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Forecasting In The Supply Chain

In the modern supply chain, forecasting is necessary for companies that manufacture items for inventory and that are not made to order. Manufacturers will use material forecasting to ensure that they produce the level of material that satisfies their customers without producing an overcapacity situation where too much inventory is produced and remains on the shelf. Equally, the forecast must not fall short and the manufacturer finds them without inventory to fulfill customer’s orders. The cost of failing to maintain an accurate forecast can be financially catastrophic. Forecasts are developed for a company’s finished goods, components and service parts. The forecast is used by the production

Why Won't My Suppliers Do What I Want?

How supplier management optimizes your supply chain. One of the nuances of supplier relationship management (SRM) involves implementing a 360-degree view of the overall SRM process. As supply chain managers, we sometimes think that our inherent leverage is that we are SUPPLY CHAIN MANAGERS, for crying out loud – so why isn’t my supplier doing what I want? But if we can take a step back and look at the relationship from the supplier’s point of view, well, you’ll see that your supplier is practicing customer relationship management (CRM) as a counterpoint to your SRM. I.e. your supplier is trying to get you to do what your supplier wants! So… what can you do about that? You’re a SUPPLY CHAIN

Supply Chain Impact - Mergers and Acquisitions

Prepare your supply chain for pre and post-M&A activity. Of all the business functions at your company, supply chain’s potential impact in a post M&A environment can be one of the most significant. But to optimize supply chain’s impact, you need to prepare well before an M&A event. I’ve written about the role of supply chain in M&A’s before – in a specific case study (the Kraft-Heinz merger) and from a boots on the ground point of view. In this article, I’ll provide a guide on preparing your supply chain for an M&A, and then share how you and your newly-formed company can get the most out of the M&A, using supply chain. Why should you prepare for an M&A event? Mergers and acquisitions oc

Master the Elements of Distribution Network Planning

Logistics executives must periodically re-evaluate the locations of their distribution centers (DCs) to minimize shipping costs. A network strategy worked out four years ago, when fuel was three dollars per gallon, might not be the best strategy now when fuel costs are 30 percent higher. Other factors affecting this decision include rate increases, driver shortages, new labor laws and consumer demand for free and fast delivery within 24 to 48 hours. A distribution network strategy must consider many supply chain factors, including strategic product sourcing, supply chain vulnerability, throughput capacity, mergers and acquisitions, inventory, omni-channel requirements, warehousing, transpor

Production Planning Vs. Master Scheduling

Production Planning Production Planning and Master Scheduling are sometimes combined depending on the company and their available resources but they have very distinct and differing responsibilities. The main difference is that production planning works with MRP planned orders & MPS firm planned orders outside of the cumulative lead-time window while master schedulers work with converting the MRP planned orders into MPS firm planned orders and ultimately into work orders once they come into the execution window or inside the cumulative lead-time. You can see the problem as any changes made by the master scheduler within the cumulative lead-time window can impact execution activities and crea

Differences Between Demand Planning vs. Demand Management

Adjusting business operations to account for customer demand is a basic requirement of any business that wants to compete in the open market. Many of these businesses practice principles of both demand planning and demand management in order to make this responsibility easier. Both demand planning and demand management are systems meant to account for future consumer demand, although they differ in the length of forecast and demand factors considered. Demand Planning Demand planning refers to the process of forecasting consumer demand for a company's products or services well into the future, sometimes as far into the future as one year. Demand planning is usually associated with sales, but

A Five-Step Approach to Effective Demand Planning Implementation

Good handling of market demand data is one of the most vital concepts in any supply chain. The correct management of demand information can greatly influence the level of integration and responsiveness, and has a direct impact on customer service and inventory levels. If customer demand is the activating element in the supply chain, it’s quite clear that a multi-step operational supply chain management process to create reliable demand forecasts can play an active role in improving supply chain effectiveness. But how to create powerful demand planning implementation? The five-step approach outlined below provides guidance. 1. Start with a demand analysis It’s an old saying: ‘garbage in, garb

Demand Planning—The Key to a Profit-Driven Supply Chain Cycle

Several times in the past I came across these questions. Why the forecast accuracy should be improved? What is the necessity in spending money towards improvement and implementation of some expensive demand planning software? To know the significance of demand planning in Supply Chain management you need to know what a demand planning means. The most crucial aspect of any organization, be it the services or the manufacturing sector, is demand planning or sales forecasting. It is a business process that entails futuristic predictions of demand for products and services and calibrates production and distribution capabilities accordingly. If you are a part of manufacturing company then you will

The Difference between Demand Planning, Forecasting and S&OP

What are the goals of business? To maximize profits! From a supply chain perspective, how do we accomplish this? Let’s look at some of the key aspects of how supply chain contributes to the goals of the company. We know how important our demand planning function is to ensuring operations are timely, efficient, and cost effective. We want to ensure product availability to maximize revenues in the marketplace but also know inventory is a tradeoff as it ties up capital. Effective demand planning then requires a variety of information (timely, as accurate as possible, useable, qualitative and quantitative) in order to properly forecast the products we sell. The end goal is to provide usable info

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