Saturday, July 19, 2014

Demand planning process

Demand planning processes have developed rapidly over the last ten years. It is performed so that the business understands profit potential. Indirectly it sets the stage for capacity, financing and stakeholder. The demand planning process consists of multiple phases.

*The process starts in a central planning department with preparation phases. It is including collection of data like forecast data from former planning runs, historic customer order, shipments etc. and correction of historic data.

*In the second phase the statistical forecast is computed based on the updated historic data.

*In the third phase of the demand planning process judgmental forecast are created by multiple departments. Planners review the planning situation and give their inputs.

*The forecast resulting from the structured judgment process is often discussed in a consensus forecasting meeting. The meeting will consolidate the different view of the planners and dealing with exceptions.

*Based on the consensus forecast dependent of demand may be planned, i.e. the demand for components of the finished goods.

*The last step of the demand planning process is the formal approval and technical release of the forecast, to further planning and execution processes.

Demand may change from month to month depending on market intelligence, customer confidence, exchange rates, promotions, product availability and may other internal and external factors.
Demand planning process

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