Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

1.1.8 Supply Chain Planning and the Planning & Control System

Intended learning outcomes: Produce an overview on supply chain planning. Differentiate between production planning and control (PPC) and a PPC system.

Planning (in an enterprise) is the process of setting goals for the organization and choosing various ways to use the organization’s resources to achieve the goals [APIC16].

Supply chain planning is the determination of a set of policies and proce­dures that govern the operation of a supply chain. It includes the determi­nation of marketing channels, promo­tions, respective quantities and tim­ing, inventory and replenishment policies, and production policies. Plan­ning establishes the parameters within which the supply chain will operate [APIC16].

Supply chain planning aims at having the right item in the right quantity at the right time at the right place for the right price in the right condition for the right customer — every time. This task must include the entire supply chain. Once the weighing of the entrepreneurial objectives is done (Section 1.3.1), supply chain planning entails a number of principles, methods, and procedures in order to accomplish the following subtasks:

  • Evaluate the various possibilities of distribution, production, and procure­ment that may be utilized to achieve set objectives.
  • Create a program in suitable detail, i.e., determine salable products, their quantities, and deadlines. Revise the plans periodically in response to changing constraints.
  • Elaborate and realize distribution, production, and procurement plans derived from the program, in suitable detail and in consideration of objectives and constraints.

Planning decisions thus concern logistics issues, such as: When, how, and in what quantities will goods be procured, produced, or distributed? Will inventory be inserted between storehouse, factories, and the supply chain community? Which services will be performed, when, where and how? What personnel and what assets will be used? When will delivery to customers and subsidiaries take place?

A supply-chain planning & control system is the suitable information logistics for supply chain planning.

Here, the term “control” should not be interpreted in a technical sense as complete mastery of a controlled process. In companies, the term indicates regulation or even just coordination. Because of the estab­lished use of the term (for example, “production planning and control”), however, we maintain it here. In the manufacturing stage within the product life cycle, such a system is frequently called PPC, or production planning and control. MPC (manufacturing planning and control) is another classic abbreviation. See [VoBe18].

The term PPC sometimes leads to misunderstandings, because the term PPC system is used to refer to both the logistics task and the computer software supporting the task. These two meanings are often mixed deliberately. Upon the background of misplaced optimism with regard to PPC software, demagogues — when the use of PPC software fails — tend to declare that the entire scientific body of knowledge on planning & control is “useless.” They overlook the fact that the primary responsibility for understanding methods and their practical application always falls upon the people in the company. Course 9 examines these issues in more detail.

Continuation in next subsection (1.1.8b).

Course section 1.1: Subsections and their intended learning outcomes