[SOUND] In supply planning, the critical items or information to understand is if I have enough capacity. So resource, machine times, these are one bucket and then the other one is material. So do I have the components raw material and even the finished goods available to meet the demands that call for from the demand planning? So we walk through an example here in Excel. So there's a lot of information that you need to gather on the supply planning side in order to put together this table, this chart, this information. And to do some computation in order to ensure that you have the capacity to meet the demand. So an example we're going to do is just a chair. So assuming that we're making or supplying chairs and we in this case we're not going to worry about the subcomponents. Okay, we're going to talk through this example by just figuring out if we can meet the demand supply the chairs as a finished item to our customers. And then here, these are the number of weeks, weeks 0 through week 8. And typically these are the information you need to gather but other companies may not be the same. Sometimes you have more information, sometimes less. Depends on the company and the system that you're using. But in the minimum, you need to understand these basic elements. So the first one is the gross requirements. So this is synonymous to what the demand plan calls for. This is a demand that I need to fulfill for example in week 1 of 150 chairs, week 3, 70 week 5, 175, week 7, 90 and the week 8, 80 and so forth. So this, the first line here there will be typically a line that comes from the demand planning side and usually you break this down to by weeks. Typically demand is planned in a monthly bucket. So you further break this down into the weekly bucket if possible. And then you understand if there's any receipt, your schedule is the factory or your facility scheduled to receive any goods at the time. And you know we need to understand the projected available balance. This is your inventory. What inventory are you projected to have in the next few weeks, n the next eight weeks? So then you will net it out and to see do you have any shortages or surplus and are there any planned orders? Can you fit more in? Can you put more order in? And can they receive your order? Like if there's external, even internal facilities, can they take these orders? Can they release them by these weeks? So then you can all still satisfy the requirement for a particular week or demand for a particular week. So the assumption we're making here is that the lead time so if you have orders, right? In this example is that lead time and in this case is two weeks. So it's two weeks. So for example first one, in week 0 we have no demand, no requirement, but we have 260 chairs in stock and that can meet the week 1 requirement of 150. So once I meet that requirement, the calculation will be 260 minus 150. I will have 110 left. I have no demand for week 2 and no further supply, right? There's no release of orders. So my week 2 projected available balance remains at 110. And week 3, I'm projected to 70. So then I have 110 so I can still meet that need but my net balance afterwards it will be 40. But then looking forward, I have week 4, there's no demand which is great. I can keep the 40 but in week 5 I need 175. So then I have 135. So then if I might lead time in two weeks. And I need to ensure that I have a order somewhere or somebody either internal external capacity like manufacturing facilities can supply at least 135 units to me. So I can meet this week 5 requirement of 175. Since my lead times two weeks. So I need to ensure that there's a capacity that's available that can produce 135 chairs for me. [COUGH] Okay so similarly if you keep going, week 7 I need 90, week 8 I need 60 and then you just continue to carry forward computation, right? So it's assuming that 135 can come. All right, so I'm planning to receive 135 here and plus the 40, I can meet the 175. So my net I will not have any inventory left over. I just have enough to satisfy the demand. So I have nothing in week 6 and no inventory and no demand, but week 7 and 8, I have these requirements. So then I need to make sure there's capacity again in the two weeks prior at least that these inventory can show up by the time I need them. So in this example we just made it that it shows up, right? Two weeks prior, it will show up. It will release at week 5 and then it will come by week 7. So I have 90 to meet the 90 and 60 to meet 60, okay? And so then you just continue to carry forward like this is on the material side and you can think of yeah, this is end product. So then you're at the same time will also be confirming the capacity, right? You're asking your internal or external manufacturing facility that if they can supply these goods or these finished product, these chairs to you by this week. So they can be released and you can receive them in time to meet the demand that's called for by the demand plan. [SOUND]
