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Business owners understand the importance of keeping their supply chain moving forward as efficiently and quickly as possible. But do they truly understand the importance of having a supply chain management plan?
Mark Cuban, one of the most famous sharks on ABC's "Shark Tank" often says that if you don't come in with a business plan, he can't help you.
He would add to that a working supply chain management plan, as well. Without it, it is difficult to be as efficient and forward thinking as you should be. It can also cost you.
Supply Chain Planning vs. Execution
Many times supply chain planning and supply chain execution are used synonymously. But they are not the same thing.
Supply chain planning is the process of planning how you will orchestrate the logistics of your supply system and integrate it with the demand, as well as using the appropriate technologies and SaaS products to keep it running smoothly.
Supply chain execution is the actual carrying out of the plan according to standards of your industry and your company values and goals.
Efficiency and productivity are the keys to keeping up with the needs that your market requires so that you will keep things running smoothly and efficiently for the long term.
Why You need a Supply Chain Management Plan
There are many reasons as to why business owners need a working supply chain management plan.
Without it, you can experience increase waste from mistakes or oversights that are made within the company's order department or supplies inventory department. You may not know how much you are spending on certain supplies, especially if you have several people working on this at the same time.
Communications may be lacking. All of these factors can create problems for your business as a whole. Below are some more reasons as to why you need a supply chain plan .
- Decreases out-of-stock situations and improves customer satisfaction rate
- Cuts down on waste due to failure to plan to spend on raw materials
- Helps increase the supply to meet the changing demand of your products without overspending
- Increases your ROI and revenue (bottom line)
- Enables you to stay on track with productivity goals and improved customer acquisition and order management
Different Supply Chain Management Models/Methods
When orchestrating your plan and implementing the strategies needed to fulfill the need of your customers and the market, you should consider the different supply chain managem ent models that you can use to achieve this.
Below are the most important ways to accomplish your goals with supply chain management.
Data Gathering and Aggregation - The data gathering process must be concise and based on evidence, figures, and corroborating facts that justify the plan you are putting into place. This will keep your operations running smoothly while also satisfying investors as to the validity of your policy.
Increased Visibility - You need to avoid waste and miscalculations when carrying out your supply chain operations. This cuts down on both productivity and overhead when needless mistakes are made that sacrifice the integrity of your operations. By increasing the level of operational visibility , you will be able to tell where you are at in terms of efficiency and production and make adjustments immediately before problems occur that can cost you money.
Lean Principles - The idea of "lean" principles means that you should decrease your inventory cost and only spend what is needed to meet the changing needs of the market and your customer base. Using SaaS solutions and other AI tools, you can keep abreast of what is needed to
Standardization of Processes - Using ERP systems can help save money and time by creating an efficiency and growth plan that works automatically. This also cuts down on mistakes that could be made, especially if several people are working on this at once.
The Planning Process
To create an effective plan for your supply chain operations , it is essential to follow a set of steps to help you reach your goals. They are not complicated but must be considered to meet the needs of your demand and changing market.
- Start with a company overview. During this stage, you have to consider whether you want to utilize domestic suppliers only, use global sourcing, or a combination of the two to meet the need of your customers. You must compare prices and be specific in how you will carry out your plan.
- Perform in-depth research to determine need and performance. It is vital that you get all of the facts and aggregate the information together to determine the best plan. Cut corners but not quality and learn how it will work on a daily, weekly, and yearly basis. The cost of operation is what is essential here.
- Address all relevant areas. Think about which factors in the procurement, sourcing, and distribution process will most affect your outcome. Anything that decreases productivity or increases expense should be avoided unless it can be shown that it will increase your return.
- Develop high-tech options to execute the plan. There are many SaaS and AI or automated systems available to businesses today that will speed up production while curtailing extra expense and waste.
In closing, business owners need more than a business plan. They need a carefully thought out plan for supply chain management, as well.
By keeping tracking of the production process from idea to manufacturing and distribution, business owners will always know what is going on with their costs and profits because they have their finger on the pulse of the entire process.
Having a supply management plan is easier today than it has been in the past, thanks to the many automation tools and solutions that are available through innovative technologies and tools.
So before you launch your supply chain, take the time to research the solutions that are best for you that will increase your ROI and help your business ramp up without losing your shirt.
Don't Get Left Behind
Schedule a free consultation with Visichain to ensure your supply chain and procurement operations continue to evolve and remain competitive in today's dynamic environment.
