The unpredictable global economy has taken its toll on almost every industry, underscoring the need for robust supply chain planning and control.
In other words, organizations need to efficiently coordinate assets as goods, services, and information are delivered from suppliers to customers. At the same time, companies need to forecast future needs and balance supply and demand.
Today, we’re taking a closer look at supply chain planning and control, and we’re sharing best practices for optimizing and automating this process.
Software Selection & Process Improvement Case Study
In helping the client get its project back on track, one of our primary focus areas was decreasing their customization needs by improving their processes to align with the system's best practices.
Why You Need Automated Supply Chain Planning and Control
Many organizations rely on supply chain management systems to predict future buying behavior. These tools have several different features that balance product supply with customer demand, including:
- Forecasting functionality
- Inventory management functionality
- Pricing optimization capabilities
SCM software automates both supply chain planning (SCP) and supply chain execution (SCE). SCP is the process by which business leaders make informed decisions about their supply chains based on data from manufacturing, logistics, and inventory, while SCE is the act of carrying out the day-to-day activities associated with a company’s supply chain.
Understanding supply chain planning vs execution is essential for aligning strategy with operations and ensuring both SCP and SCE work together effectively.
SCM systems help ensure that your SCP and SCE are based on a standardized set of procedures. With this standardization, all stakeholders can work toward improving supply chain operability and company profitability.
When you automate, organize, and simplify SCP with the right technology, you can reduce this waste as part of effective supply chain planning and control.
For example, you can forecast upcoming decreases in market demand months or even years in advance.
Ultimately, optimized and automated supply chain planning benefits your customers. You can provide personalized service, lower prices, and speedier deliveries — three factors that directly influence where they spend their money.
Supply Chain Planning vs Supply Chain Execution (SCP and SCE)
SCP and SCE are two interconnected but distinct pillars of supply chain management. As previously mentioned, understanding how they differ from one another is essential for aligning operations and strategy.
Supply Chain Planning (SCP)
- Focus on strategic and tactical decisions.
- Forecast demand, plan inventory levels, schedule production, and align capacity with expected market needs.
- Anticipate what will happen so organizations can prepare resources, mitigate risks, and optimize performance before disruptions occur.
Supply Chain Execution (SCE)
- Carry out the day-to-day operations that keep products moving.
- Order fulfillment, warehouse operations, transportation management, procurement activities, and real-time coordination across suppliers and distribution centers.
- Ensure that the plans created during SCP are executed efficiently, accurately, and on time.
Supported by modern SCM software, SCP and SCE integration help organizations gain end-to-end visibility and the agility to respond quickly to market changes.
Key Performance Indicators (KPIs) for Supply Chain Planning and Control
To understand whether supply chain planning and control efforts are working, organizations typically track the following KPIs:
|
KPI |
What it Measures |
Why it Matters |
|
Fill Rate |
Percentage of customer demand met from available inventory |
Indicates service level and inventory effectiveness |
|
Forecast Accuracy |
How closely do demand forecasts match actual sales |
Improves planning, reduces stockouts, and excess inventory |
|
Forecast Bias |
Tendency to over- or under-forecast demand |
Helps correct systematic planning errors |
|
Inventory Turns |
How often is inventory sold and replaced |
Shows inventory efficiency and capital usage |
|
Days of Inventory on Hand (DOH) |
How long will inventory last at the current demand |
Balances service levels with carrying costs |
|
OTIF (On-Time In-Full) |
Orders delivered on time and in full |
Measures execution reliability and customer satisfaction |
|
Schedule Adherence |
Alignment between planned and actual production |
Reflects planning quality and operational discipline |
|
Capacity Utilization |
Percentage of available production capacity used |
Helps optimize resources and avoid bottlenecks |
|
Stockout Rate |
Frequency of inventory shortages |
Highlights risks to service and revenue |
|
Cost to Serve |
Total cost to fulfill customer demand |
Connects planning decisions to profitability |
What Influences the Supply Chain Planning and Control Process?
Before purchasing an SCM system, you should first understand your supply chain processes. There are several overarching processes that comprise a company’s SCP approach and support effective supply chain planning and control:
1. Demand Planning
This is the process of creating a forward-looking sales forecast based on historical data and other reliable information, such as point of sale (POS) activity.
When users enter data into the SCM system or supply chain planning software, automatic reports are generated that organize the information, identify patterns, and provide visibility into future requirements. This enables companies to predict changes in buyer behavior and either prepare for these changes or proactively steer customers in a different direction.
For instance, if the data shows that demand will likely drop, then marketing teams can curb this decrease by offering incentives, such as discounts or product substitutions.
2. Production Planning
Once the SCM software reveals the necessary insights, the supply chain team can create an associated demand plan. Then, they can translate this plan into a corresponding production plan (supported by automated supply chain planning tools) that clearly outlines the steps required to respond to each actionable insight. This alignment strengthens overall supply chain planning and control and ensures production stays synchronized with real-time needs.
