11 Jul 2019

Demand Sensing, DDMRP vs Demand Forecasting

What is Demand Sensing & How Does it Differ From Demand Forecasting?

Demand sensing is a supply chain management technique that involves using real-time data and advanced analytics to better understand customer demand and adjust production and inventory accordingly.

There is a lot of commotion on the interface between demand and supply in practice. Several so-called “best practices” have emerged that actually confuse practitioners      

But they also provide a fat opportunity to sell newer and additional software to unsuspecting clients. Demand Sensing is one; Demand-driven “whatever” is another and perhaps numerous variations in the middle.

Whatever can be substituted for Planning, DDMRP, Replenishment etc

And of course, there is probabilistic demand planning.

Take the simple and now established case of demand sensing. It emerged from the abuse of demand planning in the industry by using forecasts for the extremely short-term intervals – asking the forecaster to give a forecast for tomorrow or the next hour.

Once you sense the demand what do you do with it?

Will it help the demand planner or the supply planner?

What use is it for the demand planner if current month is history. How is it different for a supply planner who is using consumption logic to adjust their plan based on actual demand?

Or does the supply planner even care about a forecast for the next two weeks?

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