Supply Planning
Definition
Supply planning determines how a company will meet the demand plan: what to make or buy, in what quantities, where, and when. It translates forecasted demand into production schedules, purchase plans, and inventory targets.
In Practice
Supply planning takes the demand plan as input and works out a feasible response given capacity, lead times, material availability, and inventory policies. It answers practical questions: which plant runs which products, how much to order from each supplier, and where to position stock across the network.
The hard part is that supply is constrained. When demand exceeds capacity, the supply planner must decide what to prioritize, pre-build, or push out, and communicate the consequences back through S&OP. When demand falls short, the question becomes how quickly to cut orders without straining supplier relationships or stranding materials.
A typical week involves reviewing planned orders from MRP, resolving shortages, expediting critical purchase orders, and rebalancing inventory between distribution centers. A furniture maker facing a foam shortage, for instance, may reschedule the master production schedule to protect its best-selling sofa line while delaying slower movers.
Related Calculators
Related Terms
Demand planning is the process of predicting future customer demand and shaping it into a consensus plan that drives supply, inventory, and financial decisions. It combines statistical forecasting with market intelligence from sales, marketing, and customers.
Material Requirements Planning (MRP)Material Requirements Planning (MRP) is a calculation engine that translates a production schedule into time-phased requirements for every component and raw material, using bills of materials, inventory records, and lead times.
Master Production Schedule (MPS)The Master Production Schedule (MPS) is the anticipated build plan for finished products or key end items, stating what will be produced, in what quantity, and in which time period. It is the primary input that drives MRP.
Capacity PlanningCapacity planning is the process of determining the production, storage, and labor resources needed to meet expected demand, and deciding how to close gaps between required and available capacity.