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Lecture 12

33:799:301 Lecture 12: 0012-IntrotoSupplyChain-2017-03-30

Supply Chain Management
Course Code
James King

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Supply Chain Planning
Supply Chain Planning is the element of supply chain management responsible for determining
how operations will best satisfy the requirements created by the Demand Plan.
The objective is to balance supply and demand such that the financial and customer
service objectives of the company are achieved.
- Operations managers are continuously involved in planning operations and resources to
balance capacity and output.
Resource - a source of supply, support, or aid, especially one that can be readily drawn
upon when needed.*
Resource Planning is the process of determining the required resources to effectively
and efficiently produce the output required.
The aggregation of all resources committed to production (space, equipment, personnel)
determines the capacity to meet the demand.
Capacity the maximum amount or number that can be received or contained*
Production Capacity the maximum amount an organization can complete in a given
period of time based on the resources available.
Supply Chain Planning in a manufacturing environment uses a combination of the
planning processes used across the supply chain:
Overall company Business Planning
Capacity Planning
Aggregate Production Planning (APP)
Master Production Scheduling (MPS)
Materials Requirement Planning (MRP)
Distribution Requirements Planning (DRP)
Supply Chain Planning in a wholesale / retail environment uses a smaller combination
of the planning processes:
Overall company Business Planning
Supply Order Planning
Supplier Capacity Planning
Distribution Requirements Planning (DRP)
Supply chain planning is usually hierarchical and can be divided into three broad categories:
Long-Range Strategic Plans involves planning for investments in markets, facilities
and major equipment purchase
Multi-year plans establishing overall business goals driven by top executives
e.g.- VW groups wants to be the #1 car company in the world
All division, department complete a plan to achieve the overall goal
Normally 3-5 years, top down direction
Intermediate-Range Business Plans (financial, operational, product) establishing
annual goals and timing of key events (entering new market, new product introduction)
e.g. VW plans to produce 1,000 Jettas / week at its Chattanooga, TN plant.
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