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A demand plan is a company’s agreed-upon forecast of future demand for its products. Demand plans are based on historical information on sales, sales campaigns, or other future initiatives that can affect demand. The purpose of the demand review is to generate a consensus forecast as input to the supply review.
The demand plan review is a meeting involving all interested stakeholders (for example, marketing and sales departments, or even customers). The purpose of the demand review phase of the S&OP process is to generate a consensus forecast as input to the supply review. This meeting typically involves reviewing:
- The baseline demand forecast.
- Changes in marketing plans.
- Changes in sales plans.
- Customer issues.
- New product introduction plans.
The demand plan review produces a consensus demand forecast. This forecast feeds supply planning to create a supply plan that includes rough-cut capacity, production and inventory plans.
During the demand plan review meeting, participants use the Consensus Forecast worksheet that contains the separate stakeholder forecasts. Each stakeholder may assign weights to each series, as well as an override to the calculated (weighted) consensus plan. Any assumptions (for example, regarding causal factors) can be recorded in the worksheet’s Notes section.
Once the forecast has been agreed-upon, the S&OP manager (or other final approver) approves the consensus forecast by product category.
