Ross watches the managers as they file into the room. They are beginning to look tired. Several people stretch to twist the kinks out of their backs before taking their seats. Ross decides to launch right into the subject of demand management and makes a mental note that he and Nolan will need to keep nonessential discussion to a minimum.

Without a preamble, Ross says, "Earlier today, Nolan presented the demand review step in the sales and operations planning monthly cycle." Ross reviews the highlights of Nolan's presentation to ensure that the group has the proper grounding for the presentation on demand management. He reminds the group that sales and operations planning is a demand-driven process and that a primary step in the monthly process is to update the demand forecast or request for product. The output of the process is an agreed-upon demand plan, which represents what the company will be prepared to ship to satisfy customers' demands. This shipment plan is also the revenue plan from shipments.

Therefore, the demand plan, the shipment plan, and the sales or revenue plan are all one and the same. If services are a product, the service requirements and projected revenues should be included in the plan and should be made visible as a separate family or at least as a separate demand stream.

"The purpose of our discussion of demand management this afternoon," Ross says, "is mostly to emphasize the importance of demand planning and demand management. If you understand the...