Demand Forecasting vs. Demand Planning

Unprecedented supply chain interruptions have caused havoc over the past two years. Demand planning and logistics chain experts have had to rethink their models and take new factors into account due to COVID-19, port backlogs, or trade disputes. Planning and predicting demand, already demanding processes, has become more challenging as a result of this. Many people interchange the phrases "demand forecasting" and "demand planning." However, knowing the differences and using them to develop solid management of supply chains and S&OP strategies are necessary to successfully meet today's problems. Demand Forecasting A prediction is what demand forecasting is. Demand forecasting can now be based on historical and current data that represent consumer behavior and market trends. Demand planners can create a forecast that accurately predicts demand by combining data from sales, marketing, and consumer feedback. In order to generate a trustworthy consensus forecast that end users can rely on, demand forecasting can also use other real-time resources like weather, load factor, and other variables. These projections can be made for the next week, monthly, quarter, or even entire year, and each range has a known margin of error. 1. It is carried out using both historical and current data. 2. It involves determining what is most likely to occur. Demand Planning Demand Planning is a process for estimating what is probable, whereas planning is the implementation process for making it happen. Demand planning uses the forecast to ensure that there is capacity, raw material purchases are placed, levels of inventory are optimized for the anticipated production rates, and deliveries of materials & finished goods may be made in the appropriate order. 1. It is carried out depending on the results of the prediction 2. It entails organizing the steps necessary to carry out the forecasting's prediction.