Parcel - August 2008 - (Page 15) an optimal balance between production and outsourcing is desired that both minimizes cost and provides responsiveness to demand variability. Distribution resource planning provides a continual review of key resources in the distribution infrastructure: warehouse location, capacity, workforce, transport vehicles (or availability), etc. It is critical that best-practice processes are implemented and standardized across all supply chain functions prior to the installation of enabling technologies. Proper visionary planning will provide consistent system architecture for integration of ERP, SCP and SCE systems, ensuring smooth data interfaces to provide realtime information. Management of the supply chain is governed by sales and operations planning (S&OP). It is the keystone of Supply Chain Planning, a formal business process that synchronizes demand and supply on a monthly basis at the highest levels of the organization. In addition, S&OP provides scheduled periodic review and Demand Planning and Supply Planning performance; cross-functional strategic alignment maintaining consistency between the business plan (budget), SCP and SCE systems; coordination and regulation of the business plan and integrated departmental budgets; early warning system for variations to the business plan utilizing Key Performance Indicators; forum for departmental collaboration and making critical trade-off decisions, including risk and contingency planning; board for policy development and approval, providing unified direction to the organization and vehicle for continuous improvement. Benefits of effective S&OP include excellent customer and supplier relations; ability to grow market share and respond to new initiatives; shorter lead times and higher inventory velocity; improved service levels at a lower total cost; as well as organization and staffing stability, and business plans and profitability objectives are achieved or exceeded. Tactical Supply Chain Planning It is important that the functions of demand planning, supply planning and inventory and logistics planning act in unison. Inventory levels should be monitored and managed, with formal service level agreements and collaborative planning in place with both customers and suppliers. Schedule adherence should be targeted at 99% complete and on-time at all supply chain transaction points for these systems to provide accurate available-to-promise information. Demand planning should be owned by sales and marketing and performed on a monthly basis to provide one unconstrained plan for the entire business. A typical forecasting system utilizes several algorithms and best fit analysis to integrate customer order management (actual demand) with historical demand that has been adjusted for seasonality and trend. Pyramid forecasting aggregates and disaggregates projected demand by defined product families. This calculated forecast should be reconciled with a sales plan that is based on customer collaboration, promotional activities and leading industry economic indicators. Some organizations feel that their business cannot be forecast accurately and forego the process; however, without formal dewww.PARCELindustry.com August 2008 15 http://www.greenmountainconsulting.com http://www.greenmountainconsulting.com http://www.PARCELindustry.com
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