What is supply chain management planning?
According to GEP (a global leader in supply chain consulting,) supply chain planning is the
process of anticipating demand and planning the coordination around meeting that demand.
According to Gartner, Supply chain planning (SCP) is the forward-looking process of coordinating assets to optimize the delivery of goods, services, information from supplier to customer, balancing supply, and demand.
Why is supply chain management planning important?
A lack of (SCP) could expose your business to risks like having more inventory than needed,
increased costs and falling behind the competition.
Having more inventory than needed:
GEP suggests that due to a lack of planning, organizations tend to harbour more inventory
or buffer stock than needed. This in turn results in inflated warehouse or storage costs and
extra labour costs that exceed the demand at the time. The stock might sell eventually but
the overhead costs would remain a loss. Falling behind the competition:
Supply chain management has become a competitive industry.
In a recent episode of Supply Chain Now (live podcast with Scott Luton and Greg White,) they discuss the changing supply
chain management landscape as companies evolve to respond to the needs of today.
Robert Giacobbe mentioned that there is no longer room to hide if there is an error.
Customers are now aware of where in the supply chain mistakes are made so planning will
help you to make your service efficient and make sure you deliver on your brand promise.
Customers will go where there is delivery and a handful of companies are working hard to
keep their edge.
The four essential components of effective supply chain planning:
The Supply Chain Now team discussed four essential components for supply chain planning,
and we thought we would give you a summary of the episode here as you plan for 2023. The
first component is that the supply chain planning capabilities need to be in line with your
competitive business strategy. For example, in an operational efficiency (OE) strategy you
will be competing on price. In a high service strategy, you will be looking at high customer
touch and in technology your competitive focus is most likely to be product leadership. The
forecasting for each strategy will be completely different and you must be aware, so your
planning outcomes suit the needs of the demand on your business.
Secondly, you will need to integrate these capabilities vertically and horizontally within your
organisation. This vertical integration means that from the highest to the lowest level the plan
is known and understood, form the strategy right down to the ordering. Horizontally includes
bringing your teams together for the common interest. There is often conflict on this plain
within organisations because while striving towards common purposes the goals of various
teams may differ.
The third component is making sure the capabilities become digitally powered. This is key as
it revolves around the data and analytics you are gathering. This has changed significantly
as the previous model included looking back to make a prediction of the future which is no
longer relevant according to Robert. Data pulled from your shopfloor, third party informers
and transportation among other sources. While forecasting, everything needs to be seen as
a process of transformation and not simply how we perform better on our previous metric.
Lastly governance and ownership of these capabilities should come directly from the
executive team. The top level must be involved in delivery of the brand promise- this is
where the brand promise was born.
Take more control of your planning process. There is little to no room for error for
management services, you can stay ahead by staying on the ball and continue to innovate
the way you do supply chain management.
1. “The Four Essential Components of Effective Supply Chain Planning.” Supply Chain Now, 17 Nov.
2022, https://supplychainnow.com/four-essential-components-effective-supply-chain-planning-1029/.
2. “Effects of Doing a Poor Job at Supply Chain Planning.” GEP, 18 Mar. 2016,
https://www.gep.com/blog/strategy/effects-of-poor-supply-chain-planning.
3. Gartner_Inc. “Definition of Supply Chain Planning (SCP) – Gartner Information Technology Glossary.”
Gartner, https://www.gartner.com/en/information-technology/glossary/scp-supply-chain-
planning#:~:text=Supply%20chain%20planning%20(SCP)%20is,customer%2C%20balancing%20supply
%20and%20demand.