What is supply chain planning?

Supply chain planning is the process of managing and organising the various activities involved in sourcing, producing and delivering goods and services to customers. It involves the strategic co-ordination of resources, information and processes across the entire supply chain, from suppliers to manufacturers, distributors, retailers and end consumers. The main goal of supply chain planning is to ensure that products and services are available at the right time, place and quantity while minimising costs, optimising inventory levels and improving overall efficiency.

What are supply chain planning systems?

Supply chain planning systems are software solutions or tools that organisations use to manage, co-ordinate and optimise various aspects of their supply chain operations. These systems help companies to plan, execute and monitor the flow of goods, information and resources from the point of origin to the point of consumption in a cost-effective and efficient manner. By implementing a supply chain planning system, companies can gain better visibility and control over their supply chain operations, identify potential risks and bottlenecks, reduce costs, improve customer service and enhance overall business performance.

What are the basic supply chain planning steps?

Demand planning: Forecasting customer demand to determine the necessary production levels, inventory requirements and distribution strategies.Supply planning: Identifying and securing the resources needed to produce goods and services, including raw materials, labour, equipment and transportation.Production planning: Scheduling and co-ordinating manufacturing processes, including capacity planning, resource allocation and production sequencing.Inventory planning: Managing the levels of raw materials, work-in-process and finished goods to meet customer demand while minimising costs associated with excess inventory or stockouts.Distribution planning: Optimising the transportation, warehousing and distribution of goods from manufacturers to customers, including route planning, carrier selection and delivery consolidation.Sales and operations planning (S&OP): Aligning the goals and objectives of various functional areas, such as sales, marketing, production and finance, to create a unified and integrated plan for the entire supply chain.

How can supply chain planning be improved?

Effective supply chain planning requires a comprehensive understanding of the internal and external factors that can influence the supply chain, such as market trends, customer preferences, supplier capabilities and regulatory requirements. It also involves the use of advanced planning software, analytical techniques, AI for process automation and optimisation and collaboration among supply chain partners to optimise decision-making and adapt to changing conditions.

Supply chain planning

Enhance decision-making across the supply chain using the AI-enabled planning platform.

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The future of supply chain planning reimagined starts with SAP AI Agents

Discover how SAP AI Agents help your business reimagine supply chain planning—from exception management to supply orchestration with predictive insights and autonomous decisions that deliver end-to-end visibility, faster cycles and more resilient, cost efficient operations across your end-to-end supply chain.

Accelerate decision-centric planning

Easily collaborate across supply chain, commercial and finance teams to dynamically plan for scenarios and confidently adapt to market shifts.

Automate planning and decision-making

Leverage supply chain visibility to anticipate or swiftly respond to demand or supply disruptions—elevating customer service and bolstering resiliency.

Break down supply chain silos

Increase agility, optimise resources and improve customer satisfaction by integrating real-time data and co-ordinating production and scheduling across the enterprise.

Supply chain planning assistants

AI assistants help planners make fast, informed decisions across all time horizons.

Planning Assistant

The assistant:

Connects planning across demand, supply and operations in one environment.
Aligns decisions and handoffs across planning horizons.
Adapts plans continuously as conditions change based on AI-generated insights.
Enables continuous corrective action across your value chain by tracking plan-to-execution lifecycles against KPIs.

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Explore supply chain planning capabilities

Make decisions based on real-time data, respond quickly, enhance collaboration and stay ahead of competitors in dynamic markets.

Autonomous planning and decisioning
Improve forecast accuracy by using AI to detect demand changes and plan accordingly.

Integrated planning and decision-making
Collaborate across supply chain, commercial and finance teams to plan for scenarios and adapt to market shifts.

AI-enabled inventory optimisation
Balance service levels by optimising inventory across the supply chain, supported by AI-enabled explanations of safety stock.

Real-time visibility across the supply chain
Gain proactive insights into the supply chain, respond swiftly to disruptions and get AI-supported explanations for supply optimisation.

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Planning automation for all manufacturing environments
Use constraint modelling for production planning and apply advanced algorithms to gain insights and solve problems.

Detailed production order scheduling
Streamline global scheduling using detailed constraints and alternatives.

Constrained capacity planning
Build production plans that account for machine capacity, as well as limited labour and tool availability.

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Prioritised order promising
Assign available stock to the most critical demand during a supply shortage and speed up delivery for key customers.

Optimised stock allocation
Allocate stocks based on business priorities, considering suitable alternatives.

Analytics for informed decision-making
Analyse supply, demand and product allocation to understand the impact of limited availability.

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Planning collaboration
Share demand plans and forecasts with your trading partners to receive commitments faster and reduce planning cycle time.

Trading partner collaboration
Support sufficient materials supply through planning, inventory and purchase order management, quality oversight and partner collaboration.

Inventory collaboration
Collaborate with suppliers to detect disruptions and track stock, replenishment and minimum and maximum inventory levels.

Purchase order collaboration
Digitally exchange POs, delivering notices, multi-tiered order confirmations, invoices and more with trading partners.

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Forecast collaboration

Share forecasts with suppliers and receive commitments faster for improved visibility into supply.

