Supercharged Supply Chains

CHAPTER 10Demand Planning: The Art of Demand Planning and Execution

One of the most challenging elements of our Business Excellence Planning model, Figure 10.1, is creating the Demand Plan because those who create it must investigate the future and predict what people will buy at that time. Imagine that we could accurately predict the future to make exact projections of the largest variable facing an organization – the products or services your customers will order 3, 6, 12, 18, and even 24 months from now. If we could make accurate predictions like that, we would head directly to Las Vegas on the next plane and not ever have to worry about working again. But, it seems, that does not work so well. All those casinos are making a ton of money because people who believe they can accurately predict the future outcomes fall well short of doing so.

FIGURE 10.1 Business Excellence Planning

The aggregate Demand Plan is a direct input to Integrated Business Planning (IBP); the detailed Demand Plan is a direct input to the Master Schedule, which, in turn, feeds the Material Requirements Plan (MRP) for dependent demand and, separately, provides input for planning independent (spare parts) demand. It is challenging because we know that the plan will never be 100% accurate across the future planning horizon of 24 months for aggregate planning and 3 months for detailed planning. IBP, ...