Strategic Supply Chain Management - Supply Chain Online

76 Strategic Supply Chain Management
favorites that were purchased every day in predictable volumes. The team
closely examined how demand was calculated at each level of the supply
chain, starting with the retail store, moving back to the warehouse, and
finally moving on to the supplier.
Using plan source process elements (see Figure 2-7), the team realized
that information on actual sell-through at the store was not used in
planning requirements for suppliers and that each store placed orders on
the warehouses based on its best view of demand. Using the P 2.1 process
element—identify, prioritize, and aggregate product requirements—the
team saw that distribution warehouses that supplied the retail outlets were
pulling inventory from suppliers based on historical demand patterns for
all products—which was fine as long as demand was consistent with historical
levels.
In actuality, of course, demand patterns for many products were
highly variable, particularly in the cases of new products, store-level promotions,
and the periodic introduction of seasonal merchandise. These
events distorted demand patterns, creating a baseline demand that was
appropriate only for a specific time period. This meant undersupply at the
FIGURE 2–7
Using plan source for better performance.
P2 Plan Source
• Establish and communicate
supply chain plans
• Production plans
• Delivery plans
• Planning data
• Item master, bill of materials,
product routings
• Reserve resources and
determine delivery date
P 2.1
Identify, prioritize,
and aggregate
product requirements
P 2.2
Identify, assess, and
aggregate product
resources
• Product availability
• Inventory availability
• Sourced production on order
• Planning data
P 2.3
Balance product
resources with
product requirements
• Planning decision
policies
P 2.4
Establish sourcing
plans
• Sourcing plans