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Benefits if Supply Planning in a Business

by William Beel

Before landing on the topic of supply planning and its objectives, have you ever wondered what all it requires to establish a business and run it successfully? How do companies grow and come up with customer-friendly strategies and make profits?

Here’s the key! Apart from knowing what the customer wants, analyzing geographic trends, considering real-time data, and applying marketing strategies among the targeted audiences, there’s a lot more that goes behind the screen. Just like demand planning which takes into consideration product demand by analyzing the market and avoiding excess inventory, there also exists a concept of supply planning. Firstly, what does the term supply planning mean?  When a business operates, it evaluates the product demand from customers, but to meet this demand it takes a lot starting from the procurement operations according to demand forecasts, manufacturing or collection of goods/services between businesses and location, and including the movement of raw materials, work-in-process, and finished goods.

And this complex process constitutes supply planning. While the main reason to manage supply planning is to provide customer satisfaction without locking business capital in inventory, it also analyses and anticipates market trends for the best time to purchase inventory. Ensuring that the business has a steady flow of stocks without overcapitalizing on materials. It is not a modern technique that has gained the limelight recently during Covid 19 but a staple that has paramount significance in today’s rapidly changing business environment. To move ahead, one should know about the five main functions of supply planning.

  • Aligning Flows: as supply chain management is a part of, supply planning it is essential to maintain a smooth up and down flow of material, money and information between customers and suppliers.
  • Integrating functions: another salient function is to manage connections between activities of logistics, purchasing and operations so as to ensure that the focus on the end goal is maintained, which also benefits overall performance.
  • Coordinating process: profitability in a business increases only when all its domains are coordinated with one another. Thus, the processes used to plan, source, make and deliver products and services in a company should be well aligned without a flaw.
  • Designing complex systems: no market is static in nature, thus predictions can turn out to be wrong and deal with such complex situations. Simulation tools can be used as they predict the behavior of a supply chain and show how small changes can cause major disruptions in the flow of materials.
  • Managing resources: it is of the utmost importance to optimally utilize the available resources in order to provide maximum customer satisfaction. Thus, managers in this process are accountable for using human resources, processes, and technology to meet the needs of customers.

The entire process of supply planning links to supply chain management and a special individual who is equipped with the latest tools and technological information is best suited to lead this role. To have a descriptive look at the job position and requirements of a supply chain leader, one can read pieces from reputable sources.

Other than the above-stated functions of an impeccable supply planning process, streamlining supply chain activities also results in faster production, efficiency, and lower operation costs. This allows businesses to better compete and, in turn, create value for customers. It helps a company to maintain an equilibrium between demand and supply, thus, saving a lot of the company’s money. The major aim of supply planning is to satisfy customers by knowing about the product/service demand in various locations. However, a very important point to keep in mind, is that demand is seen to fluctuate irrespective of the forecast and it happens due to unforeseen circumstances like changes in consumer patterns. The absence of a comprehensive plan can put a business at risk, resulting in great losses. Furthermore, one can head to job-hunting articles and read about their importance in the development of a business.

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