Supply and Capacity Planning
It takes quite some labor and prep work to figure out the right assumptions even to fulfill distribution demand, let alone customer demand. Esp. with multiple sources of supply and demand (warehouses, customer warehouses). Even in a medium scale supply network with 5 locations, 50 SKUs, 100 vendors and 1000 customers, supply planning can get daunting. Supply chain dynamics can quickly get complex. But your systems perhaps does not live the reality right now. Products are growing. Customers are growing. Some products are being discontinued. Sometimes with conditional restrictions. There are external conditions imposed by Customers, Sales, shippers, vendors and even the law. All leading to generation of a sub-optimal supply and distribution plans if these facts are not considered real time. A plan that not only fails to meet the demand at the right time but is also expensive by virtue of inventory investments. Based on obsolete assumptions. Despite multi-million dollar systems in place you struggle to balance inventories across locations, the most basic of activities!
We have helped customers re-think new paradigms in planning. Since we understand the corruption by variability at work. Inaccurate lead times, over realistic safety stocks, source of supply restrictions, resource and material availability constraints have a crippling effect on your ability to service demand. Much more than what you possibly assume. Despite a lot of capacity and a lot of inventories on hand, the stuff isn’t there in the right place at the right time. No, it isn’t just about your ability to ship. It is about your ability to meet or exceed stated service level by deploying the inventories at the right place at the right time. That needs a synchronized response to demand. It is your ability to simulate a variety of supply plans before you go ahead with production and procurement. It is your ability to ‘model’ your supply and demand ‘nodes, contracts and relationships correctly before you ‘run’ your supply and replenishment plans. It is your ability to distinguish between source of demand (customer demand, distribution demand, forecast) and source of apply clearly at all times.
© 2013 The Management Technician. All Rights Reserved.