“Perfection is the enemy of progress.” – attributed to Winston Churchill

Disciplined Sales and Operations Planning (S&OP) has long been recognized as a transformative process for aligning demand, supply, and finance with long-term strategic goals, providing a single, integrated view. For many organizations, the promise of S&OP is very compelling in its potential to achieve improved service levels, lower costs, better overall alignment, and faster, data-based decisions.

So, then, why do so many companies stall or fail in their S&OP implementation efforts?

First, the bad news: one common culprit is perfectionism. A fully mature S&OP process that functions flawlessly on day one simply does not exist, and an organization’s pursuit of perfection before implementation often becomes the very reason nothing meaningful gets launched at all.

The Trap of the “Perfect” S&OP

All too often, organizations defer S&OP implementations until:

• All data is available, clean, and integrated across all systems
• Forecast accuracy is “high enough”
• All stakeholders are on board and trained
• The “perfect” KPIs are defined
• Executive leadership is 100 percent aligned

These are all worthwhile goals — but they should not be prerequisites. After all, a well-designed S&OP program, geared toward continuous improvement, can help address, or even resolve, these very concerns. If company leadership’s demand for a perfect process becomes the bar for starting S&OP at all, there’s a high probability that it won’t ever actually happen.

Overused analogy aside, S&OP is a journey, not a single release event.

Start Small Rather than Waiting for Perfect

When companies choose progress over perfection, they quickly gain:

• Momentum: Small wins build credibility and energy
• Learning: Real-world feedback reveals what’s important
• Buy-in: Success breeds adoption, even from skeptics
• Clarity: You see which data, metrics, or tools are truly essential
• Flexibility: Each cycle identifies course corrections for the next

Why Good Outperforms Perfect: A Simple Case Study

One organization delayed its S&OP for six months, waiting for IT to complete a custom dashboard. Another kicked off with a simple spreadsheet showing demand vs. supply for their top ten items. Within two weeks, the second group was having better discussions — and catching issues early. Six months later, their process was more advanced than the one still waiting for perfection.

Keys to Making Progress Now

Launch, or relaunch, your S&OP process without falling into the perfection trap:

1. Start with what you know: Use existing data and systems.
2. Focus on issues and decisions, not documentation: The goal is alignment, not reports.
3. Engage the right people: Cross-functional doesn’t mean everyone — just the key voices.
4. Set a cadence and stick to it: Monthly reviews with a clear agenda are enough to begin with.
5. Be transparent about gaps: Call out data issues, assumptions, and tradeoffs — it builds trust.
6. Make iteration part of the plan: Document learnings and evolve over time.

Progress Is the Path toward Perfection

“Perfect is the enemy of good.” – French Philosopher Voltaire

There’s nothing wrong with aspiring to have a best-in-class S&OP process. But this doesn’t come overnight — it’s achieved through consistent progress.

• You can’t optimize what doesn’t exist.
• You can’t refine what hasn’t been tested.
• You can’t learn until you’ve started.

So start now. Start simple. And improve relentlessly.

Because when it comes to S&OP, good can be more rewarding than perfect, especially when it leads to more rapid alignment and better decision-making.

In today’s volatile and uncertain market, companies can no longer afford to operate without a structured, data-driven approach to forecasting demand. Demand planning is more than just predicting sales—it’s about building an integrated, agile business that can respond to customer needs while managing resources efficiently. Despite its importance, many organizations still rely on outdated tools, such as spreadsheets, which can lead to bias and siloed decision-making, ultimately compromising their forecast accuracy.

The potential improvements in predictive analytics and the integrated demand planning process can significantly streamline decision-making processes, create new insights, and save several business functions a huge amount of time and money.

Understand that a business will most likely invest in a new process to solve pain points, drive quantified savings, or deliver other clearly defined improvements. To successfully build a business case, you need to both help the organization understand the need and see the benefits.

Why Focus on Demand Planning?

Most companies that decide to invest or improve their process are primarily driven by one or more of the following:

• Obvious forecast accuracy challenges
• A highly variable process that requires a dedicated process to support it
• Detail-level forecasts are needed to support a more efficient manufacturing or distribution system
• Downstream inventory problems that are clearly driven by unseen variability
• An attempt to drive more cooperation between Sales and Operations through a consensus-based planning.

At its core, demand planning acts as the foundation for synchronized operations. It allows marketing, sales, supply chain, finance, and production to operate from a common set of assumptions. Without an accurate demand plan, supply planning becomes reactive; finance struggles with forecasting revenue, and customer service deteriorates due to stockouts or excess inventory.

Consumer behaviors have become increasingly unpredictable. Economic shifts, global disruptions, and rapid product cycles mean that relying solely on historical sales is no longer sufficient. Demand planning introduces a proactive lens that incorporates both internal drivers (such as promotions and price changes) and external signals (including market trends and customer insights) to create adaptive forecasts.

Inaccurate demand forecasts result in costly outcomes, including expedited shipping, excess working capital, lost sales, and markdowns. Improved demand planning helps reduce forecast error, allowing for better inventory placement, production planning, and supplier coordination. Even a 5- to 10-percent improvement in forecast accuracy can have a significant bottom-line impact.

Potential Improvements in Demand Planning

Organizations that invest in improving demand planning benefit from:

• Reduced Inventory Costs – Through better alignment of supply and demand.
• Improved Service Levels – By placing the right product in the right place at the right time.
• Higher Forecast Accuracy – Leading to more reliable plans across finance and supply.
• Faster Decision-Making – Enabled by real-time data and scenario analysis.
• Greater Agility – Ability to adjust to shifts in demand or supply quickly.

A mountain of research today shows that a mature demand planning process helps in improving forecast accuracy and delivers a high ROI. Improved forecast accuracy, when combined with software that translates the forecast into actionable insights, will decrease inventory and operating costs, increase service and sales, enhance cash flow and gross margin return on inventory investment (GMROI), and boost pre-tax profitability. The forecasting error, no matter how small, has a significant impact on the bottom line. In our experience, a 15 percent improvement in forecast accuracy will deliver a pre-tax improvement of 3 percent or higher.

In a previous IBF study of 15 U.S. companies, we found that even a one percentage point improvement in under-forecasting at a $1 billion company results in a savings of as much as $1.52 million, and for the same amount of improvement in over-forecasting, $1.28 million.[i]

The reduction in downstream finished goods inventory resulting from a well-established process and forecast accuracy improvements provides a one-time saving, as well as recurring savings arising from reduced carrying costs. There are significant benefits in a make-to-stock or distribution company. The downstream inventory reduction could range from 10 percent to 20 percent, as forecasting inaccuracies typically account for around 75 percent of the required safety stock.

Building and Investing in Demand Planning

• Build an Unbiased, Unconstrained, Consensus-Based Forecast: Organizations often confuse the demand plan with the sales target. Sales may overestimate to push for stretch goals, while operations may buffer to protect service. Demand planning needs to separate judgment from aspiration. Instituting a formal demand consensus process ensures that all voices are heard, while forecasts remain grounded in data and are evaluated against actual performance.
• Upgrade from Static Spreadsheets to Dynamic Models: Many companies still use Excel as their primary planning tool. While familiar, spreadsheets lack scalability, version control, and real-time integration. Upgrading to a dedicated demand planning system (or enhancing existing tools with forecasting models) introduces automation, improves collaboration, and enables real-time adjustments. It also supports more advanced techniques such as decomposition models or AI-based forecasts.
• Understand and Match Models to Patterns: Not all items follow the same demand pattern. Some are seasonal, some have trends, and others are highly volatile. Applying a one-size-fits-all model can lead to overfitting or underperformance. Instead, classify SKUs by their demand characteristics and apply the appropriate model, whether that’s exponential smoothing, moving average, or more complex causal models.
• Focus on Data Quality and Forecastability: Forecasting is only as good as the data behind it. Cleanse data for outliers, missing periods, and promotions. Measure forecastability using the Coefficient of Variation (CV) or Demand Intermittency. The demand planner becomes the integrator, ensuring that inputs from various departments are translated into a structured forecast. Establish accountability through KPIs such as bias, MAPE, and forecast value added (FVA).
• Invest in training and upskilling through IBF: Empower your teams with proven forecasting and planning knowledge by leveraging IBF’s certifications, workshops, and learning resources, building internal capability that drives consistent, confident decision-making.

Many companies are leaving money on the table with lost sales or poor service levels. An integrated demand planning process can result in increased revenue of 0.5 percent to 3 percent, along with improved inventory availability and demand shaping capabilities. Total annual direct material purchases, along with logistics-related expenses arising from demand variability and lost opportunities, can see direct improvements of 3 percent to 5 percent. We can also benefit from a 20 percent reduction in airfreight costs. Figure Y illustrates the anticipated benefits from a 15 percent improvement in forecast accuracy (these averages are based on individual results, which can vary depending on other variables and may be higher or lower for specific organizations).

