4 Collaboration: data sharing and planning alignment
As discussed in the previous chapter, collecting demand data is key to proper demand forecasting but especially challenging. In this chapter, we will discuss how you can collaborate with your clients to improve your data quality and directly look into the demand they are facing from their customers.
4.1 How supply chains distort demand information
Let’s imagine a simplistic supply chain with a manufacturer, a retailer, and end consumers, as illustrated in figure 4.1. This is called a two-echelons supply chain because we have two stages (the manufacturer and the retailer).
Figure 4.1 Simple supply chain with two echelons.
In this example, the retailer faces unconstrained demand coming from end consumers. That’s the flow of information that the global supply chain should forecast. Anything else is planning.
Unfortunately, in case of shortage, the retail store can only record the constrained sales—resulting in a loss of information. (As discussed in chapter 3, there are a few possibilities on how to unconstraint this data: order collection and management, shortage-censoring, and aggregated forecasting.)