Over the past five years, supply chains have faced unprecedented challenges. E-commerce demands, trade pressures, and increasingly complex supplier networks have necessitated executives to raise concerns about their supply chain operations. Recently, tariffs have become a focal point in major headlines, and the looming fear of a trade war persists.

Supply chain planners are now frequently tasked with initiating transformations to address these various pressures. Planners are uniquely positioned with an end-to-end focus, from procurement of materials, through manufacturing and engineering, to the movement, storage, and delivery of finished products or services. Executives are now recognizing Supply Chain Planning as an essential piece of operations for leveraging their companies’ commercial and technical resources.

Supply Chain Planning (SCP) is a critical component of Supply Chain Management (SCM), starting with the accurate forecasting of customer demand. SCP involves meticulously planning the journey of a material or product from its raw material stage to its final consumer. It establishes the foundation for the entire Supply Chain Operation and drives day-to-day decision-making across multiple functions within a company.

Key Trends Accelerating SCP Importance in the Supply Chain and Broader Business Operations:

Rise in Supply Chain Complexity: As supply chains grow more complex, business leaders are tasked with continually finding new efficiencies while increasing responsiveness. Investing in planning enables companies to quickly identify and address constraints while consistently realigning assets to maximize value.

Managing Multifunctional Business Processes: Multifunctional business processes can improve both top and bottom-line results. However, these processes often span multiple functions within the organization and can be difficult to oversee. Managing them requires strong technical and interpersonal skills. Planning is one of the few areas that consistently develops skills in both, resulting in planners more often leading critical business processes.

Consumer Expectations Heightened for Customized Products and Services: Retailers aim to leverage consumer expectations for competitive advantage, often increasing or requesting highly customized SKUs, which place significant pressure on demand fulfillment systems. Traditional supply chain infrastructures, built to serve brick-and-mortar markets, are being strained by e-commerce. By developing strategies for design, supply, production, distribution, and inventory, planning provides a foundation for product innovation and plays a key role in product simplification and SKU rationalization.

Who is responsible for Supply Chain Planning?

In most organizations, supply chain planning is a centralized function carried out by supply chain planners. Supply chain planners are responsible for developing and executing the supply chain strategy, ensuring that the supply chain can meet the business’s demands. Supply chain professionals use various tools, including supply chain modeling, inventory management, and forecasting.

Supply chain planning is moving away from traditional, siloed planning processes and towards a more collaborative approach, which is made possible with solutions hosted in the cloud.

Key Components of Supply Chain Planning:

Demand Forecasting This process involves ingesting historical data, market trends, and customer insights to predict future demand. By forecasting demand accurately, companies can ensure that they have the right amount of inventory at the right time.

Supply Chain Management The oversight and control of all the activities required for a company to convert raw materials into finished products that are then sold to end-users. Key responsibilities include supporting continuous improvement, increasing velocity, and always seeking new technologies that could improve processes.

Risk Management: Identifying potential disruptions, such as natural disasters, supplier disruptions, such as bankruptcies, transportation delays, and developing contingency plans to mitigate their impacts. Some solution offerings can provide “what-if” case scenarios and map out solutions.

Inventory Management: Aims to strike a balance between supply and demand, ensuring that there is enough inventory to meet customer demand without incurring excessive carrying costs.

Sales & Operations Planning This is an opportunity to make better decisions that key strategic chain drivers, such as customer demand, production rates, inventory status, and marketing, inform key supply chain drivers. To improve S&OP data quality must be improved, performance metrics must be rigorously defined, and company goals and objectives must be aligned to ensure there are clear roles and expectations.

The ARC Advisory Group will soon begin updating the annual Supply Chain Planning Market Analysis. This analysis is conducted by analyst Gaven Simon. If you’re interested in providing the supply chain team at ARC with a briefing to discuss any developments in your solution or the market as a whole, please reach out. (gsimon@arcweb.com)