THE DICTIONARY

Abnormal Demand refers to customer demand in any given planning period that falls outside the normal statistical limits or tolerances established by organizational policy.

An Aggregate Forecast is a time-phased estimate of future sales developed for groupings of products or product families rather than individual stock-keeping units (SKUs).

In the Integrated Business Planning (IBP) framework, an Assumption is a documented and agreed-upon piece of thinking that underlies business plans when definitive facts are unavailable.

A Baseline Forecast is an estimate of future demand that relies on historical demand data to project future market requirements.

Capacity Requirements Planning (CRP) is a detailed function within Manufacturing Planning and Control (MPC) systems designed to ensure the feasibility of production and material plans.

Characteristics-Based Forecasting (CBF) is a specialized demand planning technique that predicts future sales for products based on their specific features, options, or attributes, rather than forecasting at the finished end-item level.

Demand Execution is a tactical, short-term process designed to match actual incoming sales orders to the planned forecast on a weekly, daily, or hourly cadence.

Demand Management is the overarching process of integrating upstream and downstream demand planning signals across the supply chain to balance customer requirements with an organization's output capabilities.

Demand Planning is the comprehensive process of constructing rigorous demand estimates for products or services across the entire supply chain, ranging from raw materials to final consumer needs.

The Demand Review (also known as the Demand Management Review or DMR) is the second step in the monthly Integrated Business Planning (IBP) process. It serves as the primary forum where the commercial management team and Product Management, reaches a consensus on the unconstrained view of future demand.

Demand Segmentation is the strategic practice of categorizing demand profiles into distinct groups based on shared characteristics, such as customer priority, geographical location, contract type, or product seasonality.

Demand Sensing is the application of real-time data and advanced analytical methods, such as machine learning and pattern recognition algorithms, to capture immediate market behavior and improve short-term forecast accuracy.

Demand Shaping is the proactive use of commercial tactics, such as price incentives, advertising campaigns, product positioning, substitutions, and trade programs, to intentionally influence customer purchasing behavior.

Demonstrated Capability (or Demonstrated Capacity) is a critical management principle in Integrated Business Planning (IBP) that refers to the objective measurement of a resource’s proven capacity.

Dependent Demand refers to the demand for a component, raw material, or subassembly that is directly derived from the bill-of-materials (BOM) structure of a parent item or final product.

Forecast Bias is defined as a consistent deviation from the mean in one specific direction, meaning that operational plans continually either understate or overstate a situation.

Forecast Consumption is the tactical process by which planned demand (the forecast) is systematically reduced and replaced by actual customer orders as those orders are received.

Forecast Error represents the mathematical difference between actual demand and forecasted demand, while Forecast Accuracy measures how correct a prediction is.

A Forecast Horizon is defined as the designated period of time into the future for which a specific demand or supply prediction is prepared.

A Forecast Interval (also commonly referred to as a Forecast Period) is defined as the specific unit of time for which a demand or supply projection is prepared and aggregated.

Gap Analysis, within the context of the Integrated Reconciliation Review (IRR), is the financial and operational process of mathematically calculating the difference between the organization's current projected performance (based on the latest IBP plans) and its committed targets (Strategic Plan or Annual Operating Plan).

Independent Demand refers to the market-driven requirements for an inventory item that is completely unrelated to the demand for any other product or component within the network.

Integrated Business Planning (IBP) is a comprehensive, senior management-led business management process designed to synchronize an organization’s strategy, operations, and financial performance.

The Integrated Reconciliation Review (IRR) is the fourth step in the monthly five-step Integrated Business Planning (IBP) process. It serves as the critical control tower where the specific plans resulting from the Portfolio, Demand, and Supply reviews are consolidated, harmonized, and converted into a unified financial view.

Integrated Tactical Planning (ITP) is a rigorous, weekly cross-functional re-planning process designed to ensure the business stays on track to deliver the commitments made during the monthly Integrated Business Planning (IBP) cycle.

Intermittent Demand (often referred to as discontinuous or lumpy demand) is a demand pattern characterized by large or highly variable quantities that are interrupted by extended periods with absolutely no market activity.

The Management Business Review (MBR), often referred to as the Executive Review, is the fifth and final step in the monthly Integrated Business Planning (IBP) cycle. It serves as the definitive executive forum where the leadership team formally translates strategic goals into an actionable operating plan.

Management by Exception is a management principle wherein decisions that cannot be made at one level of the organization are passed up to the next level for resolution.

The Order Penetration Point acts as the push-pull boundary in the supply chain. Learn how to optimize this decoupling point to reduce inventory risk in IBP.

A Planning Horizon is the specific amount of time into the future that a business plan extends. It is a critical parameter because the required level of detail, frequency of review, and involved stakeholders change drastically depending on how far out the plan looks.

The Portfolio Review (often called the Product Management Review or PMR) is the strategic management forum focused on the organization’s entire product and service lifecycle.

A Probabilistic Forecast is an advanced statistical approach that represents the inherent uncertainty of future market requirements by generating a complete range of potential outcomes structured as a probability distribution.

A Product Mix Forecast is a detailed prediction that specifies the exact proportion of individual products that will be sold within a given product family, or the proportion of specific options ordered within a broader product line.

Rough-Cut Capacity Planning (RCCP) is a capacity planning technique used at the Master Scheduling level to test the feasibility of the proposed Master Production Schedule (MPS) against critical constraints.

Sales and Operations Planning (S&OP) is a structured, periodic decision-making process designed to balance customer demand with supply chain capabilities.

Scenario Planning is a structured decision-making process that identifies critical events before they occur and uses this knowledge to determine effective alternatives.

The Single Operating Plan is the definitive consensus roadmap generated by the monthly Integrated Business Planning (IBP) process. It represents the agreed-upon direction for the entire business, consolidating product portfolio, demand, supply, and financial projections into one common organizational plan.

The Supply Review (also known as the Supply Management Review or SMR) is the third core step in the monthly Integrated Business Planning (IBP) cycle. It is the formalized process where the supply chain organization articulates its definitive plan to meet the requirements established in the Demand Review.

In Integrated Business Planning (IBP) and Integrated Tactical Planning (ITP), a Time Fence is a policy guideline that marks a specific boundary in the planning schedule. It defines the point in time where the rules for changing supply, demand, or production shift from automated flexibility to manual restriction.