Do you need to create value and deliver change in your enterprise? With Visichain as your partner, you can leverage over 1 million hours of supply chain transformation experience from some of the largest companies in the world. Visichain drives visibility, productivity, and efficiency throughout your entire supply chain. Supply chain visibility at scale is essential to your business. Starting with the production of products all the way through free on board receiving, your business needs real-time data to help you minimize risk, drive efficiency, and make better decisions. Visichain designs, develops, and implements powerful yet easy to use software. Powerful solutions crafted to help your executives and supply chain managers leverage multiple data systems to partner with sourcing suppliers in real time. When you're ready to kick your procurement transformation strategy into high gear, send me a message through LinkedIn .
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Supply Chain Management Business Plan Sample
Do you want to start Supply Chain Management Business?
Do you want to start a supply chain management business? Well that can be an amazing idea if you want to quickly start a business. One of the main reasons is that this supply chain business plan will not need you to have any specific technical knowledge or degree. You can start this business with just a few contacts and grit.
Even though it is relatively easier to start a career in supply chain management, it still doesn’t mean you should go in unprepared. The best thing you can do is go through a business plan for supply chain management. You can get a business chain management plan supply from anywhere on the internet. And if you want, this document is also a great place to look for help supply chain business plan .
2.1 the business.
Clark’s Management will be a supply chain management startup owned by Clark Bridgers. The main objective of the supply chain business plan is to guide and assist companies in streamlining their supply chains in Oakland. It will offer versatile resources and services for the best supply chains.
2.2 Management of Supply Chain Management Company
To ensure that your company is well managed, you need to develop a supply chain management business plan as the first step.
In this supply chain strategy model, we will including all the important aspects of a business for buy side due diligence .
In order to make your supply chain business plan , you can study a sample pdf of supply chain management like this one. You can also use the internet to go through a plan for supply chain management filetype pdf. These will give you a good idea of what you should include in your supply chain business plan . And this will apply even if you are developing a business plan for video production .
2.3 Customers of Supply Chain Management
Our clients will be from all industrial and professional domains since supply chain is a part of the lifecycle of any product or service. Keeping that in mind, our recurring customers will include:
- Product Businesses
- Service Businesses
- Hybrid Large/Small Businesses
- Manufacturing Units
2.4 Business Target
The primary goal of our supply chain business plan is to become the most reliable and trusted option for our clients whenever they want to improve their supply chains.
The financial targets that we aim to achieve in the first two years are shown below:
Company Summary of Supply Chain Management
3.1 company owner.
Clark Bridgers will own Clark’s Management. Clark completed his Bachelor’s in Management about 3 years back. After his studies, he pursued a job in a corporation as a business management consultant. But he left job in pursuit of starting his own supply chain business plan .
3.2 Why the Supply Chain Management Company is being started
Clark observed that a lot of businesses are looking for ways to reduce their production costs. But there are very few businesses that offer any help in the area. He quickly realized that he could use his innovative ideas and knowledge to improve supply chain management for these companies.
3.3 How the Supply Chain Management company will be started
Step1: Plan Everything
Before you look into things like what is supply chain strategy definition, you need to consult supply chain business plan experts. They will guide you in development of supply chain organization models.
Clark decided to offer his services to both service and product based companies. So, you can use this or any related supply chain management project report pdf to get started with your own supply chain business plan . These documents will help you understand the role of supply chain management in business plan.
Step2: Define the Brand
A crucial step in starting a new supply chain business plan is to get noticed. You will have to identify and highlight your core values and market those to your potential customers to gain attention.
Step3: Establish a Web Presence
The most important part of any business in the digital age is online promotion. For this, Clark decided to establish social media presences for his supply chain business plan . He also decided to outsource a simple website through which people can book appointments and reach out.
Step4: Promote and Market
As the final step, you need to create and follow a marketing plan to promote your supply chain business plan .
Services of Supply Chain Management
When you are starting supply chain business , one of the major things you need to figure out the services you will be providing to your customer base. You can refer to a sample business plan supply chain management for an idea.
The requirements of supply chain management in a business plan is different as compared to other plans such as aerial tourism business plan .
But since Clark decided to provide a whole array of services so this example of supply chain strategy can also be used for other ventures like internet radio business plan . You can gain a lot of insight from this plan for operations and supply strategy.
- Identifying and Dealing with Logistics Problems
Our company will offer solutions to all basic problems that may occur in the supply chain. If, for instance, a customer complains about service quality, it can reflect poorly on the supply chain business plan . But our company ensures that most problems are identified beforehand through data analysis.
- Price Optimization
Many businesses offer products or services that are seasonal. Since seasonal offers are not needed throughout the year, businesses have to find a way to reduce their prices and sell them. Our company will help businesses set these marketable prices through analytical software. This will ensure that:
- Products are sold, and
- Business is still profitable
- Dynamic Resource Management
Businesses have limited resources. Our company will help businesses organize and allocate their resources such as equipment and workforce in a way that optimizes performance.