Fig. Y | Graphic showing typical benefits from a 15 percent improvement in forecast accuracy

It is essential to understand these average savings amounts and determine what savings you believe you can achieve with a mature predictive analytics and demand planning process. Sometimes you need to know what finance and executive leadership anticipate in terms of benefits; you need to be on the same page in terms of expectations. It is here that the Institute of Business Forecasting Advisory Services (IBF.org) can shed some light on what is realistic based on past implementations.

Demand planning is not just a supply chain function; it’s a strategic business process that empowers smarter, faster decisions. In an environment where disruption is the norm and expectations are high, companies that implement disciplined, data-driven demand planning will not only survive, they will lead.

The path forward is clear: Separate judgment from strategy, invest in tools and talent, and build a collaborative process that evolves with your business.

In a world of uncertainty, demand planning offers clarity. It’s not just about predicting the future, it’s about preparing for it. Companies that invest in robust, unbiased, and collaborative demand planning are the ones that outperform, outmaneuver, and outlast their competition.

But you don’t have to do it alone.

The Institute of Business Forecasting (IBF) has been the trusted authority in forecasting, demand planning, and Sales and Operations Planning (S&OP) for over four decades. Whether you’re just starting your planning journey or looking to refine and elevate your process, IBF offers the training, certification, tools, and global community to help you succeed.

Join IBF and take the next step:

• Get certified with globally recognized credentials
• Attend industry-leading conferences and events
• Access exclusive research, case studies, and best practices
• Learn from and connect with top planning professionals around the world

[i] Chaman L. Jain (2018). The Impact of People and Processes on Forecast Error in S&OP. IBF research report #18. August 31, 2018

Certification programs like those offered by IBF are becoming more and more attractive to supply and demand planning professionals. At a time when artificial intelligence makes it possible for employees to fake it until they make it until they get called out for it, certification proves that you’re the real thing.

IBF’s certification programs offer targeted training and education that help bridge knowledge gaps, develop new competencies, and align professionals with the latest supply and demand planning industry standards.

The Difference Between a Degree and Certification

Let’s start by explaining the difference between degree and certification programs.

Advanced education, which results in a degree or diploma, requires years of study. As a degree student, you attend general education classes in major- and minor-specific subjects.

By contrast, obtaining a certificate results from finishing the required coursework in a defined part of supply and demand planning. The studying you do to get a certificate is typically not general; instead, it is explicitly tailored to the specific area of study. Mastery is demonstrated by passing a test.

Earning an IBF certificate requires far less time than earning a degree. Despite this, you come away with in-depth knowledge.

Often, after completing degree programs, graduates pursue certifications when they want to advance in their careers or develop new interests. (Think moving from a warehouse supervisor position into demand planning.) This prevents people from having to start from scratch with a new degree when they want to make a change and allows them to improve their skill set and build on their education.

10 Reasons to Pursue IBF Certification

Here are the top reasons people earn certification from the Institute of Business Forecasting.

1. Improve skills

IBF’s certificate programs provide targeted education about various aspects of supply and demand planning. They offer a focused curriculum that allows you to deepen your knowledge and develop specialized skills relevant to the field. Our experts can help you gain expertise in a high-demand area. It signals employers, managers, and peers that you know your stuff.

2. Advance your career

Earning an IBF certification can improve growth and career advancement opportunities within your organization. It helps demonstrate a commitment to ongoing learning and professional development that will position you above your peers. Supply and demand planning certification shows that you are dedicated to advancing in your career in the field, which makes you a valuable asset. With certifications, you will likely qualify for promotions, salary increases, or access to more challenging roles within your company.

Be aware: Certification can significantly increase salary. Many studies show it can add up to thousands of dollars a year.

3. Stay up-to-date with industry trends

New supply-and-demand-planning technologies, methodologies, and best practices emerge constantly, and the pace of change has only increased with the advent of artificial intelligence. Like many other business areas, supply and demand planning increasingly relies on advanced technologies to improve efficiency, the customer experience, and business performance. IBF’s certification programs help supply and demand professionals stay on top of the latest technological advancements and methodologies, ensuring they are not left behind in the rapidly evolving landscape.

4. Networking opportunities

Enrolling in an IBF certification program while taking part in other learning opportunities we offer is an excellent way to expand your professional network. Imagine being able to ask industry experts and peers questions and get trade secrets that give you an edge. You can also share war stories from work during these changing and challenging times.

You will have the chance to connect with instructors, industry experts, and fellow participants who share your passion for supply and demand planning. Networking often results in valuable new industry connections, mentorship opportunities, and even job offers.

5. Improve problem-solving skills

IBF’s certification programs include case studies, simulations, and real-world scenarios that help participants learn new thinking methods. They require professionals to apply their knowledge and skills to solve problems. Through the exercises, you develop critical thinking and problem-solving abilities, which allow you to address challenges more quickly and effectively at work. It will help you to stand head and shoulders above your peers with lesser problem-solving abilities.

6. Global recognition and mobility

IBF’s certifications are recognized across the world. This makes it possible for you to pursue job opportunities beyond your local area. It is a way to prove your supply and demand planning expertise in the United States, Europe, or anywhere else. IBF professionals are known for meeting a high level of competence and enhancing trust and consistency across different regions and industries.

7. Meeting business goals and objectives

Companies have specific goals and objectives requiring a skilled and knowledgeable workforce. IBF stays closely connected to supply and demand planning experts at leading companies. This helps ensure our certification programs align with the current strategic needs of leading firms. Being certified makes it clear to companies that you are capable of helping them reach their business goals.

8. Continuous learning and personal growth

Certification does not just benefit career progress and business performance. The ongoing learning associated with certification results in personal growth and satisfaction. A focus on improvement encourages people to reflect on their values, beliefs, strengths, and weaknesses. Through self-awareness, they gain a deeper understanding of themselves, their motivations, and their goals, enabling them to make better-informed decisions and lead more fulfilling lives.

Taken together, this builds confidence, which is a reward in itself.

9. Job security and resilience

Relevant IBF certifications will improve your job security and ability to recover from setbacks. Certified professionals are in high demand, especially in industries experiencing rapid technological advancements or the impacts of tariffs.

IB’s certification programs typically cover a broad range of topics, allowing you to improve your skills in a wide array of areas. By investing in your education and acquiring certification through IBF, you can future-proof your career and increase your employability over the long term.

10. Credibility. Credibility. Credibility.

Of course, other training and certification programs are available, especially online. However, IBF’s is different. Our certification program has been around for decades and is the most respected in the industry. If you invest in personal or business-level certification, it will pay off many times over. Plus, you and your business enter an exclusive club that only a small fraction of the industry is a part of.

The Final Word on IBF Certifications

In conclusion, IBF’s individual and group certificate programs provide targeted, specialized supply and demand training that improves skills, increases knowledge, and supports career advancement across industries. It will make you more valuable to your current company and to other businesses.

Earning certification boosts self-confidence and provides a sense of personal satisfaction. Of course, studying for and passing rigorous certification exams is challenging and requires dedication, effort, and perseverance. Successfully earning certification validates your hard work and expertise. People who earn their certification through IBF are quick to claim and promote their status.

The sense of accomplishment that comes with getting certified can inspire you to set and achieve even greater career goals.

Plus, at a time when too many people are using artificial intelligence to fake it until they make it… or fail, IBF certification proves you are the real thing.

Are you ready to earn your IBF certification? Would you like to get your team certified? Find out more.

In today’s volatile and uncertain market, companies can no longer afford to operate without a structured, data-driven approach to forecasting demand. Demand planning is more than just predicting sales—it’s about building an integrated, agile business that can respond to customer needs while managing resources efficiently. Despite its importance, many organizations still rely on outdated tools like spreadsheets or allow bias and siloed decision-making to corrupt their forecast accuracy.

Employing predictive analytics and integrated demand planning can significantly streamline decision-making processes, create new insights, and save several business functions a lot of time and money.

This article explains why businesses need to leverage demand planning to improve their operations and explains the quantifiable value of doing it so that it can be sold within an organization.

Why Focus on Demand Planning?

Most companies that decide to invest in demand planning or improve their process are primarily driven by one or more of the following:

• Forecast accuracy challenges
• A highly variable process that needs improvement
• Need for a more efficient manufacturing or distribution system
• Downstream inventory problems driven by unseen variability
• Desire to improve cooperation between sales and operations

At its core, demand planning synchronizes operations. It allows marketing, sales, supply chain, finance, and production to operate from a common set of assumptions. Without an accurate demand plan, supply planning becomes reactive, finance struggles with forecasting revenue, and customer service deteriorates from stockouts or excess inventory.

Consumer behaviors have become increasingly unpredictable. Economic shifts, global disruptions, and rapid product cycles mean relying on historical sales alone is no longer sufficient. Demand planning introduces a proactive lens incorporating internal drivers (promotions, price changes) and external signals (market trends, customer insights) to create adaptive forecasts.

