Supply Chain Planning (SCP) is the process of planning a product from raw material all the way to distribution and sales – with the ultimate goal of balancing supply and demand. This is the first step in supply chain management and involves developing a strategy to achieve the objectives of the supply chain. The planning phase includes the following activities:
- Defining Objectives: The first step in SCM planning is to define the objectives of the supply chain. This includes identifying the key performance metrics such as on-time delivery, inventory turnover, cost, and customer satisfaction. The objectives should align with the overall business strategy.
- Forecasting Demand: In this step, the company analyzes historical data to forecast future demand for its products or services. This helps the company to plan its production and inventory levels.
- Designing the Network: The company needs to determine the best way to distribute its products or services to customers. This includes designing the supply chain network, determining the number and location of warehouses, and selecting transportation modes.
- Managing Inventory: The company needs to determine the optimal inventory levels to meet customer demand while minimizing inventory carrying costs.
- Selecting Suppliers: The company needs to identify and select suppliers that can provide the required quality, quantity, and delivery times for the products or services.
- Developing Contingency Plans: The company needs to develop contingency plans to address supply chain disruptions such as natural disasters, transportation delays, or supplier bankruptcies.
- Integrating IT Systems: The company needs to integrate its IT systems to enable the sharing of information across the supply chain. This helps to improve communication, visibility, and coordination among supply chain partners.
The planning phase is critical to the success of the supply chain. It lays the foundation for the rest of the supply chain management process and helps the company to optimize its operations, reduce costs, and improve customer satisfaction.