How are Demand Management and Production Planning Linked to Logistics Planning?

The planning of the supply chain is increasing in scope and frequency. Its applications continue to evolve by taking into consideration diverse resources and activities in the scope of planning in supply chain. However, there are some applications that are common for the majority of the supply chain settings inclusive of demand management, logistics and production planning. The rising complexity of marketing tactics and product offerings alongside with shorter life cycles of products needs increased flexibility, consistency, as well as accuracy when determining the requirements of the inventory. The systems of demand management, product and logistics planning seek to offer such capacities (Liberatore & Miller, 2012).

Demand Management

Demand management establishes the forecast, which drives anticipatory supply chain processes. Such predictions are the projections of the daily, weekly or monthly demand, which determines inventory, production and logistics planning. Every projected quantity may encompass some proportion of the future orders placed on the customer demand anticipation alongside with some proportion of the predicated demand on the basis of history. The process of demand management incorporates forecasts that are historically based with other logistics data regarding events, which would influence future sales activities as pricing changes, promotional plans, and new product introductions. This is in order to attain the best possible incorporated statement requirements (Vines & Maciejowski, 2012).

Demand management process aspects focus on generating forecast consistency across several warehouse facilities and products and logistics planning. Demand management that is effectively integrated needs a lone accurate forecast for every logistics facility and resource. The combined and the aggregate requirements have to reflect a plan, which is consistent with overall and divisional financial projections and firm sales. The demand management systems develop the unconstrained logistics plan. It starts with a base forecast and then integrates factors as distribution channels changes, product life cycle, promotional and pricing tactics, as well as variations in product mix (Crum & Palmatier, 2003).

Demand management systems rationalize the unique forecasts, detailed logistics plan for each product and warehouse with the aggregate national plans and product group. For instance, the overall individual warehouse facility sales must be consistent with national sales projections. On the same note, the logistics requirements level must be adjusted in order to reflect the activity level for the related resources. For example, the requirements of the present products might have to be lowered in order to reflect the reaction of the market to a new product introduction (Liberatore & Miller, 2012).

Demand management function permits a firm to determine the logistics plans like the delivery and the requirements dates for the products. The function applies both plan requirements from operations and sales planning and the prerequisite from customers. Conversely, the demand management function offers inputs for the functionality of logistics requirements planning. In order to make use of the demand management functionality, the logistics planning departments ascertain that every product in the company gets assigned a planning strategy. Demand management aids the logistics departments in realizing all the demand of services and goods in order to support the marketplace through prioritizing demand in case supply is lacking. Demand management that is appropriate facilitates the use and planning of logistics for profitable business results (Vines & Maciejowski, 2012).

Production Planning

Production planning applies the statement of requirements attained from the demand management alongside the manufacturing constraints and resources to create a manufacturing plan that is workable. A statement of the requirements is the one that defines when and what items are needed. Systems of production planning match the logistics plan requirements with the constraints of production. The goal is to ensure the vital requirements at the least overall production cost meanwhile preventing the violation of any constraints. Production planning effective leads to a time-sequence plan to fabricate the proper items effectively meanwhile operating within equipment, labor and facility constraints. On the other hand, production planning recognizes the items, which must be produced in the expectation of need in order to remain in the production, as well as minimize inventory (Voss & Woodruff, 2006).

Production planning is a central part of the function of logistics planning in any company. In the majority of firms, production planning is incorporated with other elements inclusive of materials management and plant maintenance. Each firm which has a manufacturing function implements some degree of production planning functionality in order to ascertain that finished products are manufactured at the necessary period for the sales of the customers to be delivered. Production planning is vital to the supply chain of a company since it includes the functions, which are employed to plan the manufacture, sale and introduction of the products (Argoneto, 2008).

Product planning is a process that is continuous articulating and identifying the requirements of the markets, which define the future set of the product. The function creates the product idea through the process of demand management to logistics planning. On the other hand, product planning encompasses managing the product in its life cycle using several marketing strategies inclusive of product improvements or extensions, increases distributions, promotions and price changes (Liberatore & Miller, 2012).

