Okay, so it's very interesting. You're talking about demand forecasting and Demand Planning. What are they, different things or are they the same thing? That's a good question.

What's the forecast? The forecast is an estimate of what the organization expects to sell under a certain set of assumptions, market assumptions, commercial assumptions. So the forecast could be 100 or it could be 120 under a different set of pricing assumptions It could be 140 under a different set of pricing assumptions. But the question is what is the supply chain cost and risk we are willing to take associated with the forecast?

The risk associated with the 120 forecast is higher than the risk associated with 100 forecast because you might have to buffer for more inventory. And if the demand does not materialize, then you are stuck with that inventory. If the demand forecast that you planned for is 140, then the risk that you are taking the supply chain is higher if the demand does not materialize. So the planning process is really about taking the possibilities of the forecast, i.e. the forecast range of possibilities of the forecast Right?

And then estimating what the risk and the ability of the supply chain to support it is. And then finalizing a plan. A Plan is an estimate of what we are aligned to sell based on our assessment of the risk of the forecast and what actions we are willing to take to support that forecast. So the forecast could be 100 120 or 140, depending on various assumptions of commercial and market assumptions.

But the plan that we decided could be let's operate the supply chain at 120 demand, because that's the amount of risk that we are willing to take. So that's the difference between a forecast and a plan. Plan is a set of actions and decisions that we are committed to taking. The forecast is a range of possibilities which feeds the plan.