Manufacturing visibility

Gain visibility into external manufacturing and suppliers' stock-on-hand inventory to address potential supply disruptions.

Capacity collaboration

Request capacity with suppliers and gain commits for upside available capacity and shift information across time periods.

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See how customers are succeeding with SAP

Increased efficiency and planning accuracy

SLB increased forecast accuracy to around 90 per cent with SAP IBP, saving $1B in inventory savings and reducing days inventory outstanding by 37%.

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Advanced planning decision-making

Learn how TOA Corporation improved planning accuracy and visibility by unifying sales, operations and production—reducing manual changes.

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Enhanced trading partner collaboration

Learn how Mabe collaborates with partners using shared data and network intelligence to guide decisions.

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Browse more customer stories

See what analysts and customers are saying

The role of AI in supply chain planning

Explore this IDC report to learn how to use AI and modern planning software to mitigate current supply chain challenges.

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SAP wins 2025 TrustRadius award

Learn why TrustRadius awarded SAP Integrated Business Planning as “Buyer’s Choice” in 2025.

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SAP IBP ratings and reviews

Discover how customers and partners are rating SAP Integrated Business Planning on Gartner’s Peer Insights site.

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Evolve processes with the SAP Customer Evolution Programme

Accelerate your transformation from SAP Advanced Planning and Optimisation to SAP Integrated Business Planning with the free-of-charge and efficient customer engagement, tailored to your unique business needs.

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Resources

What you should know about planning with agentic AI

Agentic AI transforms planning by connecting insight to action, enabling faster, more co-ordinated decisions. It helps organisations evaluate options early, align quickly and act before disruptions propagate, improving consistency and reducing reactive corrections.

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Supply chain planning reimagined

Start your journey to autonomous planning through agile decision making. Learn how SAP Integrated Business Planning streamlines planning across all time horizons for faster planning cycles.

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Reinventing planning for a new era of supply chain

Discover how supply chain planning and decision-making can help organisations stay agile, grow and succeed amidst volatility.

Read the brochure

SAP Integrated Business Planning for inventory

Optimise your inventory with AI insights: Use SAP Multi-Echelon Inventory Optimisation to set ideal inventory targets, boost service levels and liberate working capital, while utilising the new AI capability to understand key drivers and justify inventory plans with data-driven rationale.

SAP Supply Chain Reimagined

Discover how our Supply Chain solutions are building on the phenomenal momentum of AI-driven supply chain transformations with innovations designed to help supply chain leaders not just endure disruption, but transform it into an opportunity for resilience and growth.

SAP Integrated Business Planning

Watch the video to see how SAP Integrated Business Planning connects demand, inventory and supply planning in one AI-powered solution.

KPI-Driven Scheduling with SAP S/4HANA Manufacturing for production planning and detailed scheduling

AI-powered production scheduling analyses thousands of possibilities in seconds to balance customer priorities with manufacturing constraints.

Experience AI-Powered Decision Intelligence in Supply Chain Planning

Watch this forward-looking video and see the future of supply chain planning, powered by SAP Integrated Business Planning and infused with the latest SAP Business AI technology, to drive unmatched decision intelligence in your risk resilient supply chain.

Frequently asked questions

: Supply chain planning is the process of managing and organising the various activities involved in sourcing, producing and delivering goods and services to customers. It involves the strategic co-ordination of resources, information and processes across the entire supply chain, from suppliers to manufacturers, distributors, retailers and end consumers. The main goal of supply chain planning is to ensure that products and services are available at the right time, place and quantity while minimising costs, optimising inventory levels and improving overall efficiency.
: Supply chain planning systems are software solutions or tools that organisations use to manage, co-ordinate and optimise various aspects of their supply chain operations. These systems help companies to plan, execute and monitor the flow of goods, information and resources from the point of origin to the point of consumption in a cost-effective and efficient manner. By implementing a supply chain planning system, companies can gain better visibility and control over their supply chain operations, identify potential risks and bottlenecks, reduce costs, improve customer service and enhance overall business performance.
: Demand planning: Forecasting customer demand to determine the necessary production levels, inventory requirements and distribution strategies.
Supply planning: Identifying and securing the resources needed to produce goods and services, including raw materials, labour, equipment and transportation.
Production planning: Scheduling and co-ordinating manufacturing processes, including capacity planning, resource allocation and production sequencing.
Inventory planning: Managing the levels of raw materials, work-in-process and finished goods to meet customer demand while minimising costs associated with excess inventory or stockouts.
Distribution planning: Optimising the transportation, warehousing and distribution of goods from manufacturers to customers, including route planning, carrier selection and delivery consolidation.
Sales and operations planning (S&OP): Aligning the goals and objectives of various functional areas, such as sales, marketing, production and finance, to create a unified and integrated plan for the entire supply chain.
: Effective supply chain planning requires a comprehensive understanding of the internal and external factors that can influence the supply chain, such as market trends, customer preferences, supplier capabilities and regulatory requirements. It also involves the use of advanced planning software, analytical techniques, AI for process automation and optimisation and collaboration among supply chain partners to optimise decision-making and adapt to changing conditions.