What is demand sensing designed to do?

Demand sensing is primarily focused on generating forecasts that are responsive to near-term changes in demand, which allows organizations to react quickly to fluctuations in customer behavior and market conditions. This is achieved by leveraging real-time data, such as point-of-sale information, inventory levels, and other relevant inputs that reflect the most current market situation.

By using this methodology, companies can refine their supply chain operations to better align with the actual demand, reducing the risk of stockouts or overproduction. This adaptability is crucial for businesses that face volatile markets and customer preferences, as it enables them to make smarter, data-driven decisions rather than relying solely on historical data.

In contrast, options that suggest creating long-term forecasts or ignoring recent data do not align with the principle of demand sensing, which emphasizes the importance of current information and responsiveness over long-term trends or static production standards. Additionally, the idea of standardizing production volumes contradicts the flexibility that demand sensing aims to provide, as it is designed to accommodate variations in demand rather than impose fixed production rates.