The aim of product planning is to fix the goals of production and to estimate the resources needed to attain such goals. As a result, it prepares a plan that is detailed for attaining the production goals in time, efficiently and economically. Production planning predicts every production process steps and the issues that might arise in the process of production. Alternatively, production planning is linked to logistics planning through the effective resources utilization, steady flow of production, estimation of resources, ascertaining optimum inventory and coordinating the activities of the logistics department. Also, production planning lowers the wastage of materials, improves logistics labor productivity, aids in capturing the market, offers superior work settings and facilitates the improvement of quality. In addition, production planning leads to consumer satisfaction, and the reduction of production and logistics costs (Liberatore & Miller, 2012).

Logistics Planning

Logistics planning coordinates warehousing, transportation, and inventory in the firm and among the supply chain partners. The major objective of supply logistics planning is to ascertain that the future demand might be satisfied by the company's available resources in addition to pointing out the circumstances where the demand cannot be met in the needed quantities or in time. Sometimes, the process of logistics planning is regarded as Sales and Operations Planning, a process which occurs in a simulative mode, as well as an aggregated level. When a production plan that is feasible is found, which satisfies the demand, then it can be applied as a basis in operational production planning (Bloomberg, LeMay & Hanna, 2002).

Logistics planning incorporates the total movement demand and relevant movement costs to a common decision support system, which seeks to lower the overall logistics costs. Logistics can be shifted through demand management and production planning in order to attain economies of scale and superior asset utilization. Logistics planning is vital for the effective utilization of resources. Alternatively, the lack of comprehensive and accurate tools for supply chain and logistics planning results in a poor production, transportation and storage capacity. The rising strong focus on advanced utilization of assets alongside improved data management and decision analysis techniques and capabilities has brought planning systems that are comprehensive to reality. Planning is effective needs of a combination of data systems to offer the information and the managers to make decisions (Liberatore & Miller, 2012). Since logistics planning involves a detailed management of the operations of the organization, successful logistical management needs the effective application of resources in order to accomplish the aims of the company and carry out the company actions in a manner that is most efficient (Saget, 2006).

Conclusion

This essay has analyzed how demand management and production planning are linked to logistics planning. Demand management establishes the forecast, which drives anticipatory supply chain processes. Demand management process aspects focus on generating forecast consistency across several warehouse facilities and products and logistics planning. Demand management systems rationalize the unique forecasts, detailed logistics plan for each product and warehouse, with the aggregate national plans and product group. Demand management function permits a firm to determine the logistics plans like the delivery and the requirements dates for the products. Conversely, the demand management function offers inputs for the functionality of logistics requirements planning. The logistics planning departments ascertain that every product in the company gets assigned a planning strategy. Demand management that is appropriate facilitates the use and planning of logistics for profitable business results. Production planning apples the statement of requirements attained from the demand management alongside the manufacturing constraints and resources to create a manufacturing plan that is workable. The production planning function creates the product idea through the process of demand management to logistics planning.

Recommendations

1. Companies should reshape the relationships with the channel partners in order to ascertain demand forecast that are accurate. It is vital for manufacturers to implement a closed-loop process for analyzing, fathering and gathering demand forecasts from channel partners. Demand management has to be tightly incorporated with logistics planning for the entitlements and other benefits from channel partners;

2. Firms should base inventory allocations on real time demand and production forecasts, which integrate information from every channel, both direct and direct. As a result, this will increase revenues through targeting allocations to the locations, as well as channels, which are the most effective;

3. Companies should ascertain the presence of precise intelligence alongside automation and collaboration. Innovative technological developments have facilitated real time information flow across and within enterprises resulting in superior forecasts and enhanced capacity to respond fast to the requirements of the customer. It is possible to get rid of market uncertainty from the process of forecasting;

4. It is vital to select demand management and production planning applications, which address the distinct challenges that are faced by a particular business. The majority of the present applications fail to fulfill the particular needs of specific needs for companies.

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