Define Demand and Demand Planning

Demand

A need for a particular product or component. The demand could come from any number of sources (for example: a customer order or forecast, an interplant requirement, a branch warehouse request for a service part or the manufacturing of another product).

Demand Planning

Using forecasts and experience to estimate demand for various items at various points in supply chain. Several forecasting techniques may be used during the planning process. Often, families of items are aggregated in doing this planning. Aggregation also may occur by geographical region or by life cycle stage. Forecast demand is compared to actual demand in order to measure and increase forecast accuracy.

Everything in supply network depends upon the number of customers that go to the wholesaler, retailer, or web site offering your product: manufacturing, capacity, warehousing, transportation, location and type of retail outlets, amounts of raw materials to extract – everything.

If production outstrips demand, you suffer financial losses and perhaps go bankrupt. If orders exceed supply, your frustrated customers may go instead to your competitor.

About Paresh Sharma

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