Mentally Separating Demand and Supply

In order for the replenishment planning process to be as flexible as possible going into the future, it is imperative that a clear distinction be made between and supply planning.

The goal of the demand planning process is to predict behaviour of customers. Customer demand cannot be directly controlled and must be taken as given in the supply chain. We do our best to predict this behaviour and schedule resources (i.e. supply) as efficiently as possible to support the wants of customers. When we have our demand planning hats on, the furthest thing from our minds should be considering how this demand will be satisfied. Demand is demand, and it is not subject to constraints. This is what keeps the demand planning process as pure as possible.

Once you have a handle on your demand, proper supply decisions can be made to ensure that demand is satisfied. That’s the mental separation — demand is not within our scope of control and must be taken as given, while supply decisions can be made and remade in order to best satisfy changing demand patterns.

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