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Demand Planning
and Sales Forecasting:
A Supply Chain Essential
Edward J. Marien
Effective demand planning and sales forecasting across the supply chain can bring a
host of benefits. Specifically, it can help improve labor productivity, reduce head
count, cut inventories, speed up product flows, and increase revenues and profits.
This article views this critical supply chain activity from a number of instructive perspectives.
And it offers a structure for linking business plans and sales forecasts both
horizontally and vertically within the organization and collaboratively among the supply
chain partners.
Demand planning and sales forecasting (DP&SF) is a critical consideration for
manufacturers, distributors, retailers, and other supply chain members. It is a
central activity for many mid- to senior-level executives who manage their companies’
supply chain activities as well as those specialists responsible for developing and
monitoring sales to forecasts, schedules, and budgets.
Yet despite the importance of demand planning and sales forecasting, a lack of communications
within the company’s functional areas and across trading partners often leads
to separate and disjointed forecasts. To compensate for these uncoordinated forecasts and
the related negative impacts on customer service, companies often resort to building
excess inventories and fixed assets. And they turn to expensive premium freight.
What are the specific challenges faced by practitioners seeking to implement an effective
DP&SF process? The answers are embodied in these kinds of questions:
 How can customers be integrated with other supply chain members to realize supply
chain efficiencies?
 What role does the sharing of business plans and schedules play in demand planning
and sales forecasting?
 What information technologies enable the realization of DP&SF goals?
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