- Supply Chain Consultation
Our company will also provide consultation experts that can help businesses with supply chains reduce their costs and improve their performance.
Marketing Analysis of Supply Chain Management Company
When you are describing your company for supply chain management in a business plan, you will need to describe your customer base. Identifying your customers is one of the essential steps of starting a supply chain business plan . And you have to include this information in your plan even it is a business plan template for summer camp .
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You should have detailed information about your customer. And the best way to get these details is through a market analysis. The market analysis included in your supply chain development strategy, should have all information regarding past, present and future market trends.
The supply chain strategic management is used to analyze the market prices and to figure out the financial goals of your own supply chain reporting structure. You can use a supply chain management project pdf sample like this to see how the market analysis is presented.
5.1 Market Trends
According to ExploreWMS, the number of warehouse in US have grown by 6.8% in the last five years. This means that more and more companies need better supply chain management techniques and services. And due to the shift for efficiency, supply chain management positions are increasing faster than economic averages. So, there is no deficiency of demand in the market for a supply chain management or services.
5.2 Marketing Segmentation
The potential customers of Clark’s Management are divided into the following categories:
5.2.1 Product Businesses
Our main customers will be the product based businesses that rely on the sale of their products. Since the sale of a product is affected by a lot of factors in the supply chain so these businesses are more likely to regularly use our services.
5.2.2 Service Businesses
Our second target customers will be service providing businesses much like ours. Services are also provided as a result of a supply chain that involves ideation, planning and development as some of its parts. So service businesses are also expected to utilize our services quite often.
5.2.3 Hybrid Small/Large Businesses
Every supply chain business works for an endpoint through a series of pre-defined steps. These steps form a supply chain even in hybrid (product and service) businesses. Since these businesses are usually big corporations with their own management departments so they are likely to use our services every so often.
5.2.4 Manufacturing Units
Manufacturing units on their own also require management tips to work more smoothly. They are expected to avail our services often to streamline their operations.
5.3 Business Target
- To become the best supply chain management company throughout Oakland
- To increase the range of our offered services over time
- To earn a net profit of around £30k per month by the end of the second year
- To achieve and maintain customer satisfaction above 90%.
5.4 Product Pricing
Our prices will be a little bit higher than the market average. But we will offer more services over a longer period of time as a compensation. This will help our customers more in the long run as compared to our competitors.
Marketing Strategy of Supply Chain Management
To gain attraction in a huge industry, you need to find areas where you have competitive advantage. For this, you need a solid marketing strategy and branding so that people can recognize your offers.
In the present supply chain management report template, we are describing the marketing strategy for Clark’s Management. You can also refer to an example such as business plan supply chain management to improve your business proposal. This is helpful even if you are just starting a paintball business .
6.1 Competitive Analysis
- We have amazing customer support available. We will deal with all customers patiently and also gain feedback for future improvement.
- Through our physical shops, website and social media, customers have different ways to contact us. And we will respond to them at the earliest.
- We will provide consultations and services in accordance with all the standard practices so that our customers can focus on their work without worry.
6.2 Sales Strategy
- We will advertise through word of mouth, Google Ads, Social Media, and billboards.
- We will provide long-term services in reasonable and market-competitive prices.
- We will also provide special discounts to first-time and long term customers.
6.3 Sales Monthly
6.4 sales yearly, 6.5 sales forecast, personnel plan of supply chain management.
No business can run without the diligence of its workers. The success of any business actually depends a lot on the behavior of employees. Clark knew the importance of hardworking and patience workforce and so he developed a selection criterion for employees. This criterion will be a part of business plan for supply chain management. You can also find examples of this in a sample business continuity plan supply chain management on the internet.
7.1 Company Staff
- 1 Co-Manager for overall assistance
- 2 Purchasing Agents
- 3 Logistics Analysts
- 1 Operations Manager
- 3 Planning and Expediting Clerks
- 2 Storage and Distribution Managers
- 3 Operations Consultants
7.2 Average Salary of Employees
You can’t become successful by just selling products or services. To be profitable, you need to carry out a detailed financial analysis. Usually, like in this supply chain business plan sample, financial analysis is included. Every good supply chain management business plan has a thorough financial plan included.
In your financial plan, you need to show how you will cover your expenses with your sales and profits. You also need to identify ways to reduce your expenses and increase your efficiency.
We have provided a comprehensive financial plan for supply chain management business. But you can also refer it for business plan movie selection .
8.1 Important Assumptions
8.2 break-even analysis, 8.3 projected profit and loss, 8.3.1 profit monthly, 8.3.2 profit yearly, 8.3.3 gross margin monthly, 8.3.4 gross margin yearly, 8.4 projected cash flow, 8.5 projected balance sheet, 8.6 business ratios.
