Impact of Supply Chain Planning & Demand Prioritization on Production Sequencing

Posted by Anupama Vyas on Jul 31, 2018 9:05:47 AM
Anupama Vyas
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"A bad schedule from a good plan is better than a great schedule from a bad plan," Sanjiv Sindhu, Co-Founder i2 Technologies

Simply put, the main objective of supply chain planning is to accurately estimate the customer needs and ensure that they receive the right products, through the right channels, in the right quantities, and at the right time. However, global competition, political and economic uncertainty, and evolving technology and trends towards customization have made managing company supply chain planning a tough task.

In good economic times, when businesses are flourishing, companies experience significant increases in demand. Company manufacturing plants are overburdened.  Supply bases become constrained and time to market increases. During such periods, manufacturers look for innovative solutions to improve processes, so no opportunity is lost. The focus needs to be on a well-defined supply chain and demand prioritization planning, as it impacts the end-to-end process, starting from inventory management to logistics and customer service. It is vital to understand how production resources are planned and scheduled.

Creating an optimal production plan by gaining visibility to man, machine and material constraints ahead of time; has a significant impact on the supply chain performance. Optimal production plans help alleviate the following:

  • Overhead costs, during unplanned excess demand (bottleneck situations, overtime, etc.)
  • Excess inventory buildup, during unexpected downturns

Demand prioritization plays a key role in determining the optimal production sequence that drives maximum profitability. Demand is prioritized by several factors, including organizational profit, customer service, and demand volume.  This prioritized demand is communicated through a "control tower" mechanism to drive a production sequence that strikes a balance between profitability and customer service.

The image below illustrates the key nodes and points of contact involved in the information and material flow as part of demand prioritization process.

demand prioritization process

CGN Global is currently guiding a Fortune 50 manufacturing company, experiencing a significant growth in demand to meet its build commitments, by assuring material supply and minimizing line down situations. Capacity constraints at critical suppliers and accumulating past dues, caused the manufacturer to frequently re-plan build schedules. As a result, demand signals from the client’s several manufacturing facilities are inconsistent and uncoordinated, causing inefficient utilization of supplier capacity.

As a solution, CGN has deployed its “Supplier Constraint Management” methodology, which proactively responds to real-time issues through a “control tower” mechanism.  This advanced planning solution can help satisfy the client's demand, considering prioritization rules, supplier responsiveness, and production capacities. The planning process in place creates the ability to drive the supplier commitment to schedules and escalate any shortfalls within the frozen window. The data insights provided by the solution accelerates decision making to real-time action and raises the supply chain agility to a different level.

ABCXYZ COMPANY

At CGN, we help companies worldwide overcome core business challenges of growth, margin, and responsiveness. Going beyond simply solving their problems, we quickly and effectively deliver transformational results that are sustainable.