds of costs, like unplanned breakdowns, inventory costs, shipment costs, damage costs, and operational running costs. Thus, the planners can see the improvements in logistical problems, vendor and customer relations, and system responsiveness.
5 Supply Chain Planning Functions
Let’s find the five different supply chain planning functions:
Purchasing is the first supply Chain Planning Functions. During the manufacturing process, raw materials are necessary to produce the products and goods. It is essential that the specific materials are produced and delivered on time to start the production process. It is essential to coordinate with the supply and delivery enterprises to avoid different kinds of potential delays.
Demand planning and forecasting are necessary before the production of the materials. Such a function is essential for supply chain management, as the business enterprise can forecast the demand accurately. It helps avoid a small inventory, which might result in revenue losses. It is recommended to tie demand planning and forecasting with shipping, production, and inventory management to avoid all kinds of mistakes.
With resource management, you can be assured that the proper resources will be allocated to the proper activities. It assures the creation of an optimized production schedule to boost the operations’ efficiency. With the calculation of the available capacity, you need to take the capabilities of the resources into account. You should make sure to determine that they will be able to perform the work scheduled for that day. It assures that you will not overpromise the orders.
It is an integral part of supply chain planning Functions, which will coordinate different aspects of production, purchasing, planning, transportation, and warehousing. Thus, you can be assured that the products will be able to reach their potential customers without any interruption.
If the information workflow and communications are poor, it might end up breaking the chain. Through improved communication and visibility, supply phain Planning interruptions can be avoided.
Importance of supply chain functions
The following are the importance of supply Chain Planning Functions:
- Supply Chain Planning Functions are useful in optimizing product manufacturing and delivery.
- Supply chain planning reduces production costs, boosting sales. It is useful in managing relations with suppliers.
- It provides access to real-time and precise data, which improves the decision-making process. It also helps in facilitating time-sensitive processes.
- Choosing the updated inventory data is useful as it allows for lower overhead and leaner production.
- Accurate and proper demand and production plans are useful to businesses in recognizing inefficiencies.
- Demand planning is beneficial for aligning product development with consumer demand.
- Supply Chain Planning help monitor customer sentiment and product demand, which improves business revenue.
Implementation of Supply Chain Planning Functions plays an integral role in taking manufacturing operations to the next production level effectively. It allows you to take the first step in the right direction. It also helps maintain the prerequisite balance between supply and demand. Supply chain planning functions also improve business efficiency. Supply Chain Planning Functions have become the need of the hour as it manages inventory. It also decreases supply chain costs and reduces different kinds of potential bottlenecks. Supply chain planning is useful in seeking the latest insights into different areas. It also enhances business productivity. It helps with resource optimization on a large scale. Thus, it delivers business performance and production efficiency.