- How do I write a business plan for supply chain management?
You can write a business plan for supply chain management by reading business plans like the one here or by consulting a business plan expert.
- What is supply chain in business plan?
Supply chain consists of processes that are involved in the production of a product or the provision of a service. And in reference to a supply chain business plan , it includes all the details needed to start a business in supply chain management.
- What are the examples of supply chain management?
Supply chain management is involved in all kinds of supply chains including product design, manufacturing, farming, packaging, and transportation etc.
Download Supply Chain Management Business Plan Sample in pdf
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How to Develop a Supply Chain Management Plan
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When the supply chain plan is in sync with other operational plans within the company, the entire process of receiving and shipping products runs much more smoothly. In isolation, a supply chain management plan can bog down and work against the overall company objectives. Build your supply chain plan in tandem with other senior managers to develop the most effective and efficient plan.
Start with Company Overview
Before supply chain managers begin developing vendor relations, delivery times, warehousing staffing and other procedures, they should spend time meeting with senior managers from all the departments within the company to formulate overall company strategies. By aligning supply chain plans with all departments, the supply chain manager earns the support of sales, company executives and customers. Supply chain management decisions coincide with company goals so that supply chain goals end up being more valuable to the company’s overall success.
Perform Research for Background
When supply chain management decisions are not made in a vacuum, they take into account the various parts of the supply chain process that will affect performance. Those areas include technical improvements the company plans to initiate, an analysis of the competition, what customers need and want and what trends may affect the supply chain in the future. Research can be performed in-house or through an outside consultant, and include best-practice ideas from industry sources.
Address All Pertinent Areas
When creating the supply chain plans, include all the areas the supply chain manager controls. Transportation to and from the plant or warehouse, staffing and structure of the warehouse, and inventory management are vital components of the in-house supply chain that must be addressed. Consider customer needs, procurement processes, supplier pricing and vendor relationships. Supply chain management also must address environmental arenas involved in all of the areas and include measures to meet regulatory requirements and company environmental policies.
Develop Applications to Adopt Plan
One of the most difficult steps in devising a supply chain management strategy is deciding how to best implement the plan and ensure that all steps along the way are integrated and communicated effectively. Supply chain management software is widely available in a variety of applications and choosing the right systems for the company is vital to supply performance and success. It’s also important to make sure front-line supervisors and employees utilize the proper sequencing and information entering processes so that no information is lost along the supply chain. According to CIO, Internet-based supply chain applications are the most effective, because they can be made available to every stakeholder in the supply chain, including top management in the company.
- MIT Sloan Management Review: How To Do Strategic Supply-Chain Planning
- Supply Chain Management Review: Developing a Supply Chain Strategy for the Years Ahead
- CIO: Supply Chain Management Definition and Solutions
Linda Ray is an award-winning journalist with more than 20 years reporting experience. She's covered business for newspapers and magazines, including the "Greenville News," "Success Magazine" and "American City Business Journals." Ray holds a journalism degree and teaches writing, career development and an FDIC course called "Money Smart."
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Supply Chain Plan Template
This supply chain plan template has 14 pages and is a MS Word file type listed under our production & operations documents.
Sample of our supply chain plan template:
Supply Chain Plan
2,600+ templates & tools to help you start, run & grow your business, all the templates you need to plan, start, organize, manage, finance & grow your business, in one place., templates and tools to manage every aspect of your business., 8 business management modules, in 1 place., document types included.
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What Is Supply Chain Planning, And What Are the Business Benefits?
Supply chain planning (scp) is the process of optimizing the delivery of goods, services and information from supplier to customer, which balances supply and demand. scp provides planning, what-if scenario analysis and real-time demand commitments..
Download the 5-Step Plan
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Use scenario planning in S&OP to uncover risk and opportunity
Supply chains today are experiencing more disruption than ever. But only 18% of companies rate their performance at using sales & operations planning (S&OP) for running multiple scenarios to understand trade-offs as excellent.
Download this 5-step plan for:
Recommendations for developing scenario planning capabilities in S&OP
Summary of key challenges to inform your business case
Roadmap to assess risk and opportunity through S&OP
The key components to supply chain planning
Especially in times of disruption, it’s critical to make improvements in the supply chain planning process to enhance decision making and refine processes, organization, metrics and technology.
- Performance Optimization
- Change Management
- Process Excellence
- Org Design and Talent
- Tech and Digitalization
Engage cross-functional leaders for sales and operations planning.
