What Is Supply Planning?

Supply planning is a process that involves analyzing demand forecasts, comparing the forecasted demand to existing inventory, and coordinating the supply chain activities needed to meet that demand. It determines the production level of goods or services, the materials that are required, and when they must be acquired. 

 

Supply planning, also known as raw material or material planning or allocation planning, is often the cornerstone of optimized supply chain management. A supply chain planning strategy is designed to ensure that the right product is available at the right place and time while minimizing costs and risks associated with the supply chain. Inventory levels are intended to meet projected sales volume. This all helps to ensure customer satisfaction.

 

Inventory management is vital to sales and operations planning because it affects sales volume and product pricing. The inventory levels are adjusted as demand volumes change. When there is a change in demand, there must be a production adjustment to align with the change, which may require companies to adjust inventory levels. 

 

Changes in sales volume directly affect inventory levels. Stores must control their inventories to meet customer demand. Doing these processes well can result in higher sales because inventory is available for customers when they want to make a purchase. They can support their companies by increasing sales and reducing costs by having the right amount of products on hand.