What Is Supply Chain Planning
Supply chain planning may seem like a complicated process at first, but it can be easily understood after learning the basics.
Did you know that according to a GS1 US Survey, inventory was only accurate 63% of the time on average? How does your company stack up against that number?
Forget about supply chain planning for a moment. It’s hard enough to keep track of materials, much less optimize how they flow through your company.
What’s the most common delay in your business and industry? Can you say that you have a plan to address it that gives you an edge?
Manufacturers of any size need supply chain planning systems custom-made to their needs. Discover how to take the first steps toward optimizing your business funnel by engaging with this article today.
Supply Chain Traceability
Supply chain traceability involves a process of tracking a product’s development from raw materials to end-use.
Pharmaceutical and food companies have pursued success in this area for decades. When an organization can follow the product journey from manufacturing to delivery, they find inefficiencies, understand what’s happening upstream, and identify regulatory requirements. Consumers even have the opportunity to know where their food, supplements, or drugs came from by scanning QR codes or adding pictures.
Did you know that 98% of the products Subway sells utilize traceable barcodes with GS1 technology? Every point of their supply chain links together and keeps the franchises in charge of their brands. In a matter of seconds, you can know the entire composition of your supply chain, how they perform, and how they relate to each other.
Companies become more responsible for what happens within their supply chain every year, and calls for transparency continue to grow. Most manufacturers don’t have the capacity to understanding everything that’s happening within their supply chain. Even without control over those factors, they’re held responsible for the result.
Beyond the regulations and responsibilities, there’s a genuine to have access to technology that keeps suppliers producers and suppliers connected. Implementing supply chain technology gives both players the power to pull all elements toward sustainability that drives profitability. No solution can be complete without an appropriate mix of information, technology, and people.
Other benefits of supply chain traceability include:
- Reducing the risk of mislabels
- Tracing products down to the origin of their materials
- Supporting the use of Multiple Chain of Custody models
- Improving the integrity and effectiveness of the supply chain
- Performing effective audits with all the necessary information
- Performing rapid traceability functions during recalls or other crises
Supply Chain Performance Improvement
Supply chain planning is the process of optimizing the tug of war between supply and demand in your business. The complexities and potential solutions expand based on current practices, vendors, and quarterly goals. The ultimate goal is to optimize everything from procuring raw materials to delivering products.
Keith Oliver, a British consultant, introduced “Supply Chain” and “Supply Chain Management” to the world in 1982. The introduction of Enterprise Resource Planning (ERP) in the 1990s and the explosion in high-speed internet accessibility made them everyday words for American businesses.
No matter how complicated things may become, it’s crucial to keep things simple. This process means planning for customer demand with the highest efficiency possible using data and best practices.
The purpose of supply chain planning is to prevent bottlenecks or total blockages. If that sounds like a moving target that jumps around, you’re on the right track. Successful supply chain management begins and ends with planning for changes.
If the lessons of 2020 taught businesses anything, every company needs to respond to sudden swings in trends.
Which vendor raises your blood pressure the most when you think about them? We don’t have a pandemic every year, so where does volatility exist otherwise?
Companies can’t find themselves stuck in a vicious cycle of inventory woes, inaccurate forecasting, and putting out fires. Those problems may not exist today, but an ounce of prevention saves pounding headaches. Consumers express that they have a higher tolerance for delivery delays, but they’re also much less loyal than before COVID-19.
The nature of supply chain planning focuses on inventory costs and efficiencies, but how does the change ripple outward? Supply chain consultants and clients across North America can agree on the following benefits.
More Efficient Resource Allocation
When organizations have the tools to focus on inventory and manufacturing, they make smarter decisions. Data drives decisions about where to predict too many or too few materials. Any company that implements supply chain planning can save millions by taking proactive steps.
Lower the Cost of Doing Business
Hope is not a strategy, but that’s all a company has unless it exercises active control over the supply chain.
