What does demand planning involve?

Demand planning is fundamentally about forecasting future customer demand to ensure that products are available when and where they are needed. This involves analyzing trends, historical data, and market conditions to predict how much of a product will be required in the future. By accurately forecasting demand, organizations can align their inventory levels, production schedules, and logistics to meet customer needs effectively, thereby improving customer satisfaction and operational efficiency.

Demand planning also helps in optimizing the supply chain by reducing excess inventory and stockouts. It enables businesses to plan for seasonal fluctuations and changes in consumer behavior, ensuring that they can respond promptly to market demands. This strategic approach minimizes waste and enhances profit margins by striking a balance between supply and demand.

While managing supplier orders, minimizing surplus inventory, and creating marketing strategies are all important aspects of supply chain management and business operations, they do not capture the essence of demand planning as directly as forecasting future customer demand does.