Actual Demand

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  Actual demand is made up of "actual" or "real" customer orders.  This can sometimes include allocations/reservations of items for order, ingredients or items driven by MRP for orders, or raw materials for production or distribution against orders.

  ​Actual demand consume a companies forecast, depending upon the rules that an organization establishes for its forecasts as related to actual demand.  The best case scenario is to be in a position where everything is driven by actual demand and forecasts are kept to an absolute minimum.  Lean organizations work to build to real customer demand only.
Example

• When a customer submits an order online, this is actual demand that an organization can build to.  The APICS dictionary, 15 edition also states that "actual demand will totally replace forecast inside the sold-out customer order backlog horizon (often called the demand time fence) but will net against the forecast outside this horizon based on the chosen forecast consumption rule.

Challenge

• What is one example of actual demand that you can think of?  Share in the comments section below and receive a coupon to one of Lean Strategies International LLC's courses.

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