The professional supply chain is a sequence of complex processes. The trick is to gain good insight into this with custom-programmed ERP software. After all, in practice, the process from ‘placing an order’ to ‘delivering an order’ does not run in a straight line from A to B. Large companies and multinationals often involve various factories, distribution centers and means of transport worldwide. This means that you have to take into account different production locations and transport times between those production locations.
You should also pay attention to the transport time between distribution centers and in which distribution centers your company stores materials. In short: the factors of time and transport play a major role in delivering the requested products on time. By integrating business planning into the supply chain, you will save considerably on both factors.
Planning on 3 levels
Predicting and managing customer demand has a major impact on a company’s operational, logistical and financial performance. In order to make a correct estimate of customer demand, SAP distinguishes planning on 3 levels: long, medium and short term. The long-term planning takes into account, for example, recurring customer demand, holidays and the availability of raw materials, semi-finished and finished products. In the medium term, purchasing, production and transport proposals, the over- or undercapacity of production locations and the required stock of goods to absorb peaks play a role. You can always intervene in the planning and make adjustments. The system then supports you in making the optimal choice through simulations of these alternative schedules. This makes the impact of the adjustment(s) throughout the chain visible and transparent.
Converting proposals to orders
Are you satisfied with the medium-term planning? Then the time has come to draw up a short-term plan and convert the proposals into concrete orders. This phase includes: placing purchase orders, scheduling and reserving production orders, scheduling production locations and machines and scheduling production forces. The purpose of this planning is to 100% match purchasing, production, storage and delivery to customer demand.
Manufacturing Execution System
To keep the detailed planning run smoothly, it is wise to link a Manufacturing Execution System (MES) to an ERP system. Using an MES it is possible to set, read and analyze the performance of a production process. Monitoring gives you insight into the average turnaround time and you can take immediate action if there is a hitch. In addition, a link with the Financial module provides an accurate picture of both the variable and the fixed production costs.
When the production is complete, the transport proposals can be converted into transport orders. It is also possible here to plan the loading by truck and thus obtain optimal trip planning. This also allows you to save on your transport costs on delivery.
In short: with integrated business planning, your supply chain is as strong as the weakest link: very strong.
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