Navigating the complexities of modern supply chains is a challenge businesses face daily. The urgency to meet evolving consumer demands places unprecedented pressure on supply chains, exacerbated by shortages and erratic demand patterns. Safe to say, the repercussions of failing to deliver necessary supplies at the right time and place can be detrimental to overall business operations and their reputations.
Modern day supply chain leaders are proactively addressing these challenges by providing their distribution planning teams with the right software tools and strategic guidelines. While some distribution-centric supply chains attempt to leverage tools designed for manufacturing operations, it’s crucial to recognize the fundamental differences. Manufacturing supply chains focus primarily on managing supplies for production schedules, while distribution-centric supply chains revolve around demand patterns, and requirements for end-user demand or point-of-use operations.
Each step in the distribution management planning process demands clarity, defined ownership, established completion criteria, and identification of system tools and processes to align with the business’s core operational goals. Let’s dive into the key elements to consider when developing a distribution management plan tailored to your operations:
1. Forecasting Demand
Conducted at the warehouse or distribution center level, forecasting demand involves predicting item-level demand to support warehouse operations. Forecasts can be aggregated into companywide forecasts for procurement planning and budgeting. This step provides the demand profile necessary for replenishment planning.
2. Replenishment Planning
Utilizing a demand forecast, along with current on-hand balances and pending orders, replenishment planning determines which items need to be ordered, in what amounts/quantities, and when. A well structured, time-phased procurement plan can offer visibility and aid into future requirements.
3. Issuing Replenishment Orders
Purchase orders, transfer orders, or production orders are issued to providers to request necessary supplies at the optimal time.
4. Resolving Supply Issues
Collaboration with buyers is mission-critical when a supplier cannot meet the required delivery time. Planners should work closely with buyers to identify and approve alternate sources or substitute products that meet end-user needs.
It’s imperative for supply chain leadership to recognize that demand planning is a critical aspect of operations, and not simply an additional duty for purchasing buyers or operations staff.
To strike a balance between inventory levels and replenishment, successful distribution management should also strive to incorporate:
- ABC-Based Inventory Velocity Classification
- Establishing, Monitoring, and Tracking of KPI’s
- Distribution Management Planning Tools
- Self-Distribution vs. Commercial Distribution Considerations
- And more
A Successful Distribution Management Plan goes beyond merely fulfilling operational requirements; it involves empowering individuals to focus on planning as their primary role.
Metrics such as customer service levels and inventory investment levels become success benchmarks which serve as a scoreboard of sorts for your operation to refer to regularly.
Establishing a professional planning environment with modern operations and a clear career path can help attract and retain top talent, ensuring a well-managed supply chain ready to meet consumer demands effectively.
With the right tools, strategic operations, and a skilled workforce, distribution management planning will play a vital role as a key driver of your businesses’ long-term business success.
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