Build Resiliency With Supply Chain Planning

Global supply chains have faced significant disruptions in recent years. In fact, over 30% of global retailers experienced pandemic-related challenges, resulting in financial loss and customer dissatisfaction. While pandemics, natural disasters, geopolitical conflicts, and other disruptive events are inevitable, manufacturing managers can insulate their supply chains from their worst effects with proper preparation.

This is where supply chain planning plays an important role.

In this blog, we’ll explain the purpose of supply chain planning and break down its key components. We’ll also highlight the benefits of supply chain planning for small and medium-sized manufacturers (SMMs).

What is Supply Chain Planning?

Supply chain planning is the process of optimizing the manufacturing and delivery of goods from suppliers to customers while factoring in fluctuations in customer demand and potential disruptions. This process requires strategic coordination among several stakeholders, including: 

• Suppliers
• Manufacturers
• Distributors
• Carriers
• Retailers

Supply chain planning aims to ensure your products reach your customers seamlessly, regardless of the global complexities at play. When done right, supply chain planning can bolster your operational efficiency, customer satisfaction, and bottom line.

Supply Chain Planning Process: The Key Elements

Supply chain planning is a multi-faceted process that requires you to synchronize many moving parts. With that in mind, here are the five key components of supply chain planning:

1. Demand Forecasting & Market Analysis

Accurate demand forecasting is the foundational layer. This involves analyzing historical sales data, market trends, customer orders, and other relevant information to predict future demand for products or services. Once you’ve done your analysis, you can align your raw material procurement accordingly.

2. Inventory Management

The second stage of supply chain planning involves managing your inventory so your warehouses are stocked sufficiently at all times, allowing you to meet customer demand and minimize production downtime. This includes determining the optimal stock levels for raw materials, work-in-progress, and finished goods. It’s essential in this stage to make sure you have enough inventory but not too much. Too much inventory on hand ties up capital that could be used elsewhere and forces you to incur excess storage costs. 

The steps involved in this stage include: 

• Designating dedicated inventory storage locations
• Establishing protocols for inventory intake and inspection
• Tracking inventory levels
• Forecasting inventory to meet customer demands

This stage aims to strike a balance between meeting customer demand and minimizing holding costs associated with stocking excess inventory.

3. Production Planning

Production planning is the process of mapping out how your products are manufactured. Effective production planning aims to optimize efficiency, reduce waste, cut costs and maintain quality.

As you write down the steps of your manufacturing process, make sure to take note of dependencies and pinpoint any bottlenecks. You should also set your production targets, calculate your resource requirements, and establish clear manufacturing schedules.

4. Supplier Management

Cultivating strong relationships with suppliers can help you sustain a responsive and cost-effective supply chain to ensure the timely and efficient supply of goods and services. Access potential suppliers based on criteria such as product quality, delivery capabilities, financial stability, ethical practices, and past performance. Define the terms and conditions of the supplier relationship, including pricing, payment terms, delivery schedules, quality standards, and non-conformance return policies.

Single-source suppliers can leave manufacturers vulnerable to supply chain disruptions, so it’s a good idea to work with multiple suppliers in different regions. This diversification strategy can keep your supply chain running, even in the face of natural disasters and geopolitical unrest. It can also inspire healthy competition among your suppliers and motivate them to offer their best prices. 

Most importantly, maintain open and transparent lines of communication with your suppliers so that they can deliver what you need on time.

5. Logistics & Distribution

The last component of supply chain planning focuses on streamlining your transportation methods and transit routes. This step involves selecting the appropriate transportation modes (e.g., road, rail, air, sea) and managing transportation costs. You may also want to reevaluate your warehouse locations and choice of carriers at this time. By optimizing these elements, you can minimize your delivery times and transportation costs. 

The Advantages of Supply Chain Planning

Supply chain planning is crucial in today’s global marketplace. It can help your manufacturing company meet market demands, respond to changing conditions with agility, and optimize operations at every level. 

In fact, 57% of companies report that supply chain planning is responsible for their competitive edge. Even more impressive, 70% of companies credit supply chain planning as the leading driver of their outstanding customer service. 

While implementing supply chain planning requires time and effort, it’s well worth the investment. Here are some other benefits of employing supply chain planning at your manufacturing company:

• Enhanced efficiencies: Supply chain optimizations can improve your company’s operational efficiency, leading to fewer bottlenecks and faster lead times. 
• Reduced costs: From negotiating discounts with suppliers to streamlining your distribution routes, supply chain planning can save your company money. 
• Improved risk mitigation: Supply chain planning encourages you to devise contingency plans to maneuver unexpected disruptions successfully. If you can stay on target despite disruptions, you can bolster your reputation among customers and rise above your competitors. 
• Better customer satisfaction: A well-planned supply chain can facilitate timely and accurate deliveries of products to your customers. By fulfilling orders quickly and consistently, you can boost your customer satisfaction. Happy customers are more likely to stay loyal to your company and provide you with referrals. 

All of these benefits combined lead to a healthier business, happier customers, and a more substantial bottom line.

Get Supply Chain Planning Support From CMTC

Successful supply chain planning can bolster your company’s resilience and profitability, even in unprecedented disruptions. While supply chain planning has many benefits, it can also be complex. 

Let the experts at CMTC help. CMTC’s team of experienced and knowledgeable consultants can provide a broad range of assistance required to optimize your supply chain.

Reach out today for a no-cost consultation!