From chaos to collaboration: Transforming demand management

Mar 19, 2025 • 6 min

Demand management combines and balances input, objectives, and constraints from across the business to deliver a profit-boosting customer experience – in theory. The trouble is, without the right strategies and solutions in place, it can easily become an unwieldy process, decentralized, destabilized, and detrimental to customers and businesses alike.

With a unified approach to planning that brings together cross-functional decision-making, high-quality data, and AI-driven analysis, companies can develop efficient demand management processes that reduce inventory, increase sales, and keep customers happy.

What is demand management?

Demand management is how companies get a picture of customer expectations and organize resources and decisions across planning horizons to meet that demand. It involves:

Predicting, shaping, and managing demand given market requirements and supply chain constraints.
Evaluating promotional strategies, pricing, financials, and business opportunities.
Synchronizing these high-level decisions with day-to-day operations.

The process aims to increase forecast accuracy, optimize inventory, improve operational efficiency, and enhance customer satisfaction.

Demand terms: Management, planning, forecasting, and sensing

Demand management, planning, forecasting, and sensing are connected but distinct processes. The terms nest within each other.

A hierarchical diagram showing Demand Management structure. The top level is "Demand Management" with a clipboard icon. Below is "Demand Planning" with a shop icon, which branches into "Demand Forecasting" (chart icon) and "Demand Sensing" (gauge icon). — ***Fig. 1:*** *Demand management, planning, forecasting, and sensing are all part of an interconnected hierarchy of processes and decision-making.*

At the most minute level, you have demand forecasting, the tool that calculates the quantitative value of the expected demand for a particular product. Demand sensing integrates with demand forecasting, incorporating real-time internal and external data to refine short-term forecasts.

Demand planning is what you do with that forecast number, creating a plan that incorporates sales input, customer prioritizations, and promotions and aligns cross-functional business objectives.

Demand management is the umbrella term that captures demand planning but weaves it into the overall fabric of the business. It includes a broader spectrum of activities, ranging from pricing and promotional strategies to demand shaping, managing constraints, and achieving efficient fulfillment.

Essentially, demand management answers the question: “If we have this demand and these goods in these places, how can we best meet customer expectations?”

Components of the demand management process

Demand management processes should be tailored to a company’s particular needs, and the length and frequency of each stage will vary depending on planning horizons. In general, however, the following steps will help businesses improve forecasts, efficiency, and inventory levels.

Get your stakeholders in the same room. Internally, you’re looking at a pretty comprehensive list: sales, marketing, production planning, product development, supply chain, finance, and IT should all have a seat at the table. You’ll also want input from external suppliers, distributors, and retailers.
Identify your data sources. Don’t just stick to internal records, like sales or transaction data. Include outside information, like weather and events, so you don’t get blindsided by unexpected demand spikes or dips.
Involve your customers. See what data-sharing opportunities are available with your retail customers so you can account for their promotions or other business decisions that might impact demand.
Clean up your data. AI-driven data cleansing capabilities can help you remove outliers, correct errors or duplicates, and separate true demand signals from noise.
Define a baseline forecast. This is where you put your forecasting solution to work, calculating expected demand levels.
Widen the scope of data inputs to improve that forecast. This step kicks off the broader demand planning process, taking the forecast and refining the demand plan using promotions, historical sales information, seasonal shifts, weather, and other demand influences.
Develop a consensus forecast. A well-developed S&OP process will help you align plans and reconcile departmental needs and objectives for a well-balanced forecast.

This all sounds good in theory, but the process, of course, faces some obstacles.

The 5 challenges of demand management

Let’s start with accelerated demand cycles.

Demand volatility is the perpetual specter of the supply chain, but now consumer behaviors and trends are fluctuating more drastically and rapidly than ever before. Social media is giving manufacturers whiplash, with products dropping in and out of vogue while production planning struggles to keep up. These sudden demand surges and drops can upend even the most carefully constructed plans if there isn’t a strong demand management strategy underpinning them.

