Demand Planning is the process within a business that has the responsibility to plan and influence the Demand in Volume and Value of the Products / Services of the business in a time horizon. Oliver Wight 2020
Demand planning is more than a forecast; it is a vital component to validate medium and long-term plans. The main objective of a Demand Planning process is to detect the Gap vs. the business’s revenue objectives to generate corrective action plans.
The demand plan was born as a necessity to plan the supply in an S&OP process, but today it is clear that it must go further because it is the basis for validating the business plan, the financial plan, and the supply plan.
It is vital to understand that the supply plan is the responsibility of the Marketing – Commercial areas. Medium-Short term Commercial, Medium-Long term Marketing. It is a mistake that the Demand Plan is the responsibility of the supply area.
Demand is commonly defined as “the products or services that customers want and when they want them, at a price they are willing to pay”; We generally do not consider our ability to satisfy it, so demand is known as “unrestricted.”
The amount of actual demand that can be satisfied is the restricted demand; therefore, restricted demand ≤ demand. According to Philip Kotler, demand management involves influencing the level, timing, and composition of demand.
In the following 22-minute video, you will find more information about demand planning!