Best-in-class sales and operations planning (S&OP) is a large component of supply chain planning and brings clear business and organizational benefits. Think: improved profit, revenue, cash flow and customer service. Yet most organizations don’t fully reap these benefits due to siloed thinking and an immature S&OP process. Plus, there’s a lack of understanding from functions outside of supply chain. You must demonstrate the value of S&OP to different stakeholders and align to major business performance optimization programs to build a best-in-class S&OP process and gain commitment on supply chain planning improvement projects.
Starting and advancing the S&OP process requires extensive collaboration across supply chain and other functions, including sales, marketing and finance. To implement or transform your planning, build a strong business case for change. To start out, consider the four elements of the S&OP process:
- Product portfolio planning. Do we have the right product portfolio to meet our targets?
- Demand review and gap reconciliation. How much are we planning to sell and does this match our ambition?
- Supply review and gap reconciliation. Do we have the right inventory, capacity and capabilities to meet demand?
- Pre S&OP. What are the financial consequences of the choices we make and what decisions to escalate?
- Executive S&OP. What are the decisions to make to optimize revenue, profit and cashflow of the company?
From there, take these three actions to secure business buy-in for your supply chain planning transformation:
- Create a business case for change. Highlight how improvements in the process will enable the organization to achieve strategic goals.
- Calculate improvement potential. Use quantifiable business and supply chain metrics.
- Guarantee cross-functional engagement. Target the business case to specific stakeholder groups and including expected benefits.
- Creating a World-Class S&OP Strategy
- Supply Chain Strategic Planning
- How to Assess Risks and Opportunities Through S&OP
- Supply Chain Leaders Should Reassess Their Sales & Operations Planning Approach
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Manage change and influence stakeholders to improve business results.
Seventy-five percent of supply chain leaders expect an increase in high-impact disruptions compared to the rate of disruption over the past five years. Yet resistance to change from decision stakeholders remains the top challenge supply chain planning leaders anticipate as they attempt to execute their supply chain transformations over the next three years.
As supply chain planning leaders, you must be more effective in managing change with key stakeholders and driving multiple priorities across complex transformation projects. To do this, assess the current landscape, build a vision for supply chain planning, and create a roadmap to grow maturity, influence stakeholders and improve business results through the transformation journey.
- Securing Business Buy-In for S&OP Transformation
- Driving the Business Value of the Supply Chain Planning Function
- Guiding S&OP Transformation Through Research & Advisory Support
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- Improve Supply Chain Effectiveness & Efficiency
- 5 Ways to Mature Sales and Operations Planning (S&OP) in Supply Chain
Maturing your supply chain planning process is the foundation for future improvements.
Three in five companies are dissatisfied with the fit between their supply planning objectives and their supply planning capabilities. To ensure future supply chain planning improvements, build a supply chain planning process that aligns to business objectives and outcomes. This includes product portfolio planning, demand planning, supply and inventory planning, and the S&OP and sales and operations execution (S&OE) processes.
Process maturity is also important for future investment, and yet 72% of companies with a physical supply chain are at Level 3 or below in terms of their supply chain planning maturity. To grow your supply chain planning maturity, integrate supply chain planning processes with other internal processes such as order-to-cash, procure-to-pay, financial budgeting, and customer and supplier relationship management.
Also, establishing key performance indicators (KPIs) enables the supply chain organization to justify, monitor and drive individual processes, as well as accelerate overall supply chain performance by balancing local and global performance improvements.
- S&OP and Inventory Management Transformation Reduces Supply Chain Cost
- Driving Forecast Value in S&OP Process Management
- Checklist of Supply Chain Metrics
- 3 Principles for Inventory Excellence
- 3 Actions to Improve Demand Planning
- Supply Chain Strategy for Optimal Inventory
- Increasing the Agility of the S&OP Process at Milliken
Align a talent strategy with your overall supply chain planning strategy.
Your supply chain planning organizational design and talent strategy is critical to achieve higher performance in both the short and long term, considering the talent gap is a top internal constraint to growth. What unique skills are needed to support digital supply chain planning?
Six elements of talent strategy are key to success:
Design and implement the most appropriate organizational structure for supply chain planning that’s aligned with the broader supply chain strategy. This includes attracting talent and stepping up capabilities within the supply chain planning organization to ensure long-term continuity and the ability to overcome business challenges.
Collaborate across HR and supply chain on talent management: Consider dedicating resources from the supply chain planning organization to develop and implement a talent strategy. Use HR as a strategic partner and leverage its systems for scalability and analytics.
Understand current and emerging competency requirements: Refresh your supply chain planning competency model (or create one) based on triggers, such as shifting business priorities, emerging tech trends or changes in the competitive landscape.
Use an integrated approach to talent management: Most supply chain planning organizations continue to approach talent development from either a performance management or training-led mindset. Instead, incorporate all five talent pillars in your talent strategy — competency models, career paths, recruiting and onboarding, training and development, and performance management.
