# Supply Planning

Supply planning is the process of determining how to fulfill projected demand — translating what your business expects to sell into what it needs to make, buy, and move. It sits at the heart of IBP because it's where demand aspirations collide with operational reality. 🏭

Supply planning:
The set of activities that translate a consensus demand plan into feasible production, procurement, and distribution plans, subject to capacity and material constraints.

# The Supply Planning Hierarchy

Supply planning isn't a single activity — it's a cascade of decisions at decreasing levels of granularity:

Aggregate planning — Monthly or quarterly, product-family level. How much total output do we need from each plant or region? What's the right workforce and inventory posture?
Master scheduling — Weekly, SKU or item level. The Master Production Schedule (MPS) breaks the aggregate plan into specific item quantities and timing.
Detailed scheduling — Daily or shift-level sequencing on individual lines or work centers. This is where changeover optimization and shop-floor execution live.

Each level constrains the one below it, and each feeds feasibility signals back up. If your master schedule can't fit within the aggregate plan's capacity envelope, something has to give — either the plan or the constraints.

# Key Inputs and Outputs

Inputs	Outputs
Consensus demand plan (from demand review)	Production plan (volumes by site/line)
Inventory policies and targets	Procurement plan (material requirements)
Capacity constraints (equipment, labor)	Distribution plan (shipments between nodes)
Supplier lead times and material availability	Projected inventory trajectories
Supply chain cost parameters	Identified gaps, risks, and trade-off scenarios

The supply plan must balance service, cost, and asset utilization — and it rarely gets to optimize all three simultaneously. The trade-offs are what make the supply review meeting worth attending.

# Manufacturing Strategy: MTS vs. MTO vs. ATO

How you plan supply depends heavily on where the customer order decoupling point sits. The manufacturing strategy shapes lead times, inventory investment, and planning complexity.

Products are manufactured to a forecast and held in finished-goods inventory. Customers are served from stock. This is the default for high-volume, short-lead-time products (consumer goods, commodity items). Planning centers on accurate demand forecasting and inventory policies — get these wrong and you're sitting on excess stock or shorting customers.

Production doesn't begin until a customer order is received. Finished-goods inventory is near zero, but customer lead times are longer. Common in engineered products, capital equipment, and custom manufacturing. The planning challenge shifts from forecasting demand to managing capacity and quoting reliable lead times.

A hybrid strategy: components and subassemblies are built to forecast, but final assembly waits for the customer order. Think of configurable products (laptops, vehicles with option packages). ATO requires careful planning of the component commonality across finished configurations, and strong procurement planning for long-lead components.

# Rough-Cut Capacity Planning

Before committing to a supply plan, you need a quick feasibility check: can we actually produce this?

Rough-cut capacity planning (RCCP) tests the master schedule against a small set of critical resources — the bottleneck work centers, key assembly lines, or constrained labor pools. It doesn't model every resource in the facility; it focuses on the ones most likely to blow up the plan.

If RCCP flags an overload, you have options:

Adjust the master schedule (shift timing, reduce volume)
Add capacity (overtime, extra shifts) — see capacity planning for levers
Escalate to the demand side for prioritization

RCCP is intentionally rough. The goal is speed of decision, not decimal-point accuracy.

# The Supply Review Meeting

The supply review is the IBP step where operations leadership presents the supply plan to the broader planning team. It typically occurs monthly, after the demand review and before the integrated reconciliation meeting.

Purpose: Confirm the supply plan is feasible, identify gaps and risks, and propose scenarios for executive review.

Typical attendees:

VP/Director of Operations or Supply Chain
Plant managers or production leads
Procurement / sourcing leads
Supply chain planning team
Finance representative (for cost implications)

Key decisions:

Can we meet the consensus demand plan? If not, where are the gaps?
What are the capacity or material constraints driving the gaps?
What trade-off scenarios should be escalated (e.g., overtime vs. service reduction)?
Are supply chain costs within the financial plan, or are there variances to flag?

The supply review doesn't make final trade-off decisions — that's for the integrated reconciliation step. Its job is to present a clear-eyed view of what operations can and can't deliver, and at what cost. 📋

Inventory Policies — the replenishment rules that drive stock positioning
Supply Chain Costs — holding, transaction, and cycle stock cost modeling
Capacity Planning — matching capacity to demand requirements
Procurement Planning — planning purchased materials to support the supply plan