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.
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.
SCM systems help ensure that your supply chain planning and execution are based on a standardized set of procedures. With this standardization, all stakeholders can work toward improving supply chain operability and company profitability.
SCM tools also address the issue of waste. Studies show that the average U.S. warehouse wastes nearly 7 weeks per year on unnecessary processes. Annually, this costs the industry $4.3 billion or roughly 265 million labor hours.
When you automate, organize, and simplify SCP with the right technology, you can reduce this waste.
For example, you can forecast upcoming decreases in market demand months or even years in advance.
Ultimately, when your supply chain is optimized and automated, your customers benefit. You can provide personalized service, lower prices, and speedier deliveries — three factors that directly influence where they spend their money.
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:
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, 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 that clearly outlines the steps required to respond to each actionable insight.
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.
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 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
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. These systems 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.