Supply Planning

Supply planning is the operational process of determining how to best meet the demand identified in a demand plan. The objective is to balance supply and demand in a way that achieves a company’s financial and service goals, managing trade-offs between inventory costs, operational expenses, and customer service levels.

The process integrates procurement, production scheduling, inventory management, and logistics to create a synchronized plan. It determines what to produce, when to produce it, and what raw materials to purchase. Effective supply planning is essential for managing working capital by optimizing inventory levels and preventing both stockouts and excess stock.

Supply planning is a core element of Integrated Business Planning (IBP), as it aligns operational capabilities with the overall business strategy. It provides crucial inputs for capacity planning and directly impacts the accuracy of financial forecasts and budgets.