S&OP Demand and Supply Planning Process Steps

Since demand and supply planning is an inherently complex process that is unique to each company, DemandCaster is built with numerous modules and settings that help all types of manufacturers and distributors model their planning to mimic their reality.

To help users learn how to configure DemandCaster to meet their planning needs, the DemandCaster documentation site includes a multitude of articles that will help you learn and navigate the many options and functions within the software. The outline below is a list of rules, suggestions, and helpful articles to get you started using the S&OP Planning platform.

We have organized the document in major sections to introduce you to the functional structure of the software. Each section includes a summary with links to other articles that provide a deeper dive into the specific functional area. After each major section, please feel free to reach out to us by emailing to request a follow up of the section covered. We have found that the best way to learn the software is reading the section first, working with the software, and then asking us questions concerning any area that is unclear or you require more information or assistance.

Let's get started!

DemandCaster Overview

General Recommendations

  • We recommend using Google Chrome as your browser. Firefox, Safari, and Microsoft Edge may also be used. We do not recommend Windows Explorer.
  • You may use a Mac or Windows computer when using DemandCaster. In addition, DemandCaster runs on iPad's however we recommend requesting the desktop site option within the browser.
  • As a prerequisite, we recommend you review your data periodically to ensure it is being loaded properly in the system. Please read the article Reviewing Upload Files for Errors for an overview of how to review your data.

What does DemandCaster S&OP do?

The primary purpose of DemandCaster is to help users set an items order point.  The inventory reorder point (order point) is the basis for establishing a companies optimal inventory levels (the level between too much and too little) when the following variables are taken into account.

  • Replenishment lead time - the longer the lead time the more inventory must be carried on hand and on order.
  • Volatility of historical demand - the higher the volatility, the more uncertainty, and the more inventory must be carried.
  • Projected (forecasted) demand during the lead time
  • Desired level of customer service - the amount of extra inventory to carry to accommodate demand or supply uncertainty.

An items order point is calculated as Forecast Over Lead Time + Safety Stock. In the S&OP Platform, the forecast is defined in the Demand Plan and the Safety Stock is calculated in the Supply Plan. The Order Point is used in day to day requirement planning.

Read the article Basic Order Quantity and Replenishment Logic to learn more.

System Settings

Systems settings are the general DemandCaster settings that are applied to all items within the DemandCaster platform. When starting to use DemandCaster, we recommend reviewing and then editing the base planning policies in system settings. In most cases, the current settings that are applied will be applied during setup based on your planning policy questionnaire. However, we do suggest that you review each setting along with the articles in the section System Settings to understand the definition and purpose of each system setting.

Critical Item Settings That Must Be Monitored and Actively Managed

Understanding the the purpose of DemandCaster is to help defines an items order point, the following settings are the most critical settings in DemandCaster to ensure the items order point and thus requirement plan provide the desired result.

  • Lead time: A lead time of 0 assumes immediate availability of a replenishment order. As a result, no safety stock is calculated. In addition, monitor lead times closely through the Lead Time analytic. A lead time too short will cause the order point to be too low increasing the likelihood of stock outs. Conversely a lead time too long will cause the order point to be too high causing excess inventory to be created. A review of the lead time logic is described in the article Lead Time Analysis.
  • What to stock versus not to stock: This is the Inventory or Non-Inventory setting. A non-inventory setting causes the item to have no safety stock calculated. Its order triggers are also slightly different than a stock item. Typically a non-inventory item will have no forecast. A view of all the stock settings are provided in the Stocking Analysis.
  • Make versus Buy: If an item has a BOM it will require the setting of Make in order to explode through its BOM otherwise DemandCaster assumes the entire item will be purchased thus there will be no BOM explosion. A view of the make versus buy settings for the items are provided in the Stocking Analysis.
  • BOM structures: Must be accurate in order for the finished goods to properly drive demand for its components. You can view the BOM's in the data maintenance or in the item planning detail.
  • On hand inventory: If the on hand is not correct, the plan will not be correct.
  • Customer, production, purchase order statuses: These are Open and Closed statuses that must be properly managed. An open order that is really closed will overstate the availability in DemandCaster.
  • Distribution and manufacturing network relationships: Source and destination locations must be correctly defined in order to properly pass requirements from location to location. The item location table establishes these relationships. In summary, If the item at a specific location is replenished from another location, the primary source location of the destination location must be specified.  If the item at the specified destination location is manufactured at the same location, the source location will have the same location code. If procured from an outside supplier, the primary source location will be blank. Learn more in the Distribution Requirement Planning (DRP) Add-On Overview article.


