5 Core Supply Chain Capabilities Everyone Needs

What are the supply chain capabilities that everyone needs? Dave Food gets to the core of the issue…

What are some of the key capabilities for supply chain professionals?  When it comes to acing decision-making, cost effectiveness, forecasting, and productivity you can’t go wrong if you’ve nailed these five things.

1. Capacity Planning

CP is essential to determine the optimum utilisation of resources, and plays an important role in the decision-making process. It is a technique used to identify and measure the overall capacity of production. CP is utilised for capital intensive resource like plant, machinery and labour. Capacity planning also helps meet the future requirements of the organisation; it ensures that operating costs are maintained at the minimum-possible level without affecting the quality, and ensures the organisation remains competitive and can achieve its long-term growth plan.

2. Inventory Management & Optimisation

IMO is a top investment priority for manufacturers. It is driven by a set of values which are typically service level and inventory investment. IO is widely known as a way to free-up working capital or cost-effectively increase service levels. IO can:

  • identify all the stages of inventory
  • point out exactly which stock is excess inventory and where it is stored in the supply chain
  • understand which warehouse space can be freed up (and which shouldn’t be)
  • create a series of “what-if” scenarios based on the organisation’s improvement ideas and alternative configurations.

An IO solution should offer opportunities for supply chain professionals to understand the causes of inventory, accept or reject recommendations, and build trust in fact-based decision-making.

3. Demand Management

Demand Management is a planning methodology used to forecast, plan for and manage the demand for products and services. DM has a defined set of processes, capabilities and recommended behaviours for companies that produce all manner of goods and services. DM outcomes are a reflection of policies and programs to influence demand as well as competition and options available to users and consumers.

4. Master Production Scheduling

Scheduling is the process of arranging, controlling and optimising work and workloads in a production process or manufacturing process. Scheduling is used to allocate plant and machinery resources, plan human resources, plan production processes and purchase materials. It is an important tool for manufacturing and engineering, where it can have a major impact on the productivity of a process. In manufacturing, the purpose of scheduling is to minimise the production time and costs by telling a production facility when to make, with which staff, and on which equipment. Production scheduling aims to maximise the efficiency of the operation and reduce costs.

5. Materials Replenishment Planning

Most MRP systems are software-based, but it is possible to conduct MRP by hand as well. In almost all supply chains, materials need to be stored or buffered. This competency involves different steps, considering aspects of the planning environment/conditions about the product and the supplier. The importance of the companies’ goals/motives for materials supply must also be assessed.

MRP uses global demand plans to create a pull-driven replenishment process; this prevents ordering from the supplier when there is excess stock elsewhere in the supply chain.

Dave Food is a supply chain innovator, a passionate educator, a futurist, a trend-watcher, an insightful consultant and a marketing strategist. This article was originally published on LinkedIn.