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From Annual Vision to Daily Execution: A Guide to Supply Chain Planning

Table of Contents

In our previous blog, Optimizing Beverage Production Lines: Exploring Sistering and Cousining, we reviewed two innovative methods for improving production scheduling efficiency, and here we’ll unpack critical planning horizons that drive success in the beverage industry.

A flowchart illustrating business planning activities, segmented by frequency: annually, quarterly/monthly, weekly, and daily. Tasks span from developing supply chain planning to updating sales orders and generating deployment bills.

Understanding the Planning Landscape

Supply chain planning isn’t a one-size-fits-all approach; rather  it’s a nuanced process divided into three distinct yet interconnected horizons:

  1. Strategic Planning
  2. Tactical Planning
  3. Operational Planning

While these horizons often overlap, understanding their unique characteristics is crucial for effective supply chain management.

Strategic Planning: Charting the Long-Term Course

Frequency: Annually

Horizon: 18 Months to 5 Years

Strategic planning is the compass that guides an organization’s long-term vision. It is comprised of:

  • Annual Business Plan (BP): A comprehensive goal arising from an estimate of sales and proposed marketing plan completed once a year. It entails:
    • Detailed sales targets by brand and month
    • High-level marketing strategies for each brand
    • Profit objectives and market positioning
  • Annual Operating Plan: A critical refinement of the BP that:
    • Evaluates operational constraints that drives revisions
    • Considers associated costs
    • Aligns with the initial business plan
    • Identifies key performance measures
  • Inventory Policy: A strategic framework establishing:
    • Customer service level targets
    • Safety stock management protocols
    • Guidelines for handling external demand requests
    • Production lot-sizing and timing rules

The ultimate goal of strategic planning is to define the company’s long-term vision, develop infrastructure, and identify strategic advantages that can be leveraged to gain market share and improve profitability.

Tactical Planning: Bridging Strategy and Execution

Frequency: Quarterly or Monthly

Horizon: Often up to 18 months

Tactical planning transforms high-level strategic goals into actionable blueprints:

  • Sales and Revenue Estimation
    • Revise monthly estimates based on current performance
    • Make tactical adjustments to the existing plan
    • Analyze at an aggregate level such as by Category
  • Sourcing and Capacity Planning
    • Determine product sourcing strategies
    • Evaluate demand against production and warehouse capacities
    • Identify and address potential constraints
  • Continuous Improvement
    • Review key performance measures
    • Identify operational barriers
    • Make precise adjustments to inventory policies

Operational Planning: Executing with Precision

Frequency: Weekly to Daily

Horizon: Often up to 13 weeks

Operational planning is where strategy meets day-to-day execution:

  • Demand Forecasting
    • Develop operational forecasts by week
    • Break down into daily demand buckets
    • Continuously update and refine estimates
  • Inventory Management
    • Establish precise inventory positions
    • Conduct daily inventory counts
    • Synchronize with scheduled events
  • Production and Deployment
    • Create production orders
    • Generate purchase orders for goods and materials
    • Schedule deployments to satellite warehouses

The Art of Flexibility

The key to effective operational planning is maintaining a delicate balance between flexibility and stability. While it’s tempting to lock down schedules, true efficiency comes from:

  • Allowing dynamic adjustments
  • Minimizing inventory carrying costs
  • Improving forecast accuracy
  • Enhancing supplier responsiveness

The broader objective is to design processes that:

  • Increase the feasibility of last-minute changes
  • Lower associated costs
  • Enable nimble responses to market dynamics

Summary

Supply chain planning in the beverage industry is a complex dance of strategic vision, tactical adaptation, and operational precision. By understanding and effectively managing these three planning horizons, organizations can create a robust, responsive Supply Chain that drives competitive advantage.  Areté’s Demand Planning and Supply Planning solutions are built for purpose and allow organizations to react more nimbly (and cost-effectively) to the dynamic markets they serve.

In our next blog, Mastering Costing Measures: A Beverage Industry Insider’s Guide, we’ll explore key costing measures that complement these planning strategies. Stay tuned by subscribing to our blog!

Picture of JR Humphrey

JR Humphrey

JR has 2 decades of experience in Demand and Supply Planning helping customers achieve desired results.