Operations and Supply Chain Management The Core

SALES AND OPERATIONS PLANNING chapter 8 241
Overview of Major Operations and Supply Chain
Planning Activities
exhibit 8.1
Long
range
Supply network
planning
Business process planning
Strategic capacity
planning
Medium
range
Forecasting and
demand management
Sales and operations
(aggregate) planning
Aggregate
Sales plan operations
plan
Manufacturing Logistics Services
Master scheduling
Vehicle capacity
planning
Weekly workforce
scheduling
Material requirements
planning
Vehicle loading
Short
range
Order scheduling
Vehicle dispatching
Warehouse receipt
planning
Daily workforce
scheduling
Aggregation on the supply side is done by product families, and on the demand side
it is done by groups of customers. Individual product production schedules and matching
customer orders can be handled more readily as a result of the sales and operations planning
process. Typically, sales and operations planning occurs on a monthly cycle. Sales
and operations planning links a company’s strategic plans and business plan to its detailed
operations and supply processes. These detailed processes include manufacturing, logistics,
and service activities, as shown in Exhibit 8.1.
In Exhibit 8.1, the time dimension is shown as long, intermediate, and short range.
Long-range planning generally is done annually, focusing on a horizon greater than one
year. Intermediate-range planning usually covers a period from 3 to 18 months, with
time increments that are weekly, monthly, or sometimes quarterly. Short-range planning
covers a period from one day to six months, with daily or weekly time increments.
Long-range planning activities are done in two major areas. The first is the design of the
manufacturing and service processes that produce the products of the firm, and the second
is the design of the logistics activities that deliver products to the customer. Process planning
deals with determining the specific technologies and procedures required to produce
a product or service. Strategic capacity planning deals with determining the long-term
capabilities (such as size and scope) of the production systems. Similarly, from a logistics
point of view, supply network planning determines how the product will be distributed to
the customer on the outbound side, with decisions relating to the location of warehouses
and the types of transportation systems to be used. On the inbound side, supply network
planning involves decisions relating to outsourcing production, selection of parts and component
suppliers, and related decisions.
Long-range planning
One year or more.
Intermediate-range
planning
3 to 18 months.
Short-range
planning
A day to six months.