Inaccurate demand forecasts translate to costly outcomes: expedited shipping, excess working capital, lost sales, and markdowns. Improved demand planning helps reduce forecast error, allowing for better inventory placement, production planning, and supplier coordination. Even a five to ten percent improvement in forecast accuracy can have a significant bottom-line impact.

Potential Improvements Resulting From Demand Planning

Organizations that invest in improving demand planning benefit from:

• Reduced inventory costs through better alignment of supply and demand.
• Improved service levels by placing the right product in the right place at the right time.
• Higher forecast accuracy can lead to more reliable plans across finance and supply.
• Faster decision-making is enabled by real-time data and scenario analysis.
• Greater agility because of the ability to quickly adjust to shifts in demand or supply.

A mountain of research today shows that a mature demand planning process helps improve forecast accuracy and deliver a high return on investment (ROI). Improved forecast accuracy, when combined with software that translates the forecast into meaningful actions, will decrease inventory and operating costs, increase service and sales, improve cash flow and gross margin return on inventory investment (GMROI), and increase pre-tax profitability. The forecasting error, no matter how small it is, significantly affects the bottom line. In our experience, a 15 percent forecast accuracy improvement will deliver a 3 percent or higher pre-tax improvement.

In a previous IBF study of 15 U.S. companies, we found that even a one-percentage-point improvement in under-forecasting at a $1 billion company delivers a savings of as much as $1.52 million, and for the same amount of improvement in over-forecasting, $1.28 million.[i]

The reduction in downstream finished goods inventory resulting from a well-established process and forecast accuracy improvements provides a one-time saving, as well as recurring savings arising from reduced carrying costs. There are great benefits in a make-to-stock or distribution company, the downstream inventory reduction could range from 10 to 20 percent since forecasting inaccuracies typically drive around 75 percent of the required safety stock.

Building and Investing in Demand Planning

Here are some best practices when it comes to demand planning.

• Build an unbiased, unconstrained, consensus-based forecast. Organizations often confuse the demand plan with the sales target. Sales may overestimate to push for stretch goals, while operations may buffer to protect service. Demand planning needs to separate judgment from aspiration. Instituting a formal demand consensus process ensures all voices are heard, but forecasts remain grounded in data and evaluated against actual performance.
• Upgrade from static spreadsheets to dynamic models. Many companies still use Excel as their primary planning tool. While familiar, spreadsheets lack scalability, version control, and real-time integration. Upgrading to a dedicated demand planning system (or enhancing existing tools with forecasting models) introduces automation, improves collaboration, and enables real-time adjustments. It also supports more advanced techniques such as decomposition models or AI-based forecasts.
• Understand and match models to patterns. Not all items follow the same demand pattern. Some are seasonal, some have trends, and others are highly volatile. Applying a one-size-fits-all model can lead to overfitting or underperformance. Instead, classify SKUs by their demand characteristics and apply the appropriate model, whether that’s exponential smoothing, moving average, or more complex causal models.
• Focus on data quality and forecastability. Forecasting is only as good as the data behind it. Cleanse data for outliers, missing periods, and promotions. Measure forecastability using the Coefficient of Variation (CV) or Demand Intermittency. The demand planner becomes the integrator, ensuring inputs from various departments are translated into a structured forecast. Establish accountability through KPIs like bias, MAPE, and forecast value add (FVA).
• Invest in training and improving skills with IBF. Leverage IBF’s certifications, workshops, and learning resources to empower your teams with proven forecasting and planning knowledge, building internal capability that drives consistent, confident decision-making.

Taking steps to practice demand planning optimally will increase the bottom-line benefits you gain from it.

Bottom Line Benefits for Practicing Demand Planning

Many companies leave money on the table with lost sales or poor service levels. An integrated demand planning process can translate to increased revenue of 0.5 percent to 3 percent with improved inventory availability or demand shaping capabilities. Total annual direct material purchase, along with logistics-related expenses arising from demand variability and lost opportunities, can see direct improvements of 3 to 5 percent. We can also benefit from a 20 percent reduction in airfreight costs. The figure below shows the anticipated benefits from a 15 percent improvement in forecast accuracy. (These are averages and individual results for organizations. They are dependent on many other variables and can be higher or lower.)

This illustrates the possible benefits from a 15 percent improvement in forecast accuracy

It is essential to understand that these are average savings amounts. It is up to you to determine what savings you believe you can drive with a mature predictive analytics and demand planning process. Sometimes you need to know what finance and executive leadership anticipate in terms of benefits; you need to be on the same page in terms of expectations. It is here that the Institute of Business Forecasting Advisory Services can shed some light on what is realistic based on past implementations.

Demand planning is not just a supply chain function; it’s a strategic business process that empowers smarter, faster decisions. In an environment where disruption is the norm and expectations are high, companies that implement disciplined, data-driven demand planning will not only survive but also lead.

The Benefits of Demand Planning: The Final Word

The path forward is clear: Separate judgment from strategy, invest in tools and talent, and build a collaborative process that evolves with your business.

In a world of uncertainty, demand planning offers clarity. It’s not just about predicting the future, it’s about preparing for it. Companies that invest in robust, unbiased, and collaborative demand planning are the ones that outperform, outmaneuver, and outlast their competition.

But you don’t have to do it alone.

The Institute of Business Forecasting (IBF) has been the trusted authority in forecasting, demand planning, and S&OP for over four decades. Whether you’re just starting your planning journey or looking to refine and elevate your process, IBF offers the training, certification, tools, and global community to help you succeed.

Join IBF and take the next step:

• Get certified with globally recognized credentials
• Attend industry-leading conferences and events
• Access exclusive research, case studies, and best practices
• Learn from and connect with top planning professionals around the world.

[i] Chaman L. Jain (2018). The Impact of People and Processes on Forecast Error in S&OP. IBF research report #18. August 31, 2018

Sales and Operations Planning (S&OP) is a structured, cross-functional business process that aligns all areas of an organization around a unified set of assumptions to drive coordinated decision-making. The goal of S&OP is to ensure that business plans and objectives are balanced and that financial and operational plans are synchronized. It serves as the critical integration point between strategic planning and daily execution, enabling companies to translate high-level business objectives into actionable plans.

At its core, a mature S&OP is not just a supply chain or operations process. It is a business-wide planning framework that brings together sales, marketing, finance, operations, product management, and supply chain to work collaboratively. The result is a comprehensive plan everyone supports and works toward, reducing misalignment, improving responsiveness, and increasing overall business performance.

The process typically operates on a monthly cadence, with inputs from various departments converging into a final executive review meeting where trade-offs are discussed, decisions are made, and a single, unified plan is committed to.

The Value of S&OP

Implementing and executing an effective S&OP process provides tangible value across the organization. At a high level, S&OP delivers:

• Improved forecast accuracy and demand visibility: S&OP allows companies to move from reactive to proactive planning, reducing surprises and enabling better preparedness for market changes.
• Balanced supply and demand: With cross-functional collaboration, companies can more efficiently manage supply constraints, optimize inventory levels, and meet customer service goals.
• Financial alignment: S&OP ensures that operational plans are financially viable and support the broader goals of the business. It connects demand and supply plans to financial projections.
• Increased agility: The ability to run scenarios and analyze the impact of decisions across the business improves agility in the face of disruptions or demand shifts.
• Enhanced collaboration: S&OP builds a culture of accountability and transparency. It fosters communication across silos and ensures that all stakeholders work from the same assumptions.
• Executive-level visibility: With clear insights into upcoming challenges and opportunities, executives can make informed decisions with confidence.

Organizations with mature S&OP processes often see improvements in service levels, inventory turns, working capital, and revenue growth. But the actual value lies in the enhanced decision-making capabilities and improved alignment across the business.

How to Build a Sales and Operations Plan

Developing a robust sale and operations plan requires a clear structure, defined roles and responsibilities, and a commitment to consistent execution. While tools and technology play a role, the foundation of effective S&OP lies in process discipline and cross-functional collaboration.

Here are key building blocks to consider:

• Leadership commitment: Executive sponsorship is essential. S&OP must be seen as a strategic business process, not just a supply chain activity.
• Defined ownership and governance: Each step of the process should have clear ownership, with defined roles for demand planning, supply planning, finance, product management, and executive teams.
• Calendar and cadence: A standard monthly cycle should be established, with defined inputs, outputs, and meetings for each phase. Concurrent weekly S&OP meetings help manage near-term deviations.
• Unconstrained and unbiased planning: The demand plan should be developed independently of constraints or biases, providing a true reflection of expected demand. Only then can supply plans be adjusted accordingly.
• Data and metrics: Reliable data is the backbone of S&OP. Forecast accuracy, bias, inventory health, and capacity utilization are some of the key metrics that drive accountability and improvement.
• Technology and tools: While not a prerequisite, modern planning tools can enhance collaboration, scenario planning, and automation. However, these tools must support—not replace—a sound process.
• Culture and change management: S&OP is as much about people as it is about process. Building trust, encouraging open dialogue, and reinforcing accountability are crucial for success.