3. Supply Chain Execution
Once this plan is in place, the supply chain execution process begins.
Sometimes, a company will outsource certain supply chain tasks, such as distribution or order fulfillment, to third-party logistics providers (3PLs). These are companies that specialize in specific functions that many organizations aren’t set up to handle on their own or can’t perform at an economical pace.
How to Automate Your Supply Chain Planning
Optimizing your processes and then implementing either an ERP system or an SCM system can help you achieve supply chain success.
Many organizations integrate these two platforms as part of a best-of-breed strategy. This allows companies to use a variety of planning and forecasting tools with advanced functionality, which is especially helpful when aligning SCP and SCE across complex operations.
While this strategy makes sense for organizations with complex processes, a single system strategy can be beneficial for organizations that are able to find a single ERP system that can fulfill their needs.
Many ERP systems come equipped with functions that provide a high level of supply chain planning and control. These tools help users simplify the supply chain process and make every touchpoint more transparent.
Implementing an all-in-one solution like this means you avoid potential integration challenges and ensure seamless data flow between your supply chain functions and other functional areas. This enables:
- Improved inventory management
- Improved relationships with suppliers, customers, and supply chain partners
- Simpler, streamlined purchasing processes
- Enhanced vendor evaluation processes
When to Consider SCM System Upgrades or ERP Integration
- Outdated scheduling tools that result in missing delivery deadlines
- Stockouts and overstocks are frequent
- Expanding to new warehouses or regions
- Adding e-commerce channels that don’t integrate
- New traceability or compliance requirements
- Manual data transfers with suppliers or partners
- Disconnected purchasing, inventory, and finance data
- Warehouse inefficiencies and manual processes
- Lack of real-time KPIs or supply chain visibility
- Need for advanced planning tools or SCP and SCE alignment
For more details on the differences between SCM and ERP, be sure to read our post, ERP vs SCM.
Ensure Supply Chain Success
Your supply chain is your lifeline. It’s comprised of many different resources and stakeholders, all working together to move your company forward and keep your customers happy.
When it’s fully optimized, you know it. However, the opposite also holds true. A clunky supply chain can negatively affect your brand reputation, customer satisfaction, and bottom line.
With the right supply chain planning and control tools and processes, you can avoid these risks. Modern solutions, especially those that support automated supply chain planning, help companies leverage historical insights, make informed business decisions, and stay ahead of the curve.
To learn more, contact our ERP consulting team below and receive a free consultation.
FAQs About Supply Chain Planning and Control
1. What is supply chain planning and control?
Supply chain planning and control refers to the processes, tools, and strategies organizations use to balance supply and demand, optimize resources, and ensure that products move efficiently from suppliers to customers. It involves forecasting, inventory planning, production scheduling, procurement coordination, and continuous monitoring of operations to ensure performance stays on track.
2. What is the difference between SCP and SCE?
The difference between SCP and SCE lies in their focus. Supply Chain Planning focuses on forecasting demand, planning inventory, and creating a strategy for future supply chain needs. Supply Chain Execution focuses on carrying out day-to-day operations such as order fulfillment, warehousing, and transportation. They work together to keep the supply chain efficient and responsive: SCP decides what should happen, and SCE ensures it happens.
3. How can software improve supply chain planning?
There are many ways in which software improves supply chain planning, including providing real-time visibility, accurate demand forecasting, and automated planning tools.
Organizations can respond faster to demand changes, improve teams’ coordination, and make more informed, data-driven decisions by leveraging supply chain planning software: it analyzes historical and operational data to optimize inventory levels, production schedules, and resource allocation, while reducing manual work and errors.
4. What KPIs should I track for supply chain performance?
For supply chain performance, organizations should track KPIs that measure service levels, planning accuracy, inventory efficiency, and execution reliability. Common KPIs include fill rate, forecast accuracy, forecast bias, inventory turns, DOH (Days of Inventory on Hand), OTIF (On-Time In-Full), schedule adherence, capacity utilization, stockout rate, and cost to serve. All these metrics help evaluate how well supply chain planning and control align with execution and where improvements are needed.
5. When should a company invest in new SCM software?
A company should invest in new SCM software when its current tools can no longer support effective supply chain planning and control. Common triggers include
- poor demand forecast accuracy
- frequent stockouts or overstocks
- limited visibility across inventory and suppliers
- heavy reliance on manual processes
- fulfillment costs rising
- difficulty integrating with ERP
- companies experiencing rapid growth
What industries benefit most from advanced SCM systems?
A supply chain management system is especially beneficial for manufacturing, retail, distribution, CPG, life sciences, automotive, and high-tech industries. Due to complex forecasting, multi-tier logistics, and global supplier networks, these industries typically gain the most value.
