Definition

demand planning

Demand planning is a multi-step operational supply chain management (SCM) process used to create reliable forecasts.  Effective demand planning can guide users to improve the accuracy of revenue forecasts, align inventory levels with peaks and troughs in demand, and enhance profitability for a given channel or product.

The approach begins with a statistical forecast.  Data sources for the forecast include planned sales orders, customer contracts and intercompany standing orders. The final forecast is shared with key stakeholders, such as suppliers. 

Key steps in demand planning  include:

•         Importing historical sales data

•         Creating statistical forecasts

•         Importing customer forecasts

•         Collaborating with customers

•         Managing forecasts

•         Building consensus forecasts

•         Supply and demand collaboration

•         Securing constrained forecasts

•         Confirmation with customers

•         Reexamining data and adjusting planning accordingly.

This was last updated in November 2010

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