Key Steps in S&OP

A typical S&OP process includes several structured review steps culminating in an executive decision-making forum. Here is an overview of each phase:

Product Review

• Purpose: Align the product and portfolio roadmap with business strategy.
• Activities: Review new product introductions, end-of-life plans, promotions, and phase-outs. Evaluate the impact of changes on demand and supply.
•  Participants: Product management, marketing, R&D, operations, and finance.

Demand Review

• Purpose: Develop an unconstrained, consensus demand plan.
• Activities: Analyze historical performance, market trends, customer input, and promotional plans. Identify risks and opportunities.
• Participants: Demand planning, sales, marketing, and finance.

Supply and Resource Review

• Purpose: Determine how to meet the demand plan with available resources.
• Activities: Evaluate capacity, inventory, procurement, logistics, and supplier capabilities. Highlight constraints and propose scenarios.
• Participants: Supply planning, manufacturing, procurement, logistics, and finance.

Pre-S&OP/Reconciliation Review

• Purpose: Identify gaps between demand and supply, align on scenarios, and prepare for executive discussion.
• Activities: Review financial implications, resolve issues, and recommend decisions.
• Participants: Cross-functional team leads, finance, and planning leadership.

Executive S&OP Review

• Purpose: Make final decisions, approve the consensus plan, and provide strategic direction.
• Activities: Review scenarios, validate financial impact, approve trade-offs, and document decisions.
• Participants: Executive leadership, heads of major functions, and finance.

Concurrent Process: Sales & Operations Execution (S&OE)

While S&OP focuses on the mid- to long-term horizon (typically 3 to 24 months), S&OE manages near-term execution (0 to 13 weeks). This weekly process addresses short-term deviations from plan and ensures agility in responding to real-time changes. Key focus areas include order fulfillment, short-term supply imbalances, and demand shifts. S&OE connects strategy to execution, ensuring that decisions made in S&OP are implemented effectively.

Sales and Operations Planning: The Final Word

In today’s complex and volatile business environment, Sales and Operations Planning is more than just a process—it’s a mindset and an essential capability. Companies that embrace S&OP gain the ability to navigate uncertainty, align cross-functional teams, and drive smarter, faster decisions.

The future of S&OP is one of greater integration, intelligent automation, and real-time visibility. But, at its heart, the success of S&OP will always depend on three things: collaboration, transparency, and consensus.

Organizations that invest in building a strong S&OP process—supported by leadership, informed by data, and aligned with strategic goals—will be better positioned to thrive. They will not only deliver superior performance but also foster a culture of shared accountability and continuous improvement.

In short, Sales and Operations Planning is the bridge that connects strategic intent to operational execution. Done right, it becomes a sustainable competitive advantage.

Are you interested in a challenging career that will put you in an influential position at work and provide significant career growth potential?

Then, working in demand planning might be an excellent option for you.

Demand planners are crucial in forecasting future demand, optimizing inventory, and improving overall business efficiency. The field provides opportunities for cross-functional collaboration, exposure to diverse business areas, and the chance to significantly impact a company’s profitability. In addition, it plays a critical role in consumer satisfaction. Demand planning is a growing field offering career opportunities, limitless learning potential, and the opportunity to work in many industries.

Individuals who want to become demand planners must be interested in data tracking and analysis, understanding consumer behavior, and anticipating market trends. That’s because their ultimate purpose is to help businesses meet consumer demand efficiently.

If you choose a demand planning career, be prepared to develop a specific skill set, gain relevant experience, and continuously adapt to the ever-evolving world of supply chain and demand planning, where change is only accelerating with the introduction of AI.

This guide explains everything you must know to become a successful demand planning professional.

Education Requirements for Demand Planners

The first step in becoming a demand planner is to meet the necessary educational requirements.

A bachelor’s degree in supply chain management, business, statistics, economics, or a related field is typically required. Plan to take courses in data analysis, supply chain principles, and inventory management. Beyond that, consider pursuing a master’s degree or certifications like those offered by the Institute of Business Forecasting, which can help you stand out.

Analytical and Technical Skills Demand Planners Need

Demand planning is all about data analysis and forecasting. Develop your analytical skills by learning to interpret complex data sets and identify trends. Gain expertise with statistical software and tools. Start with Excel and then build up to more advanced ones such as SAS and R. Demonstrate your systems proficiency by mastering enterprise resource planning (ERP) systems and demand planning software. These are crucial for developing accurate demand forecasts and effective supply chain strategies.

Soft Skills for Demand Planners

One of the career-enhancing opportunities that demand planning offers is the opportunity to work with so many cross-functional partners. Many demand planners cite this as why they were offered advancement opportunities quicker than their peers.

Because demand planners must handle many types of tasks and work with a wide array of stakeholders, they will be more successful if they develop specific soft skills, including:

• Communication: Demand planners should be able to clearly communicate complex concepts to different stakeholders, including people in sales, marketing, finance, operations, and company leadership. This includes not just explaining the what behind forecasts but also the why.
• Collaboration: Demand planning often requires collaboration across many departments and functions. Getting everyone in a room to agree is a skill in and of itself. It’s easier to do this with solid collaborative capabilities, supporting partnering with other teams, information sharing, and working together to achieve common goals.
• Adaptability: Many factors, including market changes and unexpected events, can impact planning. Demand planners must be flexible and adaptable enough to adjust forecasts and plans in real-time.
• Problem-solving: Supply chains are becoming ever more complex. Consumers seem to change their minds more than ever. As a result, planners will frequently encounter challenges and uncertainties during their workday. Solid problem-resolution skills are necessary to identify and resolve potential issues, such as forecasting mistakes, data errors, or supply chain disruptions.
• Continuous improvement: Demand planning changes rapidly, even more so since the introduction of artificial intelligence. Planners must stay up-to-date on the latest trends and best practices in the field.
• Leadership: Leadership doesn’t only refer to managing other people; it comes in many forms. Demand planners must inspire other teams and stakeholders to achieve common goals, which requires the ability to both listen and influence others to drive a consensus among the team.
• Attention to detail: In demand planning, little things make a big difference. Attention to detail is key for success. Identifying small issues can save a company millions of dollars in inventory reductions and increased efficiency.
• Organization: Demand planning is all about juggling many plates at once. People with differing priorities will pull you in many directions. Planners must be capable of prioritizing their work and staying organized and structured in their approach to data analysis, forecasting, planning, and working with others.
• Time management: Planning is time-bound. That’s why demand planners must master time management and set priorities.

Experience Needed for Demand Planning Roles

Hands-on experience is incredibly valuable for understanding the complexities of demand planning and handling challenging situations.

Start by looking for internships or entry-level inventory management, procurement, or logistics positions. Larger organizations offer rotational programs for new grads that can provide excellent exposure to the various parts of the supply chain. This will help you learn the factors that influence demand and how supply chains operate. Aim to participate in cross-functional projects to find out how different departments influence supply and demand planning.

Build a Professional Network

No demand planning professional achieves success on their own.

Start by seeking out internal mentors. Look for people in roles you may aspire to one day and ask for their guidance.

Both internally and externally, networking and building connections are essential.

Join professional organizations like the Institute of Business Forecasting to connect with peers and industry experts and continue your education. Attend conferences, workshops, seminars, boot camps, town halls, and other events to stay on top of industry trends and best practices. (These are also great places to seek out external mentors.)

Networking can help you broaden your industry knowledge and open doors to career opportunities. People love to help others; you just have to ask.

Show Off Your Demand Planning Work

As you gain demand planning work experience, develop a portfolio that showcases your projects and achievements. (Consider building a website you can link to from your LinkedIn profile or share with prospective employers.) Include case studies, forecasts, testimonials, and strategies. Document how your work resulted in business improvements and efficiencies and helped prevent supply issues.

This is also a great time to start giving back. It is said that there is no better way to master a subject than by figuring out how to teach it. Write an article for a publication like the Journal of Business Forecasting. Present what you have learned or a case study at a conference.

Keep Learning and Stay Informed

Demand planning is dynamic, with methodologies and technologies constantly emerging. Introducing artificial intelligence into the practice has only accelerated the pace of change.

Too many people sit back and expect others to establish their ongoing development plan, only to be frustrated when they realize they are being left behind. Take ownership of your career development. Stay informed about the latest trends in supply chain management, data analytics, and demand planning. Engage in continuous learning through online courses, webinars, and publications like those offered by IBF. Participate in local industry networking meetings. Keeping your skills and knowledge current is critical for advancing your demand planning career.

Taking these steps is the traditional way to achieve success in demand planning.

