Supply side
A plan the network can actually keep.
The supply side is where a demand number becomes a commitment. It is also where the difference between a plan and an aspiration stops being a matter of opinion and starts being a matter of cost.
The supply side covers five of the fourteen capabilities: Supply Planning, Production Planning, Capacity Planning, Inventory Planning and Replenishment. Together they turn an agreed demand number into commitments the network can keep, with cover sized by volatility and service target rather than by instinct.
Definition
Four questions, in order
What can we make, against the capacity the network actually has rather than the capacity on the nameplate. What should we make first, given changeover cost and what the floor can absorb in a week. What should we hold, given how volatile demand is and what service level has been promised to whom. And what should we buy back, and when, so the answers to the first three do not quietly stop being true.
Each of those is a distinct capability, and they are routinely owned by different people with different measures over their heads. That is why the supply side usually fails at the seams rather than inside any one of them: the constraint is not that nobody can answer the question, it is that nobody owns the trade-off between the four answers.
Capabilities on this page
- 01Supply Planning
- 02Production Planning
- 03Capacity Planning
- 04Inventory Planning
- 05Replenishment
What breaks
What breaks without it
These are the observations that recur, in businesses of very different sizes and in very different sectors.
- 01Safety stock set years ago, against a service level nobody has revisited
- 02Lead time variability treated as noise rather than measured
- 03Capacity checked after the plan is published rather than before
- 04Reorder points overridden by hand most weeks
- 05Production sequence decided by whoever escalated most recently
- 06Inventory reported as one total, never by segment or by reason
- 07Expediting treated as service recovery rather than as a planning signal
- 08Buffers sized for the network as it was two reorganisations ago
Questions
Questions we get about Supply and Inventory Planning
How should safety stock be set?
Against measured demand volatility and measured lead time variability, for a service level that someone has actually committed to for that segment. Most stale policies fail on the second and third of those: lead time variability is never measured, and the service level is inherited rather than chosen. Setting cover without both is sizing a buffer by instinct.
Should inventory be reduced or service improved first?
Usually neither, framed that way. Businesses are typically over-covered on some segments and under-covered on others at the same time, so the first move is segmentation rather than a target in either direction. A single inventory number cannot tell you which of the two problems you have, and it is common to have both.
Where does capacity planning sit relative to supply planning?
Ahead of it. Capacity planning gives medium and long-horizon visibility of where the network runs out of room, early enough to do something other than expedite. When it runs behind supply planning it becomes a feasibility check on a plan that has already been promised to someone.
What changes
What changes when it works
The trade-off gets an owner, and the buffers get a reason.
Inventory stops being one number and becomes a set of policies: segmented by volatility and by what has actually been promised, with cover sized against measured lead time variability rather than against the memory of a bad quarter. That single change usually moves both service level and working capital, because a business is commonly over-covered on the items that do not need it and under-covered on the ones that do, at the same time.
Capacity moves from a check to an input. A supply plan that respects real constraints produces fewer commitments, and the commitments it does produce are ones the network can keep, which is the only definition of a supply plan that means anything to a customer.
And expediting becomes information. Every expedite is evidence that a buffer, a lead time assumption or a sequence rule was wrong, and a planning function that reads them as evidence rather than as heroics stops repeating the same fire.
The engagement
How an engagement touches it
The assessment maps where the four questions get answered today and where the trade-off between them gets made, which is usually the part with no name on it. It also looks at whether lead time variability is measured at all, because a buffer policy built on an unmeasured input is an opinion with a number attached.
Where the supply side is the load-bearing gap, the work is rarely a new tool. It is policy, ownership and a calendar, followed by instrumentation once there is a process worth instrumenting.
Which capability is load-bearing decides the sequencing, and that question comes before this one. The full argument is set out in why a better forecast does not move service levels. The people who would do the work are on the practitioners page.
The rest of the map
The other three
- Demand PlanningDemand planning is where a business decides what it expects to sell. Done well, everything downstream has something firm to stand on. Done as a monthly argument, everything downstream inherits the argument.
- S&OP and IBPMost businesses have a monthly planning meeting. Fewer have a monthly planning decision. The difference between the two is the whole of S&OP.
- Performance and RiskA plan is a claim about the future. The loop is how a business finds out where the claim was wrong, early enough to do something, and without turning the finding into an argument.
All fourteen capabilities, grouped, are on the services map.
Get Started
Where is your planning organisation today?
Every engagement starts with an honest assessment of current maturity. Let's find out where you are, and what the next capability should be.