Customer Demand Forecasting Procedure / Method

Corporate Commercial Department - Customers Sales Forcasting 

Demand Forecast

To ensure adequate and timely Production Planning, the demand forecast for next two complete calendar months should be prepared by the 25th of every month. In other words, demand forecasts at least for the month CM+1 and month CM+2 is closed by using the customer inputs till 25th of the current month (CM).

Preparation & Approval

The sales officer, based on discussions with the customers, ascertains their demand for the next two calendar months (i.e. CM +1 and CM + 2).

The demand estimate for the CM+2 is a fresh estimate and is referred to as the Tentative Forecast. However, the forecast for CM+1 is a confirmation of the tentative forecast provided earlier by the client for that month, and deviations may be allowed only as per the terms of agreement entered into with the client.

The tentative forecasts are compared with the actual orders received and reason analysed by the Branch Head with SM-S&D at HO for improved monitoring and efficiency on converting forecasts into orders.

The demand forecasts so prepared contain:

  • Customer Name 
  • Unique demand forecast number 
  • Description of Materials 
  • Forecast quantity 
  • Customer Order Quantity and specification 
  • Target Delivery Dates 
  • Sales Officer (responsible for the customer) 
  • Deviation, if any. 
Details of customer queries pending for trial or under trial are also aggregated and built into the demand forecast separately.

The cumulative demand forecast at the Branch is then reviewed and approved by Branch Head.

It is sent to the Head Office by 25th of the current month. The cumulative confirmed orders for CM+1 is sent as a Stock transfer Advice to the factory by the 30th of the current month.

Forecasting accuracy for is directly dependant on the accuracy with which its customers are able to estimate their future demand.

Demand estimates are primarily obtained from the customer for next to next month (i.e. current month + 2). This is called the tentative demand forecast. In addition sales personnel regularly follow up for confirmed customer orders for all demand forecasts included in the firm forecast of the month.


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