What is the primary function of demand planning in a supply chain?

The primary function of demand planning in a supply chain is to accurately forecast future product needs. This involves analyzing historical data, market trends, and various factors that can influence demand to predict how much of a product will be needed in the future. By achieving reliable forecasts, businesses can optimize inventory levels, resource allocation, and production schedules, ensuring that they can meet customer demand without overstocking or understocking products. This forecasting process is crucial for maintaining supply chain efficiency and minimizing costs while maximizing service levels.

The other functions, such as maintaining inventory levels, allocating resources for production, or tracking shipment deliveries, while important in the supply chain process, are typically functions that rely on the demand planning outputs to effectively manage overall operations. Therefore, accurate forecasting lies at the heart of effective demand planning, making it essential for successful supply chain management.