Unconstrained demand and what you’re actually purchasing can be VERY different.
There are many valid reasons why your actual purchase order quantity is different than your unconstrained demand quantity:
You may not want to invest too much working capital
- You worry that by the time the stock arrives, the market demand may look very different for you (longer forecast horizon –> more uncertainty)
- You are bound by high MOQ’s
- You do not have the storage space for it.
etc.
I have never worked with an ERP system that promises to forecast (unconstrained) demand but also uses that demand as direct input for purchasing.
I would be the first to manipulate the demand to get what I need. Or well, manipulate. I just wouldn’t see my input it as unconstrained demand but more like a.. complicated way to place purchase orders.
Because the forecast (based on your past “demand” which is now totally different from the actual unconstrained demand) becomes worthless anyway. You might as well skip the demand forecasting part altogether and just start ordering what you want/need/can afford.
Use good systems that are fit for their purpose (Supply Chain Planning systems in this case) and common sense. Don’t let a system bully you into their logic if it doen’t make sense.
This blogpost was an reaction to this article