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Demand Planning and Supply Planning
November 9, 2014


Demand Planning:

Demand planning (DP) is the initial part of the SCOR model. It pulls the chain of supply chain. Basically, demand planning covers the forecasting part of any product. Which means, how much a product should be made.


There are three important pillars in demand planning:

1. Horizon: horizon means time period. Horizon defines for how long a furcating should be done for a particular product or so. For example, an XYZ company produces Coffee. This company has to forecast for more production during the horizon of winter period as the demand of coffee is high during this period. The period of horizon are of three type (Short, medium and long). Considering another example, an XYZ company produces 2000 tons of shampoo for the horizon of 2 years.

2. Granularity: Granularity means intervals. Taking above example of a company producing shampoo, has also to make a decision that in what interval the company is going to produce 2000 tons of shampoo within these 2 years, whether they are going to distribute according to quarterly basis (250 tons in each quarter) or may be fiscal basis (1000 tons yearly).

3. Hierarchy: This basically defines bifurcation of a product at SKU level. Taking same example of 2000 tons of shampoo and 250 tons in a quarter, it is further bifurcated that 100 tons should be anti-dandruff and 100 tons should be anti- hair fall and 50 tons should be of oily scalp. It can be further bifurcated as 100 tons of anti-dandruff in 25 tons (red, yellow, white & green) bottles each, and so on.


Stock Keeping Unit (SKU):

SKU’s are differentiation of a product on the basis of size, color and variants. Suppose we have 3 different caps of a bottle (Red, yellow and blue), this means we need to have three different SKU’s for each to maintain three different inventories.



Supply Planner (SP):

Supply planner is the one who gives MPS (master production schedule) based production plan on daily basis to the production department. MPS is a software which gives production plan based on the input given by supply planner. Supply planner also gives purchase requisition (PR) to Raw material supply management and package material supply management departments. Once, a purchase requisition is given, then the source department maintains a purchase order against that PR.

Purchase requisition (PR) is also generated by a software known as MRP (Material required planning).



MRP (Material required planning) Software


Supplier Lead Time:

Total time required after an order is placed by a customer till the delivery of that product is known as Supplier Lead Time.


Level Of Inventory:

This keeps  a record of each and every stock.


Bill of material (BOM):

BOM defines the ingredients / recipe required for making 1 unit of any product. BOM is defined by R&D department of a company.


Non production items (NPI)

Any item other than packaging material and raw material is known as non-production item. For example, pana-flex, gondolas, etc.



Following are some important responsibilities that comes under make driver of the SCOR model:

  • Execute and complete the production given by supply planner on the basis of production plan.
  • It also makes full efforts to reduce or decrease wastages.
  • They also focus on improving the quality by the help of continuous improvement plan (Kaizen)
  • Finally to achieve process capabilities.


TPM (Total productive maintenance) / OEE (Overall equipment efficiency):

This part is also known as medical science of machines. This is done to enhance the life of a machine and hence the efficiency of a plant is also improved.


Engineering and Project:

This domain is responsible to take care of all the projects which are related to engineering part, for example generator, compressor, machine, etc.


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Scor model supply chain
November 9, 2014


Supply Chain Management:


Before getting into the details of Scor model supply chain, you first need to understand te definition of supply chain management. Supply chain management is a terminology which can be best explained by the help of understanding the meaning of each individual words.


Supply means needs, wants and demand of a customer or anything.
Chain means that everything is interconnected or linked with each other.
Management can be best explained with the help of basic principle that is (Planning, Organizing, Leading, Controlling and staffing).


By combining the above break ups, we can conclude that, supply chain management is basically to full fill customer’s needs, wants and demands by the help of interconnected drivers and using management tools in order to plan for current and future requirements, organizing things in a way to achieve the goal under a leadership that is a person or team taking responsibility by ensuring that all quality checks are intact with right person at the right place (Hire right person for right job).


These interconnected drivers can be best explained by the help of SCOR (Supply Chain Operational Reference) model or Scor model supply chain.


SCOR model supply chain


Scor model supply chain


Breakdown of SCOR model supply chain


1. Plan

– Demand planning (DP)

– Supply planning (SP)


2. Source

– Raw material supply management (RMSM)

– Packaging material supply management (PMSM)

– Non production items (NPI)


3. Make

– Production

– Engineering and projects

– Maintenance resource operation (MRO)


4. Deliver

– Warehousing / DC

– Distribution planning

– Logistics


5. Return


We will study the above SCOR model supply chain breakdown in detail in later chapters. Before moving further, we need to understand certain terminologies that will assist you in understanding supply chain management better.


Types of Market:


There are two types of market:


Developed and emerging market:

These kinds of market are usually found in Latin America, South Asia, etc. Taking an example of a product, we can still see powder detergents available in such markets.


Developed market:

These kinds of market are mostly found in China, USA, etc. Taking an example of a similar product, we can see that powder detergent are replaced with liquid detergent.


Classical conditioning:

To make the behavior of the consumer according to your product and not vice versa is called classical conditioning.


Modern Trade:


There are two types of modern trade:


1. Local modern trade: Super markets that has everything available in one premises (Clothing, groceries, electronics, etc.) and belongs to a local chain is known as Local modern trade.


2. International Modern Trade: Super markets that has everything available in one premises (Clothing, groceries, electronics, etc.) and belongs to an international chain is known as International modern trade.



There are two types of diversification:


1. Concentric diversification:

The literal meaning of concentric is same center. This means that the organization is diversifying or expanding its business in the same domain. For example, an XYZ company is specialized in making solid soap, now it is expanding its domain to liquid soap. This kind of diversification is known as concentric diversification.


2. Conglomerate diversification:

The literal meaning of concentric is having different center. This means that the organization is diversifying or expanding its business in a different domain. For example, an XYZ company is specialized in making dairy products, now it is expanding its domain to fertilizers and chemical products. This kind of diversification is known as conglomerate diversification.


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