Supply Chain Planning and Execution
From forecast to fulfillment
Planning and execution connects the demand signal to material, capacity, and delivery. The cycle begins with demand planning (statistical baseline plus market intelligence), moves through consensus S&OP - a monthly cross-functional process that balances demand, supply, and financial plans into one operating plan - into master production scheduling, MRP explosion against the bill of materials with lead-time offsetting and lot sizing, and capacity checks (RCCP at the rough-cut level, CRP for detailed load). Distribution requirements planning applies the same logic across the network.
Inventory arithmetic dominates the domain: ABC classification by annual dollar usage (not unit volume), cycle counting, EOQ with its assumptions of known and constant demand, safety stock driven by variability of demand and lead time rather than average demand, and reorder points that trigger replenishment.
Traps: equating forecast accuracy with absence of bias - a consistently wrong forecast can be biased yet low on absolute error; forgetting that MRP assumes fixed lead times and infinite capacity; placing safety stock where variability is low instead of pooling it; and describing S&OP as a forecasting meeting rather than a decision-making process producing a single plan.
Worked rule: Safety stock = z × σ of demand during lead time. With 95% service (z = 1.65), daily standard deviation 20 units, and a 9-day lead time, SS = 1.65 × 20 × √9 = 99 units. Reorder point = average daily demand × lead time + 99.