Use unconventional strategies to close talent gaps: Expand your recruiting profile beyond the typical supply chain planning profiles.
Establish a well-rounded team: Gather a mix of multitalented people to achieve supply chain planning objectives. Think: data science, data engineering and domain expertise.
9 Skills That Fuel Digital Supply Chain Planning
Develop a supply chain planning technology roadmap.
Supply chain planning technology projects often exceed budget, and software tools are often underused. Why? Many failures stem from how projects are initially scoped: Organizations often mistakenly view supply chain planning technology implementations as IT projects. Plus, supply chain planning and technology leaders sometimes speak different “languages” when it comes to supply chain planning solutions and priorities. Technology leaders apply software development life cycle frameworks to their projects, which may lead them to underestimate or totally neglect the impact of the new software on the supply chain planning process, organization, behaviors, etc.
Embarking on a software implementation without a clear strategy, use case, resourcing or stakeholder support can be costly. Supply chain planning technology is intended to be a long-term investment, so make the effort to prime the enterprise and develop a supply chain planning technology roadmap to embrace the new software. It’s also a good way to avoid even costlier mistakes, missed business outcomes, overall dissatisfaction, or even project suspension or termination.
7 Steps to Implement Supply Chain Planning Technology
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Five-Step Plan for Supply Chain Technology Pilots
Experience Supply Chain conferences
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Frequently asked questions
What is supply chain planning.
Supply chain planning improves profit, revenue, cash flow and customer service through multiple processes that span product portfolio planning, demand planning, supply and inventory planning, financial alignment through S&OP and short-term execution through S&OE.
What are the key elements of supply chain planning?
Supply chain planning leaders should build a comprehensive vision and roadmap to improve business performance. To do this, supply chain planning must address five key elements: performance optimization, change management, process excellence, organizational design and technology enablement.
Why is supply chain planning important?
Seventy-five percent of supply chain leaders expect an increase in high-impact disruptions compared to the rate of disruption over the past five years, specifically around three issues: risk management , future of work and digital transformation . Supply chain planning leaders will need to be at the forefront of working on these priorities and will be required to reinvent supply chain planning processes to be more agile and accommodate different categories and market needs.
How do we design a supply chain planning system?
Supply chain planning systems refer to the tools used to document the supply chain plan. Gartner urges organizations to build supply chain planning systems that deliver on strategic business outcomes, and to ensure that outcomes transform into easily communicated decisions.
What are examples of supply chain planning?
The Gartner Power of the Profession™ Supply Chain Awards is an annual community-driven recognition program that inspires supply chain transformation around the globe. Download details of the latest award winners to read examples of supply chain planning excellence in action.
What is the supply chain planning process?
Key elements of the supply chain planning process capture:
- Product Portfolio Planning
- Demand Planning
- Supply and Inventory Planning
- Sales & Operations Planning (S&OP)
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Supply Chain Planning for New Businesses: 5 Steps to Get Started
Starting a new business can be overwhelming, especially when you delve into the complexities of running a successful supply chain. Fortunately, this guide to supply chain planning has everything you need to create a winning supply chain plan for your new business.
What is Supply Chain Planning
Supply chain planning (SCP) is the forward-looking process of coordinating assets to optimize the delivery of goods, services, and information from supplier to customer, while balancing supply and demand.
Often included with the mention of supply chain planning is supply chain management (SCM) , which encompasses the broad range of activities required to control and execute a supply chain plan in the most economical, and efficient way possible. You will need both SCM and SCP to meet customer demand in the most efficient way possible.
Supply Chain Planning Strategies and Methods for New Businesses
Supply chain planning for new businesses is an immense subject, with dozens of complexities and applications. Though it seems confusing, you can tackle this complex field by breaking it down into a series of simple steps.
Define Your Supply Chain Goals and Key Results
Start by considering your business model, as well as that of your competitors. List your key goals and results you wish to achieve. A typical example might look like:
- Maintain On Time Delivery Performance greater than or equal to 95%.
- Reduce Lead Time of 70% of products you sell by 25%.
- Improve Supplier On Time Delivery to greater than or equal to 85%.
- Improve ERP Planning Parameters to achieve On Time Delivery Performance 95% level.
- Manage Working Capital – $3.8M < 68 DOH (Days on Hand) as Inventory Target.
- Reduce total logistic cost as percentage of sale by 6% from previous year.
Define Key Tactics and Initiatives To Achieve Supply Chain Goals
The next phase explores the individual aspects of your framework, i.e., your supply chain tactics. Think of your supply chain tactics as a set of short term initiatives you utilize to achieve your short term goals, and enable your long term strategy. A typical example of initiative could look like:
- Conduct ABC analysis with all strategic suppliers (Min/Max stocks, Lead-time reduction).
