Module 5 : Supply Chain Aggregate Planning and S&OP Planning

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a process where management regularly meet and review projections for demand, supply, and the resulting financial impact

In This Module We are going to talk more about the information flow. We're going to tie it into the physical flow for the design. So what we're going to talk about is the aggregate planning process, and then also distribution channels. So the aggregate planning process, we will bring everything together we've talked about the last several modules , and what we're going to do is really continue in the connection between your supplier and your customer. So the question is how do you plan for those activities? Now you also have some customer relationship management systems, helps you coordinate with your customer. And then, we talk about these integrated supply chain  management systems that help you plan your production, how you move things, and where you store things. So when we talked about this, we looked at, first, master planning schedule. And so when you do the master planning schedule you're really coming up with your production plan, and for that you're going to use the MRP. Now, where those fit in the planning cycle are appeared within three months. So what you're doing here is planning up to three months out, and that's a pretty typical, 12 weeks. And so you're planning your production.

The next thing we're going to look at though is what's known as aggregate planning, and this aggregate planning is actually over a much longer time frame, And usually, it's 3 to 18 months out. So you're going further into the future. So your date is going to be a little less actual rates. It's going to more predictive, or estimates, and you're going to be looking at a wider swath of the company. You're going to really be looking at everything here to try to plan. Looking at how your customer will react, the promotions you'll run, how that affects production, how affects your sourcing. So we're going to tie those all together with aggregate planning. And we'll also talk about something called Sales and Operations Planning, S&OP. And so what S&P does, it ties together both sides of the company, the sales or the marketing side, with the operations, sourcing, and supply chain side. How do you get those things together so that your demand planning matches your capabilities of production? So we'll continue on in this and focus heavily on S&OP and aggregate planning. And again, what's happening here is, remember, the physical flow goes this way through your network, from supplier to your customer, and we're seeing that the information flow really flows this way. Because the demand dictates what you manufacture, and what you procure, and so forth. So that's the first part of the week that we're going to go. And now, we're going to cover distribution channels. And distribution channels fit with this, but it's a slightly different perspective. It actually takes a marketing concept, your marketing channels, how you sell your product. And I want to look at the physical side of it and the information side of it, how it affects the supply chain. So we're going to introduce the four major players in any distribution network. And when I say distribution, this is distribution of final product out. We're not worried about the stuff coming in. So we're really focused on this side down. Right? Customer facing. So we'll have manufacturer, and everyone knows manufacturers. And you're down here, the consumer, the person who actually consumes the product at the end. And we all know about retailers, where consumers usually go to buy. But a new term that you might not be familiar with are distributors and wholesalers, and they play a very important role in this whole process.  So when I look at the channels, there are many different ways the product can come to me. A manufacturer might make something, and it goes to a distributor or wholesaler. They, in turn, give it to the retailers, or sell it to the retailers, and then the consumers, we guys ,go to the stores and buy it. That's a traditional channel.

You might also have a channel where the manufacturer goes straight to the retailer, and then again, we the consumer go and pick it up. And then finally, what's happened over the last 15, 20 years, you might have the manufacturer deliver straight to the consumer. Think of online shopping for computers, or anything where you're ordering from a manufacturer directly, like Dell or are Hewlett Packard, and they deliver it straight to you. So we have these three channels. These are traditional channels, a direct channel, a retail channel, and a distributor wholesaler channel, and we'll talk more about those. But let's hone in on the most common one, and that's this one, where the manufacturer delivers to the retailer, because there's more to the story.

It's not just delivered to the retailer, and you're done. There are many different options. So here's my manufacturer, and this is more of the physical distribution. And so my manufacturer might deliver to my retailers DC, generally you go from plant to a DC, and then that retailer will deliver to each of its stores. And then, of course, the consumer, we guys, go to the store and buy our toothpaste, our detergent, and whatever. That's a traditional channel, where you flow through the DC. Retailers love this. Why? Because they can achieve economies in here, economies of scale and scope. They're able to flow things through this. A lot of times this is called flow optimization. How do you flow your product through your network? But there's another well-known channel, and that's where the manufacturer goes to the retailer, but they skipped the DC, and they go to each of the stores. And this is called DSD or Direct Store Delivery, and this happens a lot on certain products, big, bulky kind of things. This is how soda, beer, cigarettes, newspapers are all delivered to stores. They don't flow through the normal channel. They go direct to the store, DSD. You see that a lot in certain industries. But something else has happened in the last five to 10 years, and that's the whole idea of mobile computing, because that's changed things. The consumer's now a lot more empowered, and there's a term that you might have started to hear called omnichannel. And this is changing the distribution networks, and so the whole omnichannel supply chains are changing the way that a lot of people set up their whole supply chains on the retail side. Because what happens is the consumer now can place an order to the retailer, not necessarily their DC but to some retailer, on their website, and they could deliver straight to the consumer. Or they might place this order, and the retailer might send it to a store that's close to the consumer, and the consumer goes and picks it up. So you order online, and you pick it up in person. So it's another common way of doing this. You're seeing more local delivery from stores themselves. So what omnichannel is doing, it's changing the way the consumers view their product, how and where they order their product, where they receive the product, and how they pay for the product.

So all of these things differ now. You can do it online. You could do it in the store. You can have it delivered at home.  You can have it shipped from a store, from a DC. So think back to all your inventory planning stuff, we've done in previous modules. This means that now, if I have a situation like this, I've got to manage the inventory here in my stores like a DC. And in fact, what we'll see is some retailers create what's known as dark stores, where they actually don't let customers in, but it's location that's close to customers. It has a close proximity, so they can deliver to customers from there. There's a lot of interesting stuff here, and we'll spend a lot of time here. Then the last thing we'll do is we'll talk about the reverse flow, because if you order things online, you're naturally going to have returns. You're going to order shoes, they won't fit. You get the wrong color, or you just didn't want it. You didn't order it. So you have these things, and it's the reverse flow. How do we handle the reverse logistics of product as it comes back? So we'll finish up talking about reverse logistics. It's something that's always been there, especially for repairs and returns, but now it's becoming much more important, because of the online presence. And it's not just online, it's that it's mobile. Mobile computing really has changed this whole retail format. All right, so we're going to talk about a lot of things, finish up our planning, talk about aggregate planning. Then, we talk about distribution channels, traditional omnichannel, and reverse logistics. We're going to go into more of the financial and  organizational things. We'll be less model based and more qualitative based.

So enjoy this Module

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