In this chapter, you will learn how to write a supply chain management plan.
## Objectives
By the end of this chapter you will be able to do the following:
– Describe the purpose of supply chain planning.
– Explain the difference between a plan and a strategy.
## Introduction
Supply chain management (SCM) is the discipline of planning, coordinating, and controlling the flow of materials, information, and money from suppliers to customers. SCM is the management of the entire supply chain, not just the part of the supply chain that is involved in the production of a product or service.
The supply chain is a network of people, places, and things that are involved in moving a product from the point where it is produced to the point of consumption. The supply chain can be divided into two parts: the upstream supply chain and the downstream supply chain.
## The Upstream Supply Chain
Upstream supply chain refers to the activities that take place before a product leaves the factory. Upstream activities include the planning, design, manufacturing, assembly, packaging, shipping, and distribution of the product. The purpose of upstream planning is to ensure that the product can be produced at the lowest possible cost and in the most efficient way possible. The upstream planning process can be broken down into the following steps:
1. Identify the product requirements.
2. Determine the product design.
3. Design the manufacturing process.
4. Produce the product in the manufacturing facility.
5. Package the product for shipping.
6. Ship the product to the distribution center.
7. Load the product onto a truck.
8. Drive the truck to the retail store.
9. Unload the product from a truck and place it on a shelf.
10. The customer purchases the product and takes it home.
11. The product is used by the customer.
12. Return the product back to the supplier.
13. The supplier processes the returned product and ships it to the manufacturer.
14. The manufacturer produces the next product.
15. Repeat steps 1 through 14 until the product is no longer needed.
16. When the product has been used up, the customer returns it to a supplier for recycling or disposal.
17. The supplier ships the recycled or disposed product to a recycler or disposal company.
18. The recyclers or disposal companies process the product into raw materials for reuse.
19. The raw materials are used to produce new products.
20. The new products are sold to new customers.
21. Repeat steps 17 through 20 until there are no more products to recycle or dispose of.
22. When the supply of raw materials is depleted, the manufacturer stops production.
23. The company goes out of business.
24. The products are no longer available to the public.
25. The end of life of the products is reached.
26. The materials are recycled or thrown away.
27. A new product is produced using the recycled materials.
28. The recycled product is sold to a new customer.
The purpose of the upstream planning activities is to minimize the cost of producing a product. This is done by reducing the number of steps involved in producing the product as much as possible. For example, if the manufacturer can eliminate the packaging step, it can produce more products in the same amount of time and at a lower cost. In addition, upstream planning can reduce the amount of materials and energy required to produce a product, which reduces the environmental impact of producing that product.
The upstream planning and design activities are critical to the success of the downstream planning and execution activities. If the upstream activities are not done properly, the downstream activities will not be successful. The following are some examples of how upstream activities can impact downstream activities:
– If the product packaging is not done correctly, the product will be damaged when it is shipped from the manufacturer to the retailer. The retailer will have to throw the product away, which will increase the cost to the consumer.
– If the manufacturer does not design the product properly, it will be difficult for the retailer to place the product on the shelf. This will result in the product being sold at a higher price than it would have been sold at if the product had been designed properly.
## Planning
Planning is the process of determining the steps that need to be taken in order to achieve a goal. The goal can be anything, such as increasing sales, reducing costs, or improving customer service. Planning is an iterative process that is done over and over again until the goal is achieved. Planning can be done in one of two ways: top-down planning or bottom-up planning. Top down planning is used when the goal of the planning process is to determine the best way to achieve the goal. This type of planning is most often used when there is a lot of uncertainty about the future. Bottom up planning is the opposite of top down planning. It is used to determine how to get from where you are now to where you want to be. It can be used when everything is known, or at least well-known, about what needs to be done to reach your goal.
There are two types of planning: strategic planning and tactical planning. Strategic planning is a long-term planning process that takes place over a period of several months or years. Tactical planning is short-term and usually takes place on a daily, weekly, or monthly basis.
Strategic planning is usually done by the top management team of a company. This team is usually made up of the CEO, CFO, COO, CIO, CMO, and CTO. The CEO is usually the leader of the company and is responsible for setting the overall strategy for the company. The other members of the team are responsible for making sure that the strategy is implemented properly. The CFO is in charge of financial planning, budgeting, and forecasting.