Demand for accessories.JPG

26 Feb 2021

How Do You Calculate True Demand?

When calculating true demand, we need to classify the orders into the correct month of demand - it depends on when your customers wanted the product.

CRDD = Customer Requested Delivery Date is the most commonly used metric. But for the seller, this should be the actual ship date.

But for the seller, this should be the actual ship date to make that delivery date. 

Better yet, the date should be when the product is available in inventory to ship. So you need to back-calculate the dates based on the CRDD and this may be a date much earlier than the delivery date.

How do you calculate True demand?

This may really be the culprit if you are demand-planning challenged!

True demand is typically calculated with a proxy using either historical shipments or forecasts.  When there are no supply constraints or product shortages, both shipments and orders will result in similar calculations.  

You can read our white paper on the method to calculate True Demand here.  

https://valuechainplanning.com/domain/Demand-Planning-

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