Aggreget Planning

Evaluating Supply Management Costing Data

Assignment # 1

The best way an organization can improve its bottom line is to build an effective operation and supply management plan. From sourcing the raw materials, to the process and capacity of production, to quality monitoring, to finished product or service distribution; OSM encompasses a large part of organizational planning. Every dollar saved during procurement, production and distribution is direct profit.

Supply management is a way of matching supply and demand to ensure the proper amount of inventory is available to meet supply, but limit the amount of inventory on hand to reduce inventory cost. It combines monthly sales forecasts produced by the sales department, operations team and supply team and synchronizes all three to ensure stock is on hand when needed but not too much. The purchasing team must communicate closely with suppliers and let them know well in advance what future requirements will be to ensure a constant flow of raw material. When product or service completes production it should be distributed to the end users as quickly and efficiently as possible.

The operations team is responsible for raw material flowing through a process efficiently minimizing wasted time, inventory, equipment and labour costs. Operations must ensure they have the capital infrastructure, proper facility design, workforce capacity to fill product or service demand and constantly strive to improve efficiency of operations. To build accurate plans a combined synchronized effort of operations, supply and sales teams is required. They will use short and long term forecasts and ensure a high level of value and adequate supply to exceed customer expectations.

Two tools to assist OSM functions are aggregate planning and process analysis. These planning tools can help ensure resources are not wasted, help diagnose a problem and find ways to improve efficiency of operations.

Aggregate planning breaks down parts of the...