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Supply Planning

Supply planning is focused on ensuring that the appropriate resources can be made available to meet agreed upon sales plans and inventory or backlog targets. 

Supply planning typically includes the following:   

  • Reviewing performance: actual supply versus planned supply, planned capacity versus demonstrated capacity. 

    • Does a statistical analysis of supply variability yield useful information?  Can the cause of differences be established and action taken? 

    • Was there a bias built into the supply plan?  What is the cause of that bias and can it be eliminated?  Even if the cause cannot be eliminated, can the biased numbers be corrected? 

    • Were there assumptions made about the supply plan and resource availability in the prior period and have those assumptions proven to be wrong?  If so what are the new assumptions and how will they affect the future supply plan? 

  • Evaluate the preliminary S&OP against capacity in key resources.   

    • Set planned capacity realistically as recent demonstrated adjusted by scheduled process changes (overtime, additional or fewer shifts, additional or fewer machines, productivity improvements, etc.). 

    • Calculate required capacity using a resource requirements planning process.

    • Compare required capacity to planned capacity.  If necessary and possible, adjust planned capacity.  As a last resort adjust required capacity by adjusting the supply plan (recognize that adjusting required capacity means adjusting the production plan which may disappoint customers)

  • Accept the preliminary S&OP or develop an alternative, adjusting planned inventory, backlog and capacity as necessary. 

  • Forward to Partnership Process for review and approval, or additional adjustment, financial reconciliation.