Chapter List

Overview

The following conversation was overheard at a client company:

• Forecaster to supply planner: "Why didn't you use the demand plan numbers as the basis for the production plan?"

• Supply planner to forecaster: "Because I don't trust the forecast."

• Forecaster to supply planner: "But the demand plan is what customers, the marketing people, and the sales organization have told us that customers are going to buy."

• Supply planner to forecaster: "I still don't trust the forecast. It's never right."

The example above illustrates some of the common frustrations that surround demand management. The forecast, or demand plan, often is the subject of much debate and distrust, especially by the supply and financial organizations. Roles and responsibilities are frequently confused. How involved the sales and marketing organizations should be in developing the forecast, or demand plan, is also the subject of debate.

Why the debate, confusion, and resulting frustration? Demand management is frequently not thought of as a process. The development of the demand forecast is seen as an event rather than as part of a larger process. When forecasting is treated as an event something that must be done once per month, for example the accuracy of the forecast inevitably suffers. When the forecast...