Other Paths To Get Into Demand Planning

Not everyone follows the traditional path into a career in demand planning. Think of all of the inputs that go into creating a solid forecast. With the right analytical skills, cross-functional partners who understand what goes into a demand consensus process can become great demand planners. Some alternatives include:

Move into Demand Planning from Customer Service or Sales

People who work in customer service or sales positions have valuable insights about consumer behavior and market trends that can benefit demand planning.

Moving from these areas into demand planning is a relatively common career trajectory. People who do this have a solid understanding of product demand and customer needs. To become effective demand planners, they must develop analytical skills and familiarity with demand forecasting tools.

Shift from Analytical Roles into Demand Planning

Professionals with analytical experience in industries like finance, marketing, or healthcare often find these skills transferable to demand planning roles. Because they can interpret data and identify patterns, they usually become valuable members of demand planning teams. Once they learn supply chain dynamics, inventory management, and effective soft skills, they can leverage their analytical expertise in a new way, making demand planning richer through cross-industry insights.

Transfer from Inventory or Logistics Positions

People already working within or adjacent to the supply chain, such as those in inventory or logistics jobs, have a basic understanding of the flow of goods and the issues impacting it. In the end, their lives have been made easier or harder by, among other things, a good forecast. Moving up to a demand planning position is often a positive career move.

Before making the shift, candidates must expand their skills to include demand forecasting while also developing a broader perspective of the supply chain. Training like that offered by IBF will be critical to ramping up quickly.

The alternative paths people can take into demand planning positions demonstrate how expansive the field is. Building an effective demand planning team requires many people with different skill sets. There is no single way to become a demand planner, and based on our extensive experience with the industry, every career and path into it is unique. That’s why IBF offers so many resources to help practitioners and hopefuls achieve success.

How Long Does It Take to Become a Demand Planner?

The timeframe for becoming a demand planner varies from a few years to several, depending on your educational background and work experience. With a bachelor’s degree in supply chain management or a related business field, you might expect to spend about three years gaining relevant experience in inventory management, analytics, operations, or other associated areas before moving into demand planning.

For people who come from unrelated disciplines or do not have a college degree, it may take more time to develop the skills and industry knowledge needed to qualify for demand planner positions. Seeking opportunities to learn about market trends, forecasting, and inventory management can speed the process.

Becoming a Demand Planner: The Final Word

While there is no single path to becoming a demand planning professional, there are a few things people need to succeed in the field.

• Expertise in data analysis. Demand planners must be solid at interpreting data. It’s the only way to forecast demand accurately. They must constantly improve their analytical skills and master specialized forecasting software. Understanding historical trends and predictive modeling is critical for achieving success.
• Understanding of supply chain dynamics. It’s critical to know how supply chains function. Understanding how the inputs into the forecast impact its accuracy, and how your forecast accuracy impacts others downstream, is the true demonstration of your understanding of the demand planner role. Learn about the complete process, from procurement to distribution, especially the effect that demand planning can have on each stage.
• Communication and negotiation skills. No demand planner works in a vacuum. It requires building solid relationships with many stakeholders and ongoing coordination with internal teams, suppliers, and manufacturers. Every team is managing to different metrics. Many speak the language of their function (i.e., dollars vs. units). Learn how to communicate and negotiate effectively to ensure operational efficiency and cost-effectiveness.
• Focus on leanness and efficiency. Become familiar with lean and agile management practices, which are how companies operate to improve efficiency and reduce waste.
• Master project management. Supply and demand planning is project-driven. That is why understanding the fundamentals of project management is beneficial. Learn how to plan, execute, and monitor projects while limiting risk. This will help you manage initiatives successfully.
• Be adaptable. Demand planners must be able to adapt to change and solve problems. Pay attention to what’s going on in the world around you. Practice resilience by exposing yourself to different demand planning scenarios, such as market shifts or supply disruptions. This adaptability will help you feel confident that you can handle any situation, even in challenging times.
• Find a mentor. Partnering with a trusted and experienced professional is a great way to gain fresh insights and perspectives. Stay on the lookout for mentorship opportunities, and don’t be bashful about asking for support, either from senior demand planning leaders or others in the organization. The worst they can say is no, but most will want to help or will be willing to refer you to a colleague better suited to supporting your goals.

These tips will equip aspiring demand planners with the skills and knowledge to transition successfully into a new position and help people already in the field advance their careers.

Get a jump start by taking advantage of all the resources available through IBF, including our training and networking opportunities, journal, podcasts, and more.

And for students, and others just starting out, IBF offers free events including webinars and regional events. You can also volunteer to help out at IBF conferences and events and receive free admission. Contact IBF to find out more.

In today’s disruptive global marketplace, more and more companies are laser focused on supply and demand planning and how to get it right.

This guide explains the two disciplines, their differences, and how they work together. Use the information to build a solid foundation for controlling your inventory in these challenging times.

What is Demand Planning?

Demand planning uses analytics, data, insights, and human experience to make predictions and respond to various business needs. It leverages demand forecasts—not as an end in themselves—but as a tool to highlight opportunities and risks, establish business goals, and support proactive planning across functions.

There are two types of demand planning — unconstrained and constrained. With unconstrained demand forecasting, the planner focuses exclusively on raw demand potential, not factoring in possible constraints like capacity and cash flow. This method determines how much you could sell if supply were not an issue. Constrained forecasting, however, considers these factors, creating a more realistic picture.

Businesses should leverage both unconstrained and constrained demand planning to deliver the most value to consumers while keeping costs down.

Essential Considerations in Demand Planning

Businesses must focus on these four areas of demand planning to succeed during this global unrest.

• Historic product sales: What you’ve sold in the past may indicate what you can expect to sell in the future, although that may not always be true. What’s critical to getting things right is to select the correct historical periods and market and economic conditions.
• Internal trends: Using historical data, identify sales trends for one product or group of products.
• External trends: Some factors that may impact a company’s ability to efficiently meet its customers’ needs. These include competition, sociocultural issues, legal factors, technological changes, the economy, and the political environment. (The last two are particularly critical today.)
• Promotional events: When companies run sales, events, or promotions, sales often increase. Demand planning must account for this as well.

Accurately forecasting demand is complex, but businesses must master it during challenging times like today.

What is Supply Planning?

As we covered, demand planning is the process of predicting consumer demand.

Supply planning, by contrast, determines how a business will fulfill demand within the organization’s financial and service benchmarks. It must factor in things like inventory production and logistics. Specifically, it must consider factors like on-hand inventory quantities, open and planned customer orders, minimum order levels, lead times, production leveling, safety stocks, and projected demand.

The five key functions of supply planning are:

1. Business operations is where demand forecasting comes in. Once you’ve calculated the demand, you are able to decide how much inventory you need. At this step, you should know how much product must be ordered and produced.
2. Acquisition involves purchasing materials or final products. Buying supplies is a critical part of having adequate inventory on hand. It requires partnering closely with your suppliers — and their suppliers — especially during uncertain times.
3. Resource management is where companies ensure adequate resources are available and distributed to the correct locations.
4. Workflow of information keeps supply chain management on track by using standardized systems across all departments preventing disconnects.
5. Transportation and logistics pull together all the components of planning, buying, manufacturing, storage, and transportation to ensure an adequate supply of items reaches the consumer.

Practicing supply planning effectively can help keep companies successful during challenging times.

Supply Planning Versus Demand Planning

Demand planning and supply planning aren’t two completely different things. They are actually two halves of a whole.

Demand planning aims to predict how much of a product you need to have available to meet consumer demand. Supply planning determines how to meet that demand within your company’s cost and service rules.

Demand impacts supply, and supply is dependent on demand.

You cannot meet demand without sufficient supply. Similarly, you can’t ensure adequate supply without clearly understanding demand, especially in changing times. You need both to keep your business healthy.

The key difference between the two types of planning are the characteristics of the data that fuels them.

Much of the information used for supply planning is internal or comes from sources connected to the company. It involves analyzing production capacity, time constraints, supply costs, delivery times, storage requirements, and other factors. Because you have relatively easy access to — and control over — supply chain data, it is u easier to master the supply side of the supply and demand equation.

Businesses typically have less control over demand data. While some of it is internal, like historical and seasonal sales records, much is external, like economic trends. This makes demand planning less dependable and more challenging than supply planning.

In short, because supply planning uses more defined and owned data points, it is typically more concrete and reliable. It provides practical direction on how you’ll meet consumer needs. By contrast, demand planning uses less definite and owned information. While certain algorithms and data sources are more accurate than others, forecasting always involves some level of prediction. Supply planning and its practical calculations using more reliably sourced data are typically less volatile.

Another way to view supply planning versus demand planning is to compare their ultimate goals. Demand planning delivers predictions that impact supply planning and other business decisions, while supply planning pays off with inventory optimization.

