What supply chain management covers
Supply chain is the planning layer that sits over purchase, production and logistics. Demand planners forecast sales by product and region using past sales, the sales team's inputs and seasonal patterns such as Diwali or the monsoon. Supply planners convert that forecast into a material plan and a production or import plan. Inventory controllers set safety stock and reorder levels for each SKU and chase slow-moving and near-expiry stock. Distribution planners decide how much stock each warehouse or depot should hold. The whole plan is reviewed monthly in a sales and operations planning meeting where sales, production, finance and supply chain agree one set of numbers.
- Demand planning: forecasts by SKU, region and channel
- Supply planning: material requirement plan, production and import plans
- Inventory control: safety stock, reorder levels, ageing and write-off proposals
- Distribution planning: depot and warehouse stock norms and replenishment
- S&OP: the monthly meeting that locks one plan for all departments
Supply chain at 50, 500 and 5,000 employees
A 50-person trading or manufacturing company rarely has a supply chain title. The owner or plant manager decides what to buy and make, a store keeper tracks stock in Tally, and a purchase executive places orders when shelves look empty. By 500 employees there is usually a supply chain manager who owns planning, with a demand planner, a production planner and an inventory controller, while purchase and logistics either report to the same manager or run as separate teams.
In a 5,000-person FMCG, pharma or auto components company, supply chain is a full function under a VP or head of supply chain. Under that head sit a planning head with demand and supply planning teams, a head of procurement, a logistics and warehousing head, and often customer service or order management. Depot supply chain executives in each region report into this function rather than to local sales managers.
How supply chain works with sales, production and finance
Sales gives the forecast and later complains about stock-outs, so the most useful habit is a written forecast from each region, signed off by the regional manager before the S&OP meeting. Production needs a frozen plan for the next week or two so machine changeovers stay under control. Procurement needs lead times and minimum order quantities built into the plan. Finance watches inventory days and working capital, and will question any plan that parks crores of rupees in stock. Logistics needs dispatch plans early enough to book trucks and containers at normal rates.
Plan approvals and reporting lines
Planners report to the planning manager, inventory controllers to the supply chain manager, and the head of supply chain reports to the COO, the managing director or, in some companies, the CFO. The monthly plan is approved in the S&OP meeting chaired by the COO or MD. Stock write-offs, disposal of near-expiry goods and changes to safety stock norms usually need the supply chain head together with finance, because they hit profit. Urgent air freight or expedited orders above a set value, for example ₹2 lakh, go to the supply chain head for approval.
Typical supply chain team structure
Supply Chain designation hierarchy
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What does a supply chain department do?
A supply chain department plans and coordinates the flow of material and finished goods from suppliers to customers. It forecasts demand, plans purchases and production, sets inventory levels, decides stock at each warehouse, and runs the monthly S&OP meeting where sales, production and finance agree one plan. Purchase and logistics often sit inside it in larger companies.
What is the difference between supply chain and logistics?
Supply chain covers the whole flow: forecasting, planning, buying, making, storing and delivering, and the trade-offs between them. Logistics is one part of it: the physical movement and storage of goods through transport, warehousing and distribution. A logistics manager executes dispatches, while a supply chain manager decides how much stock should move where and when.
What is the hierarchy in a supply chain team?
Supply chain careers usually start as an executive or analyst, move to planner or inventory controller, then planning manager or supply chain manager, and reach head or VP of supply chain, a role answering to the COO or the MD. In large companies separate heads for procurement, logistics and planning report to the supply chain head.
Who does a demand planner report to?
A demand planner usually reports to the planning manager or the supply chain manager. In some FMCG companies demand planning sits under sales or commercial excellence because the forecast depends on sales inputs, with a dotted line to supply chain. Either way, the demand planner presents the forecast at the monthly S&OP meeting.