Mba Case Studies

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Demand and Supply Planning
Within
Supply Chain Management

Abstract

This paper demonstrates the concept of Supply Chain and the understanding of its different parties. How existing practices in demand planning improve forecast accuracy with advanced statistical forecasting capabilities and how demand planning is different than other SCM parties in structuring flexible hierarchy models & inventory integration. In addition to explore the Integrated Demand and Supply Planning for Consumer Goods and Services Companies, where we show a Case Study for Nestle Company using weather forecast data that shows a significant insight into the extent to which difference products and/or customer sales were impacted by weather. On the other hand, Globalization and the challenges of managing a global operation - such as forecasting in the face of uncertainty and reducing inventories for improved cash flow.

Introduction

What is a supply chain?

The supply chain concept arose from a number of changes in the manufacturing environment, including the rising costs of manufacturing, the shrinking resources of manufacturing bases, shortened product life cycles, the leveling of the playing field within manufacturing and the globalization of the market economies. At a high level, a supply chain is comprised of three fundamental processes which are integrated. Procurement process involves sourcing and designing supply contracts with vendors and also developing interfaces which act as a conduit for information. Production and inventory control encompasses the manufacturing, material handling and warehousing sub-processes. Distribution and logistics process deals with the retrieval and transportation of products to retailers, distribution centers or final customers. These processes interact with one another to produce an integrated supply chain.

UNDERSTANDING THE SUPPLY CHAIN

There are specific roles for each function in the Supply Chain that are supported by the activities of Demand Planning. At a basic level, the Supply Chain flow of a product looks like this, beginning with 'Create' and ending with 'Deliver'. Source

Create
Plan
Sell

Deliver
Make

Create: One level below the "Create" flow are individual departments that support these Supply Chain actions. "Create" involves Research & Development, Regulatory Affairs, and Product Development as new formulas are discovered, tested and developed for the market. Sell: It is focused on introducing the product to market and driving consumption. Sales, Marketing, Category Management, Market Research, Marketing Services, and Trade Marketing are key departments that support this process. This phase is also a critical communication feed to the Plan phase as it is closest to consumption and customer needs. Plan: It is the center point of the Supply Chain responsible for the creation of inventory levels that coincide with the needs of customers or distributors, which is one step before consumption. It is also the point where financial planning is executed and P&Ls are managed. Demand Planning, Supply Planning, and Finance departments are usually found within this point in the Supply Chain. It is important to note that the position of Demand Planning here is the "hand-off from Sales to Operations, giving it the unique opportunity to link the company's supply chain activities. This is the kick-off to execution of the company's strategic plan. Source: It is the first step in producing product for sale, as raw materials, packaging components and finished goods are procured. Purchasing and Contract Manufacturing take place here in preparation of the manufacturing process. Make: It is simply the manufacturing of materials and components that result in "finished goods" inventory. In a synchronized Supply Chain Manufacturing, Packaging, Quality Control, and Technical Operations execute the inventory plan developed upstream in the Plan...
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