What is in this article?:
- Supply Chain Basics: Utilizing the Planning Process to Optimize Business Performance
- Key Supply Chain Planning Elements
Powerful planning processes provide the essential elements for business success through material management, lean operations, waste reduction and working capital optimization.
It is not unusual to observe businesses of all kinds taking the view of their supply chain and manufacturing networks as a necessary evil. In most if not all cases, the externally facing functions—marketing and sales—get most of the attention. While finance commands internal respect, the supply chain, which is intricately woven into every aspect of the business, tends to be the utilitarian stepchild—meeting demand and controlling costs.
The biggest lever for optimizing business performance is to drive supply chain excellence by aligning it with business strategy. One of the elementary components for a high-performing supply chain is a robust set of planning processes. We see repeatedly in conversations with business partners, a yearning for improved sales and operations planning (S&OP) processes, demand planning programs, supply planning that optimizes factory performance, logistics performance, and the desire for better inventory and working capital management.
This article is not intended to be a tutorial, but as a quick look at key supply chain planning elements useful in making the point regarding the pivotal nature of superior planning processes. To the extent possible, I will attempt to remove as much jargon as possible from the discussion. All too often in formal supply chain presentations, there is the propensity to dive so deep into the details that the key points are lost. It is indeed a complex issue, but we are trying to not only make the supply chain point, but show how a company and its performance will benefit from the message.
Blocking and Tackling
Sports analogies abound, but if marketing and sales represent the backfield and receivers on a football team, the supply chain would be the offensive line, with planning at the center position. Essentially, the ball cannot be advanced down the field until it is snapped, and a business can’t perform at its highest level without a sound planning system.
While I am focusing here on the basics of supply chain planning processes, there are, of course other key planning elements in a business, not the least of which is the strategic plan and direction of the company. It goes without saying that all of the functions in an organization must accurately reflect the strategic objectives of the business. But with an eye on superior supply chain performance, another way to look at planning is as a hub, where each spoke connects to a function, all of which are reliant on a sound planning platform.