Demand planning and forecasting are two similar concepts that are linked but are also unique in their own respects. It’s important to understand the differences between the two so you can use them both in your business to make healthier decisions regarding your business using these powerful tools. However, there’s no right or wrong way to use them. Some businesses rely more on one than the other, but most businesses will make use of both at some point.
What’s the Difference?
Demand forecasting is essentially taking historical data you have at hand and using it to make predictions about future outcomes. It’s academic in a sense and wholly theoretical in many ways, which can make it tricky to work with, but learning to use demand forecasting is also incredibly rewarding. Demand planning is more practical than demand forecasting and relies more on having solutions already available for customers when they want them. Rather than remaining purely in the realm of the theoretical, demand planning is about having actionable solutions already waiting in the wings.
Where’s Your Focus?
Demand planning and forecasting are both important for varying reasons so it’s a good idea to take some time out to put some focus on both while developing plans for your business. Think about things, such as how your customers shop, if you want to determine which is more important. Do your customers rely on your judgment, and therefore do you want to push some of your own ideas using forecasted trends, or do you want to preemptively plan for your customers’ needs before they head into the store?