- Implement Direct Line Feed (DLF) with high running manufacturing cells.
- Deliver Cost Out projects committed in freight & warehousing spend.
- Support Part Transitions via ramp up/ramp down to support cost out.
- Develop Individual Personal Development Plans for each Supply Chain team member.
- Develop advanced project management skills.
- 2 x CPIM & 1 x MCIPS certifications to support the Supply Chain team in 2021.
Outline Your Supply Chain Strategy
Every item you sell requires supply chain planning at every phase of its life cycle. This phase is where you outline the supply chain strategy for each item. Supply chain strategy outlines typically include:
- Demand planning and management – Supply chain forecasting for a product improves your chances of producing and stocking adequate inventory to meet customer needs on a timely basis, without the need to store surpluses.
- Supply management – Supply management involves sourcing and procuring trusted sources of raw materials, components, software, and other goods that go into making your product or service.
- Production management – Production management, a.k.a. capacity planning is when you address production issues in terms of machinery, staff, and efficiency. The key question in this phase is “How much can we realistically produce during the planning period?” .
- Inventory management – Inventory management is how to manage inventory levels with supply chain partners, and keep stock on hand at an optimal level while ensuring reliable customer service.
- Pricing strategy – Pricing strategy is how you set an optimal price for your goods and manage the balance between supply and demand. One example of pricing strategy is a price cut designed to stimulate sales during periods of low demand.
- Crisis management – Event management in regards to your supply chain involves identifying all possible supply chain bottlenecks, breakdowns and delays at every link in the chain, and developing contingency plans to stay in business should you lose a supplier.
- Integrated business planning (IBP) – Integrated business planning is how you link supply chain planning with the rest of their business, like sales, operations, and finance. Because IBP gathers information from across the enterprise, it also helps companies perform better predictive analysis.
Combine Goals, Tactics and Strategy into Your Supply Chain Plan
This phase of supply chain planning is where you combine everything, and decide on how your supply chain plan is going to be effective. Here’s where the process gets tricky, as you will have to corral your managers to agree on short term and long term actions, due dates and expected results.
When working on this stage of your supply chain plan, it’s a good idea to decide on a figure that you’re willing to spend to achieve your goal. Keeping that figure in mind will make it easier to select the tactics that provide the most advantage.
Find a Fulfillment Partner
The last and final step in the supply chain planning process for new business is to invest in supply chain fulfillment . Flowspace is the fulfillment partner that handles everything after a consumer clicks buy. With a flexible, distributed network of fulfillment centers, the Flowspace platform makes it easy for businesses to enable fast, affordable fulfillment, from anywhere to anyone.
Contact us today to get started!
Allison Champion leads marketing communication at Flowspace, where she works to develop content that addresses the unique challenges facing modern brands in omnichannel eCommerce. She has more than a decade of experience in content development and marketing.
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Supply Chain Planning: Strategy, Processes and Practices
Supply chain planning helps your business meet customer demand in the most efficient way possible. But to increase profitability and keep demand from outstripping supply, every step in the supply chain planning process—from ordering raw materials to product delivery—has to be reliable.
The process also has to be adaptable, efficient and accurate to address changing market forces. It sounds like a tall order, but there are best practices that can help.
Video: What is Supply Chain Planning (SCP)?
What is Supply Chain Planning?
Supply chain planning helps you match product supply with customer demand using forecasting, pricing strategy and inventory management techniques. Before delving into the details of supply chain planning, here are two key concepts you need to know.
Supply chain planning vs. supply chain execution
Supply chain planners are long-term prognosticators, asked to peer months or even years into the future. But their predictions aren’t based on what they see in crystal balls. Instead, they analyze manufacturing, logistics and inventory data to make their plans.
Supply chain execution, on the other hand, is the day-to-day implementation of that plan—order fulfillment, transporting goods, warehousing. Think of them as two sides of the same coin.
What is supply chain management software?
Supply chain management software supports planning and execution. It forecasts demand and manages inventory so you can keep costs down and deliver products faster. It provides real-time updates about the status of your supply chain, lets you inspect your operations and helps balance supply with demand.
Supply Chain Benefits
Supply chain planning is a way to improve your operations by standardizing procedures, reducing waste and planning for variability.
It also plays a pivotal role in price and delivery—two of the most important aspects of customer satisfaction. A well-run supply chain lowers manufacturing costs, improves the reliability of deliveries and helps you respond to unplanned demand.