Imagine the challenges your company experienced for the last year. How much could you have saved without the extra shipping costs, unplanned breakdowns, or material problems?
Improve Customer Service
Do you remember the last time that a package didn’t arrive on time at your home? Beyond the feelings of frustration, your priority became preventing that from happening again.
Meeting or exceeding expectations isn’t an accident but a result of the top-down change. Your customers will take note and reward companies that improve their supply chain.
Support Strategic Planning
Does your organization have aggressive growth strategies?
Does building the infrastructure to support that business cause an outbreak of insomnia among the leadership?
Whether a company deals with local farmers or suppliers on the other side of the world, supply chain systems support any strategic planning. You can scale your growth to match your vendors’ pace instead of experiencing “red light, green light” anxiety. Without strategic planning, it’s not possible to replace pain and frustration with relief and confidence.
Food Supply Chain Improvement
The food supply chain is a delicate balance of accurate accounting for the entire process from production to distribution to retail operations. The FDA has requirements for food manufacturers to report product contamination also. Food safety regulations continue to become more complex over the last decade, and that trend will stay relevant.
Nothing brought more changes than the 2011 FDA Food Safety Modernization Act (FSMA). Food industry companies must continue to improve their data for raw materials and lot traceability to ensure recall compliance across the supply chain. The U.S. Department of Agriculture even has rules that grocery stores have to keep records for ground beef.
As a result, tremendous improvements have arrived for tracking or detecting food contaminants. PulseNet, for example, gives public health labs a tool to analyze bacteria from the sick and report the results to the CDC.
Other benefits of food supply chain improvement include:
- A better collaboration that improves efficiencies and drives profit
- Confidence over quality control
- Real-time data that avoids a lack of inventory or a surplus
- Adapting faster to shifts in demands
- Optimizing shipping and associated costs
- Improving cash flow with more accurate predictions and reactions
Food Supply Chain Sourcing vs Procurement
The difference between sourcing and procurement is a focus on services and products. This element involves digging into data and creating a plan for materials.
Implementing supply chain sourcing involves having a dedicated focus on market research for pricing and quality. Profits for your business likely rely on locating sources that align with your goals.
Changing Food Supply Chain Inventory Management
The movement from ordering, storing, and handling goods affects the bottom-line. Without appropriate inventory management, an organization risks severe costs and angry customers.
Supply chain planning cannot succeed without full control of inventory. With improvements to the system, it’s possible to stock with confidence while exceeding customers’ expectations.
Food Supply Chain Production Management Changes
While changing inventory management, it’s worth asking tough questions based on the data and set expectations for production. This essential process involves planning for capacity needs regarding staff, machines, and optimal efficiency. Doing this while changing inventory practices affects significant change.
Food Traceability
Food traceability means having the ability to trace the ingredients for a food product through every link in the supply chain. The process involves documenting the production process, distribution, processing, and raw materials.
Companies must know every element “backward and forward” according to the government agency’s website. FDA regulations require food companies to have recorded detailed enough to show one step ahead and back in the supply chain. If a foodborne illness occurs, having insufficient records may cost lives and incur serious liabilities.
The FDA introduced an initiative called “The New Era of Smarter Food Safety” in 2019. These new directives take the Food Safety Modernization Act (FSMA) from 2011 and modernize the approach. The new plan calls for focusing collaboration around four points: foodborne outbreak response, traceability through technology, smarter tools, and prevention.
Food traceability doesn’t have to limit itself to safety and regulations for a food company. Tracing went mainstream because the benefits of a risk management plan far outweigh the alternatives.
Have More Supply Chain Planning Questions?
Supply chain planning systems need constant planning based on insights from data. The process from raw material to product delivery is a living organism that needs testing and treatment. Customers demand more, and a poor forecast could mean the difference between a great quarter and angry investors.
Now that you have an essential education in supply chain planning, how do you approach the next steps? What happens after you can answer the question, “What is a supply chain planning system?” Contact us through our website, or give us a call at 773-417-1221.