• Predictions: Demand planning considers a wide array of factors to develop as accurate forecasts as possible. Demand predictions inform supply planning and support other business decisions, such as when to offer promotions or find new vendors.
• Optimization: Supply planning determines how you’ll meet projected demand within your organization’s operational constraints and business objectives. It considers available resources and other factors to develop a plan prioritizing efficiency, cost savings, and speed. The supply plan must align fully with company goals and allow it to take action to achieve them. For instance, if an organization wants to reduce costs for a project, a supply plan might recommend buying materials with a slower fulfillment timeframe. This approach wouldn’t be appropriate for a business driven by tight deadlines.

A balanced approach to demand and supply forecasting is essential for ensuring appropriate stock levels without storing extra inventory, but striking that balance looks different for every business. High-quality data is a key component of both planning types, making analytics and robust supply chain management software and systems especially valuable.

Supply Versus Demand Planning: The Final Word

Supply planning and demand planning aren’t competing factors within a company. Instead, they should be viewed as complementary functions that allow businesses to operate more efficiently and effectively. This is especially critical when operating in dynamic and challenging times like today.

Do you have questions about demand planning? This guide explains everything you need to know about this complex topic in a simple and understandable way.

What is Demand Planning?

Demand planning is the process of using analytics, data, insights, and experience to make predictions and respond to various business needs. It leverages demand forecasts—not as an end in themselves—but as a tool to highlight opportunities and risks, establish business goals, and support proactive planning across functions.

While demand planning often reports into the supply chain, it is not solely a supply chain function. It is a cross-functional discipline that integrates insights from sales, marketing, finance, and operations to create a consensus plan—a unified view of what is most likely to happen in the market.

Demand planning combines historical sales analysis, market intelligence, consumer behavior trends, and business knowledge to guide actions across the organization. It enables companies to anticipate demand shifts, align resources accordingly, and avoid stockouts and excess inventory, especially in an environment where customer expectations and market conditions constantly evolve.

At its core, demand planning drives better business performance by ensuring that decisions are based on relevant, timely, and collaborative inputs, not guesswork or isolated projections.

Bottom line: An accurate demand forecast provides the information your operations and sales teams need to plan how much product to buy or manufacture to meet projected demand as efficiently as possible with limited waste.

What is the Difference between Demand Planning and Demand Forecasting?

Demand forecasting and demand planning are closely connected but serve different purposes:

• Demand forecasting is the analytical process of using data, statistical models, and judgment to predict future demand. It’s a probability-based estimate of what might happen and forms the foundation for planning decisions?
• Demand planning takes the forecast further by integrating it into the business strategy, aligning stakeholders around a shared set of expectations, and determining the actions needed to respond to that demand.

What Purpose Does Demand Planning Serve?

Demand planning aims to create a realistic and actionable view of future demand so the organization can align supply, resources, and investments accordingly. It addresses critical issues including:

• Strategic planning and assessing risk (long-term planning and S&OP/IBP)
• Finance and accounting (budgets and cost controls)
• Marketing (consumer behavior, life cycle management, pricing)
• Operations and supply chain (resource planning, production, logistics, inventory)

Why Is Demand Planning Important?

In a world of increasing uncertainty, demand planning helps companies stay ahead. Done well, it enables organizations to:

• Improve service levels and customer satisfaction
• Minimize inventory carrying costs and waste
• Respond quickly to supply chain disruptions or market shifts
• Enhance collaboration between departments
• Increase profitability and operational efficiency

Demand planning is not a one-time task but an ongoing, iterative process that requires the correct data, tools, and cross-functional collaboration. It must also be flexible enough to adapt to volatility, whether driven by global events, consumer trends, or economic shifts.

Poor demand planning leads to the outcomes businesses aim to avoid: lost sales, excess inventory, wasted capital, and disconnected teams working from different assumptions. A well-executed demand planning process, on the other hand, builds organizational alignment, reduces bias, and leads to better business outcomes.

Why is it Critical for Businesses to Practice Demand Planning?

Demand planning is not just a supply chain function; it’s a core business process that drives strategic alignment, financial performance, and customer satisfaction. Based on IBF research from 34 organizations across different industries, companies that invest in structured, data-driven demand planning realize tangible benefits across key areas of the business.

1. Improve service and protect revenue: A strong demand planning process helps businesses meet customer needs with greater reliability, ensuring on-time and in-full (OTIF) performance, even in the face of market volatility or promotional spikes. The result? Improved customer satisfaction, stronger brand loyalty, and higher top-line revenue.

Fact: A 15-point improvement in forecast accuracy has been shown to drive on to two percent in top-line sales growth and improve OTIF performance, meaning fewer stockouts and more happy customers.

Demand planning ensures your business doesn’t miss out on sales because of poor availability. It provides the early visibility needed to make smarter inventory and production decisions, keeping your shelves stocked and your customers returning.

2. Increase operational efficiency and reduce cost: Demand planning enables organizations to run more efficiently by minimizing waste, improving resource utilization, and allowing smarter scheduling of production, logistics, and labor. It transforms decision-making from reactive to proactive—letting teams plan ahead rather than scramble in response.

Fact: A 15-point improvement in forecast accuracy can deliver a 2.3 percent or more increase in pre-tax net profit, driven by better operational alignment and cost control.

By aligning cross-functional teams around a consensus forecast, organizations reduce duplication of effort, optimize capacity, and ensure the right resources are available at the right time—leading to smoother operations and lower costs.

3. Manage assets and free up cash: Effective demand planning significantly improves companies’ inventory and working capital management. With clearer insight into what’s actually needed—and when—businesses can reduce excess inventory, lower carrying costs, and avoid the pitfalls of overproduction or fire-sale markdowns.

Fact: For every 15-point improvement in forecast accuracy, companies can realize a 12 percent reduction in inventory, freeing up valuable cash and minimizing waste.

Demand planning ensures businesses are not over-invested in supply, storage, staffing, or space. It helps unlock capital tied up in inventory and directs it toward more strategic, value-added investments.

Demand planning is no longer optional. It’s a strategic necessity. Organizations that invest in robust demand planning processes not only gain greater visibility and control but also position themselves to thrive in a constantly evolving marketplace. With the proper training, structure, and leadership, demand planning becomes a competitive advantage that enables more resilient, data-driven organizations.

Where Does Demand Planning Fit Within an Organization?

Demand planning is a strategic, cross-functional process that touches nearly every part of the organization—from supply chain and operations to sales, marketing, and finance. While its reporting structure can vary, what matters most is how the function is structured, supported, and empowered, not simply where it reports.

Based on IBF research and industry benchmarks:

• 48 percent of demand planning functions report into supply chain or operations
• 23 percent report into the commercial side of the business, such as sales or marketing
• 8 percent report into finance
• 10 percent operate as an independent function or report directly to a business unit owner
• The remaining 11 percent follow other models depending on organizational design.

These variations reflect the flexibility of demand planning—it can reside within different departments, depending on the company’s structure, maturity, and strategic priorities.

But here’s the key: regardless of the reporting line, demand planning must operate as a cross-functional, collaborative, and unbiased process. Its success depends on its ability to engage multiple stakeholders, reconcile competing priorities, and drive consensus to produce a unified, realistic view of future demand.

The Complexities of Demand Planning

Finding and maintaining the perfect balance between sufficiency and surplus can prove especially tricky. It isn’t a once-and-done task. Economic conditions change, and competitive environments constantly evolve.

To address this, demand planning typically requires using demand forecasting to predict future demand trends. This has added benefits, most importantly, heightened company efficiency and increased customer satisfaction.

What are the Key Components of Demand Planning?

Here are the critical parts of demand planning:

Product portfolio management

Effective demand management requires a clear understanding of product lifecycles, from launch to phase-out. Product portfolio management supports this by tracking each product’s stage and showing how changes in demand can impact related items. It also plays a key role in planning new product introductions, helping teams anticipate demand, allocate resources, and support successful launches. With strong portfolio management, companies can better manage transitions, reduce risk, and respond more effectively to market changes.

Statistical forecasting

Statistical forecasting is based on the concept that past history best predicts future performance. It uses complex algorithms to analyze historical data to develop demand forecasts. This exacting process demands accurate data, including eliminating outliers, exclusions, and baseless or inaccurate assumptions.

Sales forecast and overrides

As a process champion, the demand planner plays a critical role in driving consistency, structure, and accountability across the forecasting process. One of the key responsibilities is managing sales inputs and overrides—ensuring that adjustments to the statistical forecast are based on valid insights rather than bias. This involves working closely with sales teams to understand market intelligence, promotions, and customer expectations while also challenging assumptions when needed. The goal is to balance collaboration with discipline, ensuring that overrides improve forecast accuracy and align with broader business objectives.

Trade promotion management

In today’s highly competitive environment, it can be challenging to spark the interest of prospective customers. That’s why sales and other promotions are becoming increasingly common. They often result in increased consumer demand. Trade promotion management helps ensure that these types of programs are properly executed, that there is adequate product supply, and that they deliver all expected benefits to a company.

