What is Supply Chain Planning?

One area gaining more and more attention in industries due to its critical role is Supply Chain management. The increasing complexity of production chains and its consequences in high costs, shortages and loss of competitiveness for those who don't address this challenge correctly only happens because we don't know what the future will be. If we knew exactly what future demand will look like, how long it will take to produce ‘x’ products and had certainty about supply and delivery quantities and lead times, we could use simple arithmetic to solve our problems. But “real life” isn't like that. Where there is uncertainty, there must be planning. While Supply Chain Management (SCM) is a broader concept that covers all aspects of the supply chain — from planning to execution — Supply Chain Planning (SCP) is more focused on the former and is part of SCM.

So, supply chain planning is the set of activities to anticipate and decide how much of each material to supply, in what quantity, in what form and at what moment, in order to meet future demand that is still uncertain. In short, it gives us the answers to our main decision objective: what responsiveness do we want in order to meet which service level? It's precisely the imprecision and complexity that make this process full of stages and trade-offs, with many areas involved.

The literature on this topic may vary slightly, even more so if we look at it from a conceptual or technological perspective. We'll find a lot of material talking about S&OP and IBP, others focused on Demand Planning, those directed at Operations, and so on. A reference in the field that aggregates all these perspectives in a synthesis of SCP is the expert Gerald Feigin, PhD in applied mathematics from Harvard and consultant at large companies. He divides SCP into 3 major areas: Demand Planning, Sales and Operations Planning (S&OP/IBP) and Inventory and Supply Planning. Breaking down the last topic as we understand its different functions and even technologies applied and highlighted by authorities such as Gartner, we can — with a bit of poetic and advisory license — divide SCP into the following main topics:

• Demand Planning;

• S&OP/IBP;

• Inventory Planning;

• Production Planning;

• Supply Planning;

• Logistics Planning.

To learn what each of these stages is, what their applications are in Supply Chain planning, which technologies are most recommended to support execution and the main practical uses of each topic addressed above, we prepared a complete and totally free ebook for you. Click here, fill out the form and get your ebook immediately!  

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