Importance of Supply Chain Planning
Supply chain planning affects your top and bottom lines. Stock shortages can result in lost sales or rush shipping charges. Too much inventory ties up cash. And over-forecasting and canceling orders can damage important relationships with suppliers and disrupt your own business.
It’s difficult to argue with the why , but there’s often less agreement on how the process should be structured.
Supply Chain Planning Process
Achieving desired business benefits requires strategic, long-range supply chain planning. However, in a flexible supply chain, managers are empowered to respond tactically to changing conditions and alter those plans on the fly.
This phase focuses on the long term and establishes a framework for your supply chain. In this phase, you’ll factor in elements like the location of your business and suppliers. You’ll map transportation routes and determine the size and location of warehouse space for materials and finished products. If you already have a location, this is when you determine how to leverage it.
The next phase delves deeper into individual aspects of this framework. For example, you might place standing purchase orders with certain suppliers for just-in-time delivery. You may decide to store safety stock of key materials to avoid shortages. And even the best-laid plans can require tactical adjustment, such as changing sourcing strategy or rebalancing inventory among overseas warehouses if new tariffs raise your costs, for example.
Supply Chain Strategies and Methods
Many planners use a combination of just-in-time delivery and safety stock to cut costs while hedging against shortages. The just-in-time approach delivers materials right before they are needed for manufacturing or other processes. With less inventory, less cash and space are tied up.
But companies risk pauses in production if there are delays in shipping or problems with materials. Alternatively, with the safety stock approach, companies store more inventory to provide an extra buffer against supply chain disruptions; the downside is an increase in inventory costs.
Supply Chain Planning Elements
A product requires supply chain planning at every phase of its life cycle. Steps include:
Demand planning and management: Accurately forecasting demand for a product improves your chances of producing and stocking adequate inventory to meet customer needs on a timely basis, without having to store surpluses. Supply chain planners look at historical customer behavior, projected versus actual sales, market conditions and other factors. Increasingly, they use predictive analytics to better understand the demand for a particular product—how much, where and when it should arrive. Then, supply chain planners estimate the internal demands on each link in their supply chains.
Supply management: Supply management involves sourcing and procuring trusted sources of raw materials, components, software and other goods that go into making your product or service.
Production management: In parallel, capacity planning addresses your own company’s production lines in terms of machinery, staff and efficiency. The key question: How much can we realistically produce during the planning period? Keep in mind that this could be less than your demand forecast.
Inventory management: How a company orders, handles and stores goods can significantly impact costs, operational efficiency and customer satisfaction. Companies aim to manage inventory levels with supply chain partners to keep stock on hand at an optimal level while ensuring reliable customer service.
Inventory management can also provide other financial advantages, such as the ability to capitalize on volume prices from suppliers and accurately include the value of inventory in assets listed in company balance sheets and tax filings. More sophisticated inventory management systems can identify high- and low-performing products and trigger reorders when stock dwindles.
Pricing strategy: Setting an optimal price is part art, part science. Honing an effective strategy is critical, however, to manage the balance between supply and demand . For example, price cuts can stimulate sales during periods of low demand, helping you cover the fixed costs of production lines and your workforce.
Event management: This involves identifying all possible supply chain bottlenecks, breakdowns and delays at every link in the chain and developing contingency plans, such as workarounds, buffers and backups.
Integrated business planning (IBP): This is an approach that links your supply chain planning with the rest of your business, from sales and operations through finance. Because IBP gathers information from across the enterprise, it also can help companies perform better predictive analysis to grow the business and manage risk.
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7 Steps to Supply Chain Planning Success
Here are seven basic principles that leading supply chain planners adopt:
- Synchronize supply chain planning and execution, how often you update your data and planning horizons—or how far into the future your company will project.
- Systematically manage data so that you can use consistent information throughout your supply chain planning and management processes. This includes data about items, customers, manufacturing resources and suppliers.
- Build cooperative relationships with suppliers and primary customers so you can more easily adjust forecasts, orders and increase sales.
- Examine the data used in your demand planning for flaws, such as forecast errors or bias.
- Focus on actual point-of-sale data more than your company’s sales orders.
- Continuously analyze the product lifecycle, looking for ways to improve the links between product development and the supply chain.
- Create a culture of steady improvement to better understand customer behavior.
Supply Chain Planning Trends
Despite the fact that companies increasingly use technology to improve supply chain planning and management, demand forecasting remains a formidable challenge for many organizations.
Companies are turning to predictive analytics to better understand buyer behavior and other factors that influence demand. Predictive analytics is also becoming an important tool for planning the production, distribution and other supply chain functions needed to fulfill that demand.
Supply Chain Defined
A supply chain is a coordinated network that includes all the companies, facilities and business activities involved in sourcing, developing, manufacturing and delivering products. Each business relies on its supply…
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