DemandCaster Analytics are designed to help users focus on the most important items and also help review and modify planning settings and other variables so that appropriate planning and stocking policies may be applied.

The Analytics are built with a logical sequential work flow as described below and organized in the Analytics menu group. To learn more, please read the article Analytics Logic

  1. The Classification Analysis sets the items Business Importance (BI) by item and location (if applicable).
  2. The Segmentation Analysis sets the items Order Frequency (OF), Accuracy (A), and Forecastability (F)
  3. The Lead Time Analysis calculates the actual versus stated (planned) lead time by item and location (if applicable).
  4. The Stocking Analysis is run for recommendations on what should be stocked and maintained in inventory versus not stocked and made or purchase to order.
  5. The Forecast Analysis provides the detail of the forecast source including statistical measures.
  6. The Stocking analytic and Lead Time analytic drives the Order Point Calc which calculates the safety stocks and order points for those items that are stocked.
  7. On a periodic basis (monthly is recommended) the Order Point Review should be reviewed to assess actual to plan performance among other metrics to assess if any of the set parameters need to modified.

Demand Planning

Things to Consider

  1. Each month or planning period, the S&OP demand and supply planning process follows a very specific linear work flow as outlined in this article.
  2. Setting a planning hierarchy is a critical part of generating appropriate forecasts. The demand planning hierarchy is top down one to many within the sales level and also within the product level. Read the article DemandCaster S&OP Planning Hierarchy to learn about the planning hierarchy. If a node is not assigned to a hierarchical level the item will not be forecasted.
  3. We recommend developing a planning process work flow with responsibilities and timing clearly defined. This is particularly important when implementing a formal demand and supply planning process via the S&OP platform. Here is a suggested work flow with roles and responsibilities when implementing a S&OP.
  4. We do not recommend running new forecasts and safety stocks more than once per month especially if you have long lead times. Excessive changes to these values increases nervousness in supply planning. Of course, if you need to make updates on an ongoing basis, nothing prevents you from doing so.
  5. You may automatically update the demand plan data with each new upload. To enable the automatic update, enable the "Recalculate SOP Actual History After Upload" setting under Sales and Operations Planning Settings in System Settings.
  6. When introducing new items, consider linking the new item to a similar old item per the article old to new linking. Also, new items with no history need to be assigned to their demand stream per the article assigning new items to the planning hierarchy.
  7. After the close of the prior fiscal month or planning period, run the analytics as described in the Analytics Logic article. Please note that some analytics apply the change to the next requirement plan depending on the options set. For example, safety stocks may be updated depending on the method chosen. As a result, we recommend making changes to Order Points only after reviewing the results in the Order Point Review to determine if a change needs to be made.

S&OP Planning Progress Tool Bar

The toolbar sections illustrate what needs to be run via the color coding and timestamps. In short, anything that is yellow or red should be run prior to approving the plan. If a predecessor process is updated, all the subsequent steps need to be run again.

  • Green: Updated.
  • Yellow: Needs to be run. A process that precedes it has been run but there has been no change to the base data.
  • Red: Data out of date, needs to run.

Running the Demand Plan

At the start of each planning period and after any prerequisite data prep is completed, run the new Demand Plan.

Demand plans forecast by customer, channel, or market based on your companies setup. Typically, demand plans are not by distribution/supply locations unless defined to do so.

