Demand management in supply chain management involves forecasting customer demand. Accurate demand forecasting is necessary to reduce costs and customer dissatisfaction by integrating supply chain activities like production planning. Forecasts are estimates of future demand and are often less accurate for long term and aggregate forecasts. The benefits of accurate forecasting include optimizing operations to reduce costs and increase sales while inaccurate forecasts can lead to unnecessary inventory, production, and costs. Effective demand forecasting solutions address needs like preventing changes to production schedules and accurately projecting inventory levels to manage costs and meet customer demand.

1. Demand Management in SCM
Prof. Prakash Tambe

2. What is demand?
•Demand means “desire backed by willingness &
ability to pay”.
•Demand also signifies a price & a period of time
in which demand is to be fulfilled. It is obvious
that which it is offered.
•Demand planning involves forecasting & also
other activities such as promotion planning. This
is best done through a simultaneous planning
process between marketing, manufacturing &
purchase.
• Customer’s demand varies with price.

4. Forecasting:
•Manufacturers, retailers & distributors moves
towards integrating their supply chains. Hence
they realize that an accurate representation of
future demand is necessary to reduce cost &
customer dissatisfaction.
•Many successful organization implement
demand & sales forecasting. This help them for
knowing future raw material requirement &
production plan also.

5. Characteristics of Forecasts:
1.Forecasts are not accurate
2.Long term forecasts are usually less accurate
than short term forecasts
3.Aggregate forecasts are usually less accurate
than dis-aggregate forecasts.

6. Benefits of accurate forecasting:
Optimize the business for reducing the cost
of operations.
Increase sales opportunities for maximizing
profits.
Provides accurate information for making
better decisions.

7. Effect of inaccurate or nonexistent forecasts:
Unnecessary inventory
Unnecessary high production planning is
done
Increased cost of all operations & labours.
Maintenance cost of finished goods becomes
a bourdon.

8. The right forecasting solution should address,
at a minimum, several key needs like:
•Prevention of unforeseen changes to production
schedules that can result in higher production
costs. These includes personnel changes,
equipment changes & movement of raw
materials from plant to plant.
•Accurate projections for correct quality of raw
materials & finished goods on hand in order to
better manage inventory levels, save shipping
costs, prevent transshipping of products
between locations &meet customer demand.

9. • Management of Just-in –time inbounds material to
prevent the cost of expediting raw material not
ordered on time & the cost of storing raw materials
not immediately required.
• Complete production cycle planning for scheduling
& allocation of machinery, logistics, shipping &
warehousing to meet dynamic market
requirements.
• Integration with in collaborative operational
planning. Accurate forecast support the decision
making process by providing base line metrics to
support tracks & measure the performance of an
initiative.

10. Methods of forecasting:
Qualitative
Time series (For specific time)
Casual
Simulation (With past records)
Quantitative

11. Thank you