How supply chain planning works: A general discussion

Abstract

The uncertain nature of the customer demand need to take into consideration by generating the production plan and in particular the production quantities, to meet uncertain customer demand in the best way possible and maximize the profit, by minimizing production costs. Aggregate planning is a process by which a company decides about their ideal levels of capacity, production, inventory, stock-out situations, pricing, subcontracting, etc. Production planning, is the correct placement of production orders concerning place, or region, of production, and time scheduling and sequencing of production orders. The parameters are usually production rate, workforce, overtime, machine capacity level, subcontracting, backlog, and inventory on hand. The amount of overtime production planned is a parameter for aggregate production planning. Production planning for fashion apparel products has to cope with demand uncertainties. Collaborative forecasts created by various enterprises are an important input in aggregate supply chain planning. However, at the time of generating the production plan, the predicted customer demands are largely uncertain.

Keywords:  Aggregate supply chain planning, demand, forecast, apparel supply chain.

Article:

Introduction:

Supply Chain Planning (SCP) is a strategy for maintaining trade-offs between the supply of and the demand for goods and services. SCP is one of the primary elements of supply chain management, while the other is supply chain execution. The aggregate planning methods are used to decide about production, outsourcing, and backlogs in a supply chain.

A company’s supply chain

Supply chain planning covers many aspects of a company’s overall supply chain. Use of tools or inventory, sales or production are included in SCP. Precise planning helps just-in-time inventory management requirement easier. Multi-screen dashboard can make business process transparent using specific interface strategies. These things help supply chain managers save money and allow them to work efficiently.

 

supply-chain-planning1
supply chain planning

Aggregate planning

Aggregate planning is a process by which a company decides about their ideal levels of capacity, production, inventory, stock-out situations, pricing, subcontracting etc. over a specified time. The goal of aggregate planning is to satisfy demand and maximize profit. It does not center aggregate planning around stock keeping unit related decisions only, but solve aggregate decision problems. To be effective, it needs planning from around the supply chain and its results have an enormous effect on the whole supply chain performance. Collaborative forecasts created by various enterprises are an important input in aggregate supply chain planning. Many constraints in supply chain planning are because of other partners outside the enterprise.

Objectives of the aggregate planner

The aggregate planner’s primary aim is to identify some parameters in a specified time. The parameters are usually production rate, workforce, overtime, machine capacity level, subcontracting, backlog, and inventory on hand. Production rate is nothing but the number of units to be completed per unit time. The number of worker or units of capacity needed for production is also a parameter named as workforce. The amount of overtime production planned is a parameter for aggregate production planning. The number of units of machine capacity required for production (machine capacity level). The subcontracted capacity needed over the specified time horizon (subcontracting). Demand not specified in the time and deferred for a future time period is called backlog parameter. Inventory on hand is a parameter that denotes inventory carried over in a time.

Production planning in apparels supply chain

The uncertain nature of the customer demand has to be taken into consideration by generating the production plan and in particular the production quantities, to meet uncertain customer demand in the best way possible and maximize the profit, by minimizing production costs. Production planning, is the correct placement of production orders concerning place, or region, of production, since well as time scheduling and sequencing of production orders. It is of high economic importance for fashion apparel suppliers. However, at the time of generating the production plan, the predicted customer demands are uncertain. It is crucial to produce a robust production plan, which can manage the risk resulting from the demand forecast. Production planning for fashion apparel products has to cope with demand uncertainties. [1]

Conclusion

If demand and production capacity suggest an enterprise could make and sell 10,000 units but she can only afford supplies for 8,000 units, they require it to use the lower figure of her supplies. The forecast tells how much they need to produce to meet demand so that the enterprise know the quantity of supplies they will need to maintain productivity. Previous experience can be used as a guide, and industry trends, economic forecasts and feedback from their marketing/sales manager to determine the probable demand for their products in the coming months. The enterprise need to anticipate the demand for their products before they can plan their supply ordering. They can evaluate their production department to determine how many products can reasonably produce during the period they are planning for.  If they plan to borrow to buy supplies, include the interest costs in your estimates of the profits they will make from the products they manufacture. In other words, what they need to produce must always be compared to what you can afford to produce.

References

1. Ait-Alla. Abderrahim ,Teucke. Michael,  Lütjen. Michael, Samaneh Beheshti-Kashi. Samaneh, and Karimi. Hamid Reza.(2014). “Robust Production Planning in Fashion Apparel Industry under Demand Uncertainty via Conditional Value at Risk”. Mathematical Problems in Engineering.Volume 2014, Article ID 901861, 10 pages.http://dx.doi.org/10.1155/2014/901861
2. Johnston,Kevin. “Aggregate Planning in Supply Chain Management”.https://smallbusiness.chron.com/aggregate-planning-supply-chain-management-73641.html
3.https://en.wikipedia.org/wiki/Production_planning#/media/File:Planning_department_bulletin_board,_1911.jpg

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