To run a Demand Plan:

  1. Click on [Demand Plan] in the progress bar
  2. Click "Run Demand Plan" button to commence the Demand Plan process steps

Once a demand plan period is edited by the user, it will NOT change unless a user edits the change. When editing at a level above the edited value, the basis of how the edit is distributed is determined by the "Redistribute Forecast" system setting . The process is covered in the article Editing Demand Plans.

Statistical forecast based demand plan values will change with each new demand plan cycle unless there is a frozen period applied or an edited period.

Apply 4-P  Overrides (if applicable)

At times, user may want to enter lifts or reductions to the demand plan to accommodate promotions, cannibalization, or other demand plan modifications. We recommend making these changes after the demand plan edits are completed. To learn more, read the article 4-P Planning Work Flow

Here are some additional points of consideration:

  • A planned or executed 4-P plan locks the base demand plan for the designated item, customer, and period.
  • A Demand Plan for the designated item, customer, and period that has an executed 4-P can not be changed unless you un-execute the 4-P back to concept first.
  • 4-P plans are layered on top of each other in order of creation. This maintains the starting base demand plan for each 4-P within a item, customer, and period to assure there is a consistent base to measure performance. Each 4-P that is layered on top of an existing 4-P will have a different starting base demand plan.

Supply Planning

Once the demand planning step is complete, the supply planning process should commence since the demand plan is an input to the supply plan. The supply plan process automatically runs a requirement plan in order to see the impact of the plan against inventory.

Running the Supply Plan

The Supply Plan process translates the demand plan to a supply plan otherwise known as the MPS.

To run a Supply Plan:

  1. Click on [Supply Plan] in the progress bar
  2. Click "Run Supply Plan" button to commence the supply plan

Upon completion of supply plan, you should review the output in the Requirement Review to assess any shortages or issues that necessitate a change in the demand or supply plan

To view the results:

  1. Click S&OP in the breadcrumb
  2. Click "Requirement Review" in the drop down

From the UI. click Suggested Orders to review the detail.

Run Capacity Review (if applicable)

Upon completion of the Requirement Review, run Capacity Review to assess any capacity related issues that may necessitate a change in the plan

To view the results:

  1. Click S&OP in the breadcrumb
  2. Click "Capacity Review" in the drop down

Within the capacity review, you may review overcapacity situations and assess their impact on the plan and make changes as required.


The last step is the approval step. This step is covered in the article Approval. This steps allows the next requirement plan to use the approved demand plan and supply plan values updated during the demand and supply planning cycle. It also saves the demand and supply plans in the waterfall.

Again, the demand and supply planning process is the output to requirement planning. This means that when S&OP is enabled all settings and changes must go through the demand and supply planning steps and then approved before going live to requirement planning. Short term demand plan edits may be edited in the requirement plan detailed view, but those values will not be retained following the next S&OP approval.

Day to Day Requirement Planning

Once the plan is approved, day to day requirement Planning is executed as described in the article Running a New Requirement Plan (S&OP Platform)

Requirement planning can have multiple users running at the same time. We do not recommend having multiple people working on the same item at the same time independently. A best practice is to segment the planning by vendor or some other sub-set of data. Creating a saved filter helps filter the data quickly by person or some other definition.

Other Considerations

Active/Inactive, Enable/Disable Item Settings

At times, there could be items that are in DemandCaster that are not required for planning. These items can be turned off however the method chosen could have an impact on demand planning. There are two methods to deactivate items. Read the article How to De-Activate, Re-Activate, Disable, and Enable Items to learn more. A summary is provided below.

  • DIsabling an item is like a hard removal of an item. If an item is disabled it will not show up again even with an order. It is OK to disable items when S&OP is not running. However, if the S&OP Platform is used, a disabled item will not be included in S&OP history and thus will not contribute to any aggregate forecasting.
  • An old item linked to a new item may be disabled and it will continue to drive the forecast for the new item.
  • Deactivating an item turns the item off from lists but retains the items sales in the Demand Plan history. This is important when running S&OP since a deactivated items history will still be used for forecasting.
  • A deactivated item may turn back on if a new order for the item is entered into the ERP. There is a setting in system settings to prevent the item from turning on.
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