Demand Planning Methods

Quantitative forecasting methods are the foundation of most forecasting processes, with approximately 74 percent of companies relying on historical data to project future demand. Standard demand forecasting methods are:

• Time series models, used by nearly half of organizations (48 percent), are the most common approach and focus on identifying patterns, trends, and seasonality in historical data.
• Cause-and-effect models, used by 17 percent of companies, link external or internal variables—like price changes or promotions—to shifts in demand behavior.
• Machine learning and AI are emerging tools in forecasting. Currently, about six percent of organizations use them, and as adoption grows, they offer the potential for more adaptive and automated insights.
• Judgmental forecasting, reported by 17 percent of companies, is a qualitative method incorporating expert knowledge, market intelligence, and human insight when data is limited or context is needed.

What is Required to Do Demand Planning Effectively?

Effective demand planning is more than just generating a forecast. It’s about creating a reliable, unbiased view of future demand that drives smarter decisions across the organization. Done right, it improves service levels, optimizes inventory, enhances collaboration, and ultimately boosts profitability. However, to achieve these outcomes, companies must establish the proper foundation. Here’s what’s truly required to do demand planning effectively:

• A clearly defined process: An effective demand planning process must be structured, repeatable, and aligned with business goals. It should define all stakeholders’ roles, responsibilities, timelines, and expectations. The process should incorporate steps for data collection, model development, consensus building, evaluation, and communication—ensuring that each cycle produces more accurate and actionable insights than the last.
• High-quality, clean data: The best forecasts are built on relevant, clean, and complete data. That includes historical sales, customer orders, promotional activity, and external factors like market trends and economic indicators. Without trustworthy inputs, even the most sophisticated models will produce unreliable outputs. Demand planners must work with IT and business teams to ensure data integrity, consistency, and standardization.
• Forecasting approach: An effective demand planning process requires selecting the right forecasting approach, whether it’s bottom-up (built from item-level inputs), top-down (driven by high-level business targets), or middle-out (a blend of both, used to reconcile plans across levels). Planners must also determine the appropriate level of aggregation, such as by item, customer, location, or time, based on how the forecast will be used and the level of noise in the data. The planning horizon must match the decision being supported—ranging from strategic (long-term capacity and investments) to tactical (monthly or quarterly planning) to operational (weekly or daily execution). Since no forecast is perfectly accurate, planners should establish acceptable and expected error thresholds and measure forecast performance to continuously improve.
• Cross-functional collaboration: Demand planning is inherently cross-functional, involving input from sales, marketing, supply chain, finance, and operations. To be effective, the process must include a consensus step, where teams align on a final, agreed-upon forecast. This collaboration minimizes bias, integrates commercial intelligence, and ensures the forecast reflects both statistical outputs and business realities.
• Skilled demand planners: The demand planner plays a critical role as a process champion and cross-functional influencer. Strong planners possess analytical capabilities, organizational awareness, communication skills, and the ability to challenge assumptions objectively. They must manage statistical models, evaluate overrides, monitor forecast accuracy, and facilitate dialogue between departments.
• Focus on continuous improvement: No forecast will be perfect, but the goal is to improve continuously. That means measuring forecast accuracy and bias, tracking value-added steps, and adjusting models and inputs over time. Each forecasting cycle should yield better insights and inform more intelligent decisions.
• Executive support and integration into business strategy: Demand planning must be embedded in the organization’s decision-making processes with strong executive support to ensure it has the visibility, tools, and authority to drive change. Gaining buy-in from key stakeholders is equally critical, as it builds alignment, promotes cross-functional engagement, and reinforces the value demand planning brings through improved customer service, operational efficiency, and business performance.

Demand Planning: Best Practices

Once the foundational elements are in place, adopting these best practices ensures demand planning becomes a value-driving process that adapts to change and supports better business outcomes:

• Understand the purpose of forecasting: Clearly define why you are forecasting—whether for financial alignment, production planning, or service optimization—to tailor the process accordingly. Anchor the planning process in key business questions and explicitly state the assumptions driving forecast changes and decision-making.
• Identify demand drivers: Analyze internal and external factors—such as seasonality, promotions, economic trends, and customer behavior—that influence demand patterns.
• Gather relevant inputs across functions: Incorporate insights from sales, marketing, finance, and operations to ensure the forecast reflects a broad and informed perspective. Cleansing and structuring data is essential to ensure accuracy and consistency, providing a reliable foundation for effective forecasting and informed decision-making.
• Track forecast performance regularly: Measure and report forecast accuracy and bias at appropriate levels of aggregation to continuously improve planning effectiveness. Forecast errors and metrics help us identify uncertainty and bias, allowing us to communicate them clearly, prioritize errors in high-value products and items, and improve forecast accuracy through better inputs and process refinement.
• Schedule timely and recurring meetings: Regular forecast review meetings enable collaboration, resolve conflicts, and build consensus around the final demand plan. Demand planning should act as a hub for cross-functional alignment, bringing together departments to drive consensus and accountability.
• Communicate and manage results: Share insights and results across the organization, highlighting successes, identifying gaps, and reinforcing the value of the demand planning process.

What Skills Do Demand Planners Need?

Effective demand planners must combine analytical expertise with business acumen to interpret data and translate it into actionable insights. They need strong communication and collaboration skills to work cross-functionally with sales, marketing, finance, and operations, facilitating alignment and consensus. A deep understanding of forecasting techniques—from time series models to causal methods and emerging AI tools—is essential to building and evaluating accurate forecasts.

Demand planners must also be adept at managing uncertainty and bias, using metrics to identify errors, and continuously improving forecast performance. Critical thinking and problem-solving abilities are key to challenging assumptions, evaluating overrides, and navigating business complexity. Equally important is the ability to act as a process champion, ensuring the planning cycle is structured, repeatable, and aligned with strategic goals. Ultimately, demand planners serve as integrators across the organization, requiring a balance of technical skills, strategic thinking, and emotional intelligence to influence without authority.

The Future of Demand Planning

The future of demand planning is rapidly evolving into a more strategic, technology-enabled, and integrated function that drives value across the entire enterprise. Fueled by advancements in artificial intelligence (AI), machine learning, and predictive analytics, demand planning is becoming more precise, automated, and responsive. These technologies allow organizations to analyze vast amounts of real-time data from sources like point-of-sale systems, distributors, and suppliers, enabling more accurate forecasts and timely decisions that reduce waste and improve customer service.

As forecasting tools become more sophisticated, the demand planner’s role will shift from generating numbers to generating insights, focusing on scenario planning, cross-functional collaboration, and business alignment. Demand planning will continue to integrate with S&OP and IBP processes, connecting operational planning to financial and strategic goals. With global supply chains becoming more complex and volatile, demand planners will be expected to manage greater uncertainty while maintaining agility and discipline.

However, as Eric Wilson of the Institute of Business Forecasting (IBF) cautions, the successful integration of advanced technologies requires more than just investment—it demands alignment with business strategy, proper implementation, and upskilling teams to interpret and act on AI-driven insights. Without these, organizations risk underutilizing powerful tools or making misaligned decisions. Done right, the future of demand planning is not just digitality becoming a central pillar of strategy and competitive advantage.

Demand Planning 101: The Final Word

The world of demand planning is rapidly evolving. However, the reality is that companies that don’t practice it must jump on board. If they don’t, they risk losing out to competitors who do. Demand planning will help you satisfy consumers, run your organization efficiently, and drive dollars to your bottom line.

Leverage the information in this guide—and the other resources available through IBF—to launch and optimize a demand planning practice at your company.

The essence of Sales and Operations Planning (S&OP) is the active participation of different departments. Participants come from varied backgrounds, each with different daily objectives and challenges, and they need to reach consensus to advance the process. Achieving this alignment in an environment of trust while balancing risks and opportunities is the main challenge.

The Demand Review is a foundational step in this process It is where a picture of future demand is created by taking a statistical forecast and adjusting it according to information about clients and the market from Sales & Marketing. It is where consensus on future demand is achieved.

The building blocks of the Demand Review include a statistical forecast, input from Sales and Marketing, and technology that supports the planning process to track the different clients, SKUs, and each person who collaborates in each stage of the S&OP process. In addition, transparency is key whereby all participants have the same information regarding past performance and future expectations.

Pre-Demand Review

Before the Demand Review, we must build a statistical forecast. I highly recommend having a quick meeting at the beginning of each month to show the results of the main KPIs, similar to the daily meetings proposed in the agile methodology. This helps us to understand the main difficulties of the last month and encourages conversation between the Sales team and Demand Planners. It is important not to focus too closely on each SKU and to keep it high level. I have been in Demand Reviews that lasted more than one hour per category, causing managers to leave the meeting. At this stage, keep discussions concise and focused.

In these pre-meetings, we can gain information about products or clients. For example, we might have a deviation from the forecast because our competitors increased their prices, or a client decided to increase shelf space, or conversely, the client decided that the product will be sold in fewer stores.

