Demand Forecasting and Production Planning

Operations can usually be classified into two broad categories: Demand Creation and Demand Fulfilment. The interface of an organisation’s Demand Creation side (marketing and sales) and Demand Fulfilment side (production or processing, in- and outbound logistics, warehousing, procurement and post sales activities) is critical. The difference between the objectives of each side of the business is natural. Demand Creation and Demand Fulfilment sides must be aligned and conflicts can be limited by:

  • proper design and alignment of the forecasting and planning processes,
  • creating rules and executing good communication between the commercial (Demand Creation) and production (Demand Fulfilment) sides of the organisation,
  • reaching a point of mutual understanding, especially acknowledging production capacities and other operational limitations by the commercial side,
  • creating a formal and structured system of meetings (planning group meetings),
  • creating simple IT tools supporting effective and coherent communication to replace often chaotic exchange of e-mails and Excel spreadsheets.

The results of implementing an ArtPLANN project include: increase in effective production capacity as a consequence of reducing the number of changeovers, effective communication, reducing the level of lost sales (out-of-stocks and back-orders) and lower inventory levels.