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Unit 4: Demand Planning and Forecasting

To successfully implement a supply chain management strategy, forecasting along with demand Notes
planning, are key factors. Bringing down investments in inventory and enhancing customer
service levels is directly connected to the level of accuracy and efficiency with which this demand
is forecast and is communicated up and down the supply chain.
Though accurate and effective forecasting is an elusive target, many companies are now using
an approach of collaborative forecasting. Collaborative forecasting involves the entire supply
chain that participates in decisions about demand. This demand involves gathering forecasting
information both internally and externally, and is used to drive the activities of the supply
chain.

Collaborative forecasting overcomes some of the inherent problems with traditional forecasting.
It is a method by which enterprise-wide knowledge is unified into a forecast more accurate than
a traditional forecast, and has the support of the entire supply chain. The objective is to be able
to provide the best and most timely predictions of demand.

Figure 4.1: CPFR Model

Source: Upendra Kachru (2010). “Exploring the Supply Chain”. Excel Books

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