Supply chain planning is the “heart” of SCM and occurs at the start. In general, supply chain planning is the determination of a policies and procedures that govern the entire operation of a supply chain. Planning also predicts future requirements to be able to balance supply and demand. Poor planning can result in a loss of profits.
1. Know the customers:
- What do they want
- Where do they want it
- How do they want to receive it
- When do they want it
- What price are they willing to pay for the products/services
2. Integrate business processes in making a good strategy to increase profits. Companies must be able to make an accurate estimate of the demand in the near future. For example, the company forecast “x” amount of sales and order enough materials to cover “x” sales. But in fact fewer sales than “x” amount therefore the company end up with an excessive inventory. This case will create decrease in profit. Likewise, too many sales could cause the company has to order additional materials in the last minutes in order to fulfill demand, company also need to pay overtime to their workers. Then there will be additional production costs which will be usually passed on to the buyers and this can reduce in profits as well.
3. Makes a good information system/infrastructure. To achieve a competitive advantage, an effective information system/infrastructure is needed for both internal and between all stakeholders in the supply chain. Today, the internet makes much easier for stakeholders to share timely demand such as market demand, stocks, logistics, market trends etc.
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