Distribution & Supply Chain Planning Overview

In many industries – e.g. consumer goods or chemicals – the same products are stored in different warehouses to reduce delivery times and optimise transports. In this case there is a supply network on finished product level and planning is required to supply the warehouses and to determine the appropriate safety stock levels.

Distribution planning between the plants and warehouses gains increasing importance since many companies change their processes from non co-ordinated local inventory management to a global inventory management in order to reduce their inventories. By concentrating safety stocks from multiple local DCs to a central DC and changing the responsibility for the inventories at the local warehouses combined with service level agreements and a VMI (vendor managed inventory) process for the local warehouses, significant stock reductions are achieved. The focus for distri17 bution and supply chain planning is on make-to-stock production.

Tasks within Distribution and Supply Chain Planning

The supply planning for the warehouses has a more requirements planning oriented part, where the focus lies to propagate the demands of the supply network to the procuring plant in order to trigger the production or the external procurement, and a more execution oriented part, where the focus is to make the best of the given supply and demand situation – which often differs more or less from the initially planned situation. The latter is accordingly a short term task.