There are a number of terms that are used when discussing demand forecasting, demand planning and demand management — all of which appear to be used interchangeably. Just what are we talking about here? I thought it would make sense to share the terms I use on this blog and at Demand Foresight, and articulate the difference between each.
In my last post, I talked about demand planning. Next up is demand forecasting. Based on the demand plans, how do we quantify demand? And at what level? The key is defining the execution level required for the forecast. What is the correct level of detail in order to create efficiencies throughout the supply chain? Is it at the SKU level? At customer by SKU? Once greater accuracy is obtained at the execution level, the same forecast can be aggregated to higher levels for use by multiple groups, including the CFO. Demand forecasting can sit anywhere in the organization depending on cultural and organizational design fit.