Demand and supply

Planning compares demand, supply and stock to determine what is missing, when it is needed and how to cover it. Demand indicates requirements. Supply indicates expected receipts. Demand and supply allocation explains what part of each requirement is covered by current stock or future receipts.

How they relate

Do not confuse supply with physical stock. Supply represents an expected receipt; it only becomes stock when you receive the material or complete manufacturing.

Concepts

Concept	Meaning
Demand	Stock requirement generated by a confirmed sale or expected manufacturing consumption.
Supply	Expected receipt from a confirmed purchase or manufacturing.
Allocation	Calculated relationship between a requirement and the stock or supply that covers it.
Projected stock	Future evolution after applying demand and supply.
To order	Direct coverage of a specific requirement.
To stock	Grouped coverage from common inventory and shared receipts.
Reorder point	Threshold from which replenishment is advisable.
Minimum order	Minimum recommended quantity.
Lot size	Operational multiple for rounding quantities.

Demand

Demand can come from confirmed sales orders, internal requirements or expected manufacturing consumption.

Source	When it generates demand
Sales order	When the line is confirmed and a quantity remains to be delivered.
Manufacturing order or request	When it needs components or material for execution.
Expected consumption	When an open operation expects to consume material.

A draft sales line does not generate demand. Only confirmed lines represent commitments included in planning.

Supply

Supply can come from confirmed purchase orders, pending receipts, manufacturing requests or planned orders.

Source	When it generates supply
Purchase order	When the line is confirmed and a quantity remains to be received.
Manufacturing request	When it represents a requirement to manufacture before a date.
Manufacturing order	When pending production should increase stock.

When the warehouse receives material or production completes an order, pending supply becomes physical stock.

A forecast is a recommendation. It is not demand, supply or incoming stock, and it does not cover any requirement until you convert it into a purchase order or manufacturing request included in planning.

Projected stock

Current available stock = physical stock - outgoing stock
Projected available stock = current available stock + incoming stock

Projected stock lets you detect shortages before physical stock becomes negative.

Physical stock describes what exists now. Projected stock includes future commitments and can anticipate a shortage while units are still in the warehouse.

Forecasts and assistants use this calculation to suggest purchases or manufacturing before you create documents.

Coverage statuses

Status	Meaning
Already available	There is enough stock now.
Planned	Future supply covers the requirement.
Partially planned	Only part is covered.
Not planned	You still need to create or confirm enough supply.
No stock required	The requirement does not need procurement.

Read Demand and supply allocation to see how each status is determined.

Example

You have 20 units of an item. There is a confirmed sale of 35 units and a confirmed purchase of 30 units that arrives before the delivery date.

When	Element	Change	Projected stock
Today	Initial physical stock	20	20
Before delivery	Purchase supply	+30	50
On the delivery date	Sales demand	-35	15

Although current physical stock is 20, the sale is covered if the purchase arrives on time. After covering the 35 units, projected stock is 15 units.

Concept map

Work mode

How they relate

Concepts

Demand

Supply

Projected stock

Coverage statuses

Example

​How they relate

​Concepts

​Demand

​Supply

​Projected stock

​Coverage statuses

​Example

​Related

How they relate

Concepts

Demand

Supply

Projected stock

Coverage statuses

Example

Related