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Planning Function In Supply Chain Management

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Supply Chain Management
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Why is the planning function in Supply Chain management so important?

In the previous article, I once said that in the supply chain management there is not something to be sure, there are always some possibilities that could happen. It is a result of several factors involved in supply chain activities.

There are four (4) main things or factors that greatly affect all the activities and supply chain activities such as:
  • Supplier internal conditions
  • Forwarder or expedition
  • Road situation and Conditions
  • Warehouse Location
These four factors will later be discussed in the next article. For now, I will focus on discussing the function and importance of planning in supply chain activities.


Before doing any purchase activity, we have to update and update the stock data of both raw materials in the warehouse or stock WIP (Work in process) in the production line. The way we can do is to conduct stock-taking activities. Thus it will be obtained real and accurate stock data.

After that, the next stage is we enter the result of the stock count result data into the calculation. We also have to enter the model or type and the number of products we will produce. We can get this data from the sales marketing forecast.

Marketing forecast

After all, we put in the calculation either with the MRP system or Ms. Excel (we can make it), it will look at any item that will be less for production activities. This is where the supply chain is the basis for purchasing the goods. 

Calculation of stock count result is needed in the planning because if the stock data obtained not actual or real data in the field will result in the goods in the order is also wrong, both the type and the amount. 

It is certainly very dangerous because it is at risk of the stopping of production activities which of course result in losses for the company.


After the purchase planning activities are done then our next task is to determine the time of arrival of the goods we ordered. In this activity we have to consider several things:
  • Supplier capacity 
  • Procurement time of goods by the supplier
  • Delivery time
  • Time of the customs clearance (if imported goods)
  • Road conditions
  • Possible sudden requests from marketing or sales.
Those things should be a concern because almost all of the above factors are uncertainty, meaning it is still possible to miss out on the schedule we make.

In addition to the above factors in conducting a purchase planning activity and delivery, there is one thing that should also be our concern that is the capacity of a raw material storage warehouse. 

Even if we order items at once we have to do a deeper analysis of when the item will be needed. Except for imported goods, then the goods that we order from the local supplier can we arrange so that the later arrival of goods can be gradually adjusted to the date on which the goods will be used. 

The objectives of the arrangement are as follows:
  • For warehouse capacity to stay awake at a safe level, not over, clean and tidy.
  • So that the company's financial cash flow is also smooth because the later payment is not direct in large quantities.
  • There is no more cost for companies to spend on moving goods, rearranging the location of goods as a result of the arrival of goods and many.
  • Deadstock risk due to change of model can be avoided or at least minimized.
After reading some of explanation above, we must understanding about functions of supply chain management.

Below, are the five functions of supply chain management include the following:

1. Purchasing

Purchasing is the first role of supply chain management. Raw materials are necessary in the manufacturing process to create goods and products. It is critical that these materials be ordered and delivered on schedule in order for production to commence. To avoid any potential delays, communication with suppliers and delivery providers will be necessary.

2. Operations

Before materials can be procured, demand planning and forecasting are normally required, as the demand market will govern how many units to manufacture and how much material is required for manufacturing. 

This function is critical in supply chain management because companies must accurately estimate demand to avoid having too much or too little inventory, which results in revenue losses. To avoid such errors, demand planning and forecasting must be integrated with inventory management, production, and shipping.

3. Logistics

Logistics is a component of supply chain management that coordinates all parts of planning, purchasing, production, warehousing, and transportation to ensure that products reach their intended destination without delay. It's beneficial to have good communication between departments so that products may be delivered quickly and at a reasonable cost to customers.

4. Management of Resources

Raw resources, technology, time, and labor are all consumed during production. Resource management ensures that the appropriate resources are given to the appropriate activities in the most efficient way possible. This will ensure that an efficient production schedule is produced in order to increase operational efficiency. 

When calculating available capacity, take into account each resource's capabilities and whether they can do the job that has been assigned to them. This can help you avoid over-promising orders and ensuring that your manufacturing plan is viable and precise.

5. Workflow of Information

All of the other functions of supply chain management are kept on track through information sharing and distribution. It's possible that if the information flow and communication aren't up to par, the entire chain will fall apart. 

Increased visibility and communication can help to prevent many supply chain disruptions. Having a standardized system that all departments utilize will ensure that everyone is working with the same data, reducing miscommunications and time spent updating everyone on new developments.

Understanding the five functions of supply chain management is critical for any manufacturing company. Many manufacturers around the world, on the other hand, are struggling to keep up with the fast changing demands and problems of supply chain management.

Thus the importance of planning in supply chain management activities. Follow along with my blog for a more detailed discussion on factors and the things that affect the supply chain activities as above.

Hopefully, this article is useful and helpful for you.

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