Planning and control within the focal firm

In this section, we consider planning and control within the focal firm (intracompany) and then between firms in the supply chain (inter-company). The model used is based on that developed within manufacturing firms, since it is the best developed. An excellent text, which goes into detail on most of the issues discussed in this section, is Vollman et al (2005) - included in the reference section at the end of this chapter. We conclude with the implications for planning and controlling the supply chain as a whole. 

The purpose of a manufacturing planning and control (MPC) system is to meet customer requirements by enabling managers to make the right decisions. The system coordinates information on key source-make-deliver processes to enable material to flow efficiently and effectively. Three time horizons are involved for 

Victoria SA makes fantastically good cakes from basic ingredients like flour, water and cherries. Demand for Victoria sponge cakes comes from two sources. Some big retailers place their order with the firm two days in advance, while other customers arrive at Victoria s own shops without prior warning and select from cakes that are on display. This means that some cakes are made in line with orders, whilst a forecast is also required to predict day-by-day demand. 

When overall demand across the range has been collated, Victoria SA is able to determine how much of each ingredient will be needed to make the right number of cakes. 

Too many and cakes will have to be thrown away, because the shelf life is 5 to 8 days (Victoria does not use stabilisers like potassium sorbate). Too few and sales will be lost. Accurate planning is thus crucial to the efficiency of the whole operation. The ideal situation is that cakes are made and delivered just-in-time to meet customer demand because inventories will be low and freshness at its best. 

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