At the same time, it’s important to look at our service levels for different clients. Variations in sales could be due to internal problems. I recommend discussing Fill Rate, Market Share, and Days on Hand (DOH) for each client/category. If our colleagues have this information, we can react faster to changes in sales. For example, if we see that a retailer has increased its DOH, it is highly possible that our sales for next month will be lower. Information from the past helps us identify new sales trends and focus on products or clients that could pose risks or opportunities for our projections.

The desired level of aggregation depends on the planning time horizon. We take a more granular view the closer the horizon, and a higher level view for longer horizons. I suggest breaking it down as shown in Figure 1.

Figure 1 | Aggregation by planning horizon

Inputs We Need Before The Demand Review

We need a few different types of data for our Demand Review, which we collect from different sources.

Statistical forecast: We forecast based on historical data, assuming what happened in the past could happen again. The unconstrained demand forecast is our foundation for further discussion. This forecasting step can be improved with technology. For example, with APO or IBP, it is possible to keep a history of sales affected by out-of-stock situations or promotions, leading to a cleaner history and allowing Demand Planners to create better forecasts.

Input from Sales: Collaboration from the salesperson for each client is crucial, as they know the client’s perception best and will execute the sales plan. Therefore, they must be committed to the plan, considering it is usually their goal for the next month, with correlated financial incentives. The unconstrained forecast can be adjusted accordingly.

Input from Marketing: This area must incorporate knowledge of expected future share of the category, promotions, launches, or any product changes that could mean replacing a current SKU. At this point, the effectiveness of the Demand Review increases, as all the previous hard work will help have a decision-making meeting with managers. The unconstrained forecast can be adjusted accordingly.

During the Demand Review Meeting

During the Demand Review, I recommend starting with a one-page overview focusing on each category, showing the projections in terms of volume, price, and margin. This should be high level; only go into detail for SKUs that show significant deviations versus the last three months or have notable characteristics for the next months. In this meeting, we expect the participation of the sales manager, business manager, finance manager, or revenue manager.

The S&OP leader should encourage consensus to obtain a single plan that must be followed and executed. However, the S&OP leader also needs to create tension among the areas by asking questions such as:

• Are we considering pending orders in this demand?
• With the current projection, what could be our market share? Is it similar to what we expect?
• If we create a scenario in which competitors increase or decrease their prices, what is the expected volume difference?
• Which SKU poses the biggest risk? (If we anticipate higher sales than planned, we can project a bigger proportion of the demand at the beginning of the month, adapting the production schedule accordingly and react faster to potential out-of-stock situations.)
• Are we considering discontinued SKUs according in our revenue forecasts?
• Are we considering cannibalization between SKUs?
• Are we comfortable with this plan? What is the gap between this plan and the budget?
• What do we need to do to achieve our strategy? (We can adjust projections for a specific client, considering the sales manager’s participation in the meeting.)

One of the outputs of this meeting is a realistic yet challenging demand plan, with alerts for the next stage of the process. This will facilitate the next step in the S&OP cycle, the Supply Review. While uncertainty about the future always exists, we must take action with the best information available and prepare to react to new opportunities or risks. This is why it is essential to discuss the questions above.

Overcoming Bias & Achieving Alignment

I have been in Demand Reviews with biased behavior. We cannot forget that the demand agreed on at the end of the process will be part of the sales goal. Therefore, sales teams may try not to overcommit, thinking that selling more than planned is a good problem to have. At the same time, I have seen Marketing overpromise sales for new launches to ensure sufficient inventory, even at the risk of expiration. To promote cohesion, ensure that all participants share the same overarching goal (profitability for the business). Occasionally, let everyone adopt the CEO perspective. This approach helps identify what is best for the company and reduces siloed thinking.

Conclusion

In conclusion, the Demand Review is a critical step in the S&OP process and its success depend on the quality of the data and information used in preparation. This preparation allows for a decision-making meeting instead of an informational one. The S&OP leader must align the team through commitment, transparency, and trust, creating positive tension that addresses potential risks and opportunities.

This article first appeared in the fall 2024 issue of the Journal of Business Forecasting. To access the Journal, become an IBF member and get it delivered to your door every quarter, along with a host of memberships benefits including discounted conferences and training, exclusive workshops, and access to the entire IBF knowledge library. 

]]> https://demand-planning.com/2024/10/18/5-reasons-to-include-customer-service-in-demand-planning-meetings/ Fri, 18 Oct 2024 16:54:15 +0000 https://demand-planning.com/?p=10476

Experienced Demand Planners add value to statistical forecasts by bringing in customer and market knowledge that algorithms alone can’t capture. By monitoring information about their customers in the press and trade journals, they can gain a perspective on potential customer performance issues.

Their knowledge of management changes, potential mergers and acquisitions, merchant changes and financial and operational issues with their customers allows them to advise the S&OP teams about the potential impacts of these factors.

However, in my own experience, one of the greatest sources of customer intelligence exists within my own company and is frequently overlooked.

“Your customer service team can be a secret weapon in managing customer performance and service levels.”

Your customer service team (also sometimes called voice of the customer) can be a secret weapon in managing customer performance and service levels. In my own experience, customer service members were often able to answer customer ordering and performance questions better than anyone else. In some cases these teams also had more consistent contact with customers than their sales counterparts. Their perspective on the business can be very helpful. In my experience, I’ve found five reasons why this is the case, and why you should consider including them in your planning meetings.

1) They Have Their Finger on the Pulse

Experienced customer service members understand the monthly and annual pulse of their business. They know when orders peak each year, what customers have historically ordered large quantities of specific products at unusual times, and when orders begin to drop off each year. Their expertise is especially important in seasonal businesses where orders peak and decline based on weather or cultural events rather than annual holidays.

Their knowledge of the annual ebb and flow of orders can aid the whole S&OP team in planning each month’s expected demand, especially when orders come in that do not match the expected monthly or annual patterns.

2) They See Orders Before Anybody Else

The customer service team sees the incoming orders before anyone else. The are the first to see when orders are larger than normal, and when they are early or late in relation to the normal flow of orders. They are also the first to see when new items are ordered, or when customers orders items that they don’t normally order. They are the first line of demand sensing. Asking them to notify the team when orders are out of the ordinary can help the team adjust their current and future plans accordingly.

3) They Know if Orders are Keeping Pace With the Plan

The customer service team can also advise the team when orders are pacing ahead or behind the planned level for a given period. Knowing when the monthly orders are consuming the forecast faster than planned allows the S&OP team to adjust both the forecast and the planned production to meet the higher demand.

And on the reverse side, knowing when orders are running behind the anticipated pace can help the team allocate product to later periods and allow the production teams some leeway in their production planning. In addition, this team’s advice on allocating limited product and managing shortages can also help improve the overall service level by spreading the available product where it is most needed based on the current open orders.

4) They Identify When Buying Patterns Change

Apart from seasonality, the customer service team can also advise the S&OP team when customer order patterns change significantly. Knowing when a retail customer that normally orders early in the month delays their orders, or when an industrial customer sends in an unusually large orders after wining a new contract, can aid the S&OP team in adjusting production or allocating product to meet the change in demand.

They can also point out unusual orders that need attention to understand if these are one-time orders or part of new pattern. In addition, they can track whether seasonal orders are coming earlier than expected or if they are delayed, allowing the production team critical time to adjust their plans to meet the early demand, or replan to balance production to better match the new trend.

5) Promotions and Events

In addition to assisting with executing planned promotions, the customer service team can also advise when customers execute unplanned promotions or when extreme weather or emergency events drive additional demand. These changes are usually very disruptive, so any advance warning is very helpful. Their early warning of these changes can give the planning and production teams a chance to adjust to the change in demand and balance supplying the unexpected demand along with the normal monthly demand.

Give the Customer Service Team a Stake in the Business

By including your customer service team in your planning, you can give these team members a stake in the business’ success. While this may involve additional work on their part, I have found that the people on these teams appreciate seeing how their work contributes to the company’s success.

“It surprises me how often the customer service team is aware of a customer issue long before the salesperson managing the account is.”

In some cases I have actually asked individuals on these teams to report specific types of transactions to the S&OP team so that the planning teams get the earliest possible warnings about significant changes in order patterns and timing. And in addition to helping manage orders, these team members are frequently also aware of customers that are late in paying, are on credit hold or are in financial distress. It surprises me how often the customer service team is aware of a customer issue long before the salesperson managing the account is aware of the issue. In some cases I have seen the S&OP team ask the customer service team to track and report on the ongoing orders from specific customers when the customer’s ordering becomes erratic.

Remember also that the key customer service metrics – order fulfillment (including OTIF) and service level are also important metrics for your overall supply chain performance.

Based on the fact that the customer service team most often see ordering problems and patterns before anyone else, it makes sense to include them in planning how to best meet your customer’s needs and expectations.