Demand planning estimates what customers may request. Supply planning determines what the network can fulfill, when, and under which constraints.
Measure forecast errorDemand planning
Produces an unconstrained, evidence-based view of demand using history, commercial intelligence, events, and statistical or judgmental methods.
Supply planning
Consumes demand and tests it against inventory, materials, capacity, lead time, network, cash, and policy constraints.
The handoff
Demand should carry assumptions, uncertainty, bias, and event context. Supply should return feasible quantities, dates, constraints, and alternatives.
Metrics
Demand uses error, bias, value add, and adoption. Supply uses service, shortages, schedule adherence, utilization, inventory, and plan stability.
Common failure
A point forecast crosses the handoff without ranges or assumptions, then supply treats it as certainty and builds hidden buffers.
S&OP escalation
Escalate material gaps, scenarios, financial exposure, options, and decision dates, not raw exception lists.
Test your own assumptions.
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Measure forecast error