Five-step demand planning framework

As explained in Demand Forecasting Best Practices

The five-step demand planning framework is a book-specific structured approach for improving demand planning and forecasting through five activities.

The five-step demand planning framework organizes forecasting around a practical question: which supply-chain decisions should the forecast support? Excellence combines efficacy—helping decisions—and efficiency—minimizing forecasting effort. section 1.2 section 1.2.1

Use the framework to shape a forecasting process around five activities:

• Set the objective: identify the decisions, users, material aggregation, temporal aggregation, and forecasting horizon. section 1.2.1
• Leverage appropriate data for the decisions and forecast being developed. section 1.2
• Monitor performance with relevant metrics rather than treating one measure as universally sufficient. section 1.2 section 15.4
• Generate a forecast baseline with appropriate models, recognizing that different teams may need different models and processes. section 1.2
• Enrich the baseline through an efficient review process. section 1.2

Start with the decision

A forecast may support decisions about how much to produce, where to deploy inventory, or whether to open or close plants. Those decisions determine its users, aggregation levels, horizon, models, and process. section 1.2.1

Figure 1.2 5-step framework for demand planning excellence

Use the framework figure as a compact map of the five activities and their role in demand planning excellence. section 1.2

How Demand Forecasting Best Practices covers it

How deep it goes

Defines five activities and elaborates objective-setting, but defers detailed aggregation, horizon, model, and process guidance.

Examples

Uses production, inventory deployment, and plant decisions to show how objectives determine forecast design.

What it assumes

Assumes awareness of supply-chain decisions while teaching how to identify forecast users, objectives, aggregation, and horizon from those decisions.

What you can do after

Build a tailor-made demand-planning process and organize forecasting projects around decision value and operational efficiency.

How it connects

Connects demand planning with supply-chain decisions, forecasting horizons, aggregation levels, metrics, forecasting models, and review processes.

liveBookmanning.com

Read Demand Forecasting Best Practices on liveBook Get the book at manning.com

Related concepts

• feature selectionhas part · Feature selection is the process of choosing a subset of input features for use in a modeling, analysis, or prediction task.
• optimizationhas part · Optimization is the systematic selection or adjustment of values, actions, or system designs to improve a specified objective, often subject to constraints.
• demand planning processconfigures · A demand planning process is an organized set of activities for generating, reviewing, and applying forecasts of future demand.
• traininghas part · Training is a process of developing or improving a person’s or model’s capabilities through instruction, experience, or adjustment using data.
• baselinehas part · A baseline is a reference value, model, condition, or performance level used to evaluate or compare measurements, outcomes, or methods.

This explainer was generated by Manning's knowledge graph from the text of Demand Forecasting Best Practices. The section links point to the parts of the book it draws on.