The Seven Principles of Effective Supply Chain Planning

APICS or the American Production and Inventory Control Society confirms industry expectations in emerging technologies and data processing and analysis for effective supply chain planning.

"Sustained results from the best supply chain planning organizations include

• 15 percent stockkeeping unit mean absolute percent error (MAPE) (for high profile products) and 20 percent weighted MAPE (covering the entire family)
• 10 percent improvement in manufacturing cost (labor productivity and product yield)
• 15 percent improvement in inventory turns
• 25 percent reduction in excess and obsolete inventory
• 20 percent improvement in delivery reliability
• 90 percent of new products launched on time
• 50 percent faster response to significant unplanned demand events
• 99.5 percent or more volume fill rates.

While not incorporating all leading practices, there are seven basic principles that the best planning organizations adopt:

1. Systematic management of “master data,” including key data fields for items, customers, manufacturing resources, and suppliers
2. Synchronized long-term, tactical, and execution planning processes, planning horizons, and intervals for data refresh
3. Mature collaborative processes for both key customers and suppliers reconciling forecast, orders, and usage or sell through
4. Data-oriented understanding of the inputs to the forecast including forecast error, cumulative bias, lift, new products, and year-end volume variation
5. Intense focus on “point-of-sale” or “sell-through” data (as opposed to sales orders and “sell in”)
6. Disciplined product lifecycle management process bridging the gap between product development and supply chain
7. A continuous improvement approach to understanding consumer or user behavior."