Infographic titled "Demand management challenges" showing five issues: "Demand volatility" (erratic graph), "Disruptions" (globe with warning pins), "Inaccurate forecasts" (tablet with charts and coins), "Planning silos" (disconnected checklists), and "Poor quality data" (database with alert). — ***Fig. 2:*** *From external forces to internal processes, demand management faces a slew of challenges that keep manufacturers always three steps behind demand.*

At the same time, manufacturers face consistent global disruptions. Pandemics, natural disasters, and geopolitical issues can wrench demand patterns off kilter, leave manufacturers scrambling to fulfill demand with limited supply, or complicate already complex regulatory requirements or market conditions.

These external demand influences would make managing demand difficult enough. But let’s take a look at what’s happening inside the business.

Many businesses are facing a triple threat: outdated planning solutions, poor data, and ineffective collaboration. These issues have a bad habit of feeding off each other.

For instance, less sophisticated planning systems don’t have the AI capabilities that help them absorb information and generate accurate plans at market speed. Plus, the data they are drawing from is often siloed, inaccurate, and limited.

The resulting general inventory imbalance is only exacerbated by the lack of collaboration across functions. Much the same way data is siloed, so are teams, each working with their own data sets and objectives but without visibility into how their decisions impact the rest of the business.

So, demand management is assailed from within and without.

The role of technology in optimal demand management strategies

Good news! There’s a solution to all of these problems – unified planning.

A unified solution puts all your functions on the same platform, using the same, high-quality data pool and accessing the same AI capabilities for collaborative planning across departments. This unification helps manufacturers:

Increase visibility and data sharing across the organization, so teams can eliminate tunnel-vision planning, avoid working at cross purposes, and make better, data-based decisions.
Tackle radical market changes with ML-based forecasting that accounts for shifting demand patterns, internal business decisions, and external demand-influencing factors.
Use demand sensing to integrate internal data with retailer POS data and other data sources to create and adjust short-term forecasts.
Collaborate with external supply chain partners, sharing forecasts through supplier portals and incorporating retailer data for more collaborative planning.

These capabilities help manufacturers achieve fast, responsive supply chains that run on shared data and highly refined AI for planning decisions that foster business growth and improve the overall customer experience.

Real-world benefits: Strategic demand management in action

When supported by the right technology, demand management delivers enviable business benefits.

Infographic showing "Demand management benefits" with 5 advantages: "Reduced inventory" (boxes with down arrow), "Better forecasts" (graphs and coins), "Increased sales" (rising green graph with coins), "Reduced waste" (recycling symbol), and "Efficiency and collaboration" (laptop with analytics and connected people icons). — ***Fig. 3:*** *Manufacturers can turn the tables on disruptions and clear internal roadblocks to craft demand management strategies and plans that anticipate and meet demand profitably and efficiently.*

More accurate forecasts lead to more efficient planning, reducing overall inventory and helping manufacturers avoid overstocks and stockouts.

Coupled with enhanced collaboration across teams, these forecasts improve operational efficiency along the supply chain as well, streamlining processes, reducing costs, and enabling better resource allocation.

Better demand management also allows planners to focus on the right products, ensuring availability according to customer preferences and increasing sales and customer satisfaction.

Atria, a leading meat producer and food company in Northern Europe, uses RELEX demand planning and machine learning capabilities to manage the complexities of production, sharing forecasts and collaborating across teams to ensure more stable forecasts – even after large sales peaks during the busiest seasons. Leveraging retail data, the company achieved 98.1% forecast accuracy on a weekly level and reduced manual forecast changes by 13%.

“Following the introduction of machine learning, we were extraordinarily impressed to see just how much further RELEX algorithms could improve our forecast accuracy and stability.”
Tapani Potka, SVP, Delivery Chain Management, Atria

Atria is just one of over 120 companies using RELEX ML-based forecasting, including some of the world’s largest retailers, like The Home Depot, Dollar Tree, Samworth Brothers, and Maag Food.

Next steps: From tactics to technology

Demand management requires a foundational demand planning solution that enables companies to take quick, strategic, and decisive action.

Backed by machine learning and extensive data management capabilities, RELEX demand planning helps companies increase sales, reduce inventory, and improve fulfillment. It’s the power supply behind a demand management machine that can scale, adapt, and grow with the business while increasing customer satisfaction and loyalty.

Discover how RELEX demand planning keeps companies one step ahead of the market