The most effective consumer products companies have a formalized process for integrated demand and supply chain planning. Such companies develop a process to create a foundation for synchronizing its people, processes and systems to enable the supply chain to respond to trends and bypass roadblocks. This process has been given several names, including Sales and Operations Planning (S&OP), Integrated Business Planning (IBP) and Integrated Demand and Supply Chain Planning (IDSCP).
IDSCP is a mindset and a philosophy for managing the business. It’s a day to day approach that coordinates strategic, tactical and daily planning functions to minimize risk and costs while improving customer service. The process removes traditional departmental silos, replacing them with a single integrated demand, deployment, production and procurement plan actionable by the entire company.
Is Integrated Demand and Supply Chain Planning Possible?
IDSCP is a brilliant idea, but is it achievable? The answer is yes. Many consumer products companies excel at integrated planning, and your company can too. It takes a little bit of effort and a shift in thinking, but the benefits are well worth it.
Collaboration between management and functional teams is critical for long-term success. Synchronized and agreed-to plans alert management to critical issues, helping them to make decisions quickly and resolve problems in a timely fashion. It ensures that everyone is managing and operating toward the same goals.
Clear and Formal Communication Between all Critical Functions of the Business
The company must remove silos… Customer Service, Distribution, Sales, Marketing, Production and Product Development need to be on the same page. A single forecast should reflect all departments working together toward determining the right number. All plans, distribution, production and procurement must be aligned, and that leads to minimized production disturbances, on-time delivery and lower inventory costs. The company will be able to introduce new products quickly and deliver them when needed to the market, while old products are phased out on a timely basis to minimize obsolete inventory. Your customers get what they want when they want, making you more profitable.
Alignment at all Planning Levels is a Must
Successful companies have aligned their strategic, tactical and operational planning levels. Operational plans are used to execute the day-to-day business functions, but to be truly effective they must also be in sync with the long-term strategy. Satisfying a customer now does not ensure long-term growth if it disrupts the long-term strategy.
Create Alternate Scenarios to Plan Ahead of Problems in the Supply Chain
By planning the overall supply chain, potentially critical situations can be identified before they happen. Then the company can generate various alternate scenarios to restore balance between supply and demand while complying with corporate strategy.
The Benefits of Integrated Demand and Supply Chain Planning
Integrated planning provides vision, stability and a process that enables companies to establish precise, but adaptable, long-term plans. While there are many intangible long-term benefits, there are several near-term benefits that support a quick ROI, including:
- Improved customer service — synchronized demand and supply plans result in improved product delivery, resulting in improved customer satisfaction and loyalty.
- Reduced supply chain costs — coordinating all functions of the supply chain and operations streamlines the process and improves effectiveness which lowers costs.
- Maximize profitability — plans are optimally created by using one plan agreed upon by all levels of the organization minimizing pitfalls and allowing for maximization of profits.