What are the differences between demand forecast and sales forecast?

Demand forecast is finding of the requirement of the market or market demand. Sales Forecast is to find the share of the market demand which we propose to sell or achieve. 

Demand Forecasting and Sales Forecasting are different, and the results of each can have a dramatic impact on your profitability. Demand Forecasting and Sales Forecasting should be calculated with some similar and some different data points. While closely related, the two resulting forecast numbers will not be the same in most business situations. The forecast results will impact the inventory replenishment by impacting available inventory, expected inventory orders, and sales. An inventory replenishment system that is based on a demand forecast (demand driven) can reduce the risk of lost sales while improving service. This in turn delivers higher sales by connecting inventory levels with demand forecast. - See more at: http://www.data-profits.com/blog/differences-between-demand-forecasting-and-sales-forecasting-for-inventory-replenishment

Thanks Ibrahim !

Both are inputs of the inventory replenishment process.

It's up to you to choose one or another method for a yearly replenishment planification:

Estimating the customer demands

or  

Estimating your sales targets.

Demand forecasting is the average quantity of demand sales specially the key product or a promotional ,seasonal that is highly demanded by the consumer.  By monitoring the demand sales forecasting is the key and one big factor to generate sales and hitting the target sales plan.Demand forecast can help you  monitor the sufficient stock level and inventory accuracy.Using this method you can balance the supply and demand and helps you understand the flow of the sales  demand. Likewise to Sales forecasting is a useful technique to control the quantity of ordering . Sales forecasting is a lay out of the sales plan or sales target ,where you are estimating the sales target on that particular year. Sales Forecasting can help us control the losses of the sales.It can give us theory how the sales flow .

Sales forecast is the forecast actually made by the sales based

on the company's current position based on its budget, current

financial situation, current profit margin etc., which will be

decided by sales team and sales team management personnel

which will be fixed and forecast will be made accordingly

Demand forecast is the forecast that is actually needed by

the customer or by market.  ie It will reflect the actual

demand situation in the market. 

Both sales forecast and demand forecast may or may not be

same for a typical condition.  In general, sales forecast can

be adjusted to reduce or exceed the demand forecast based

on the performance of the company.

Demand forecast is about the demand for the product at a certain price in a given territory. Sales forecast is  for the company, territory wise or sales unit wise. That is the sales targets (product wise).

The differences between demand forecasting and sales forecasting are subtle in some places; for example, they both use sales history. The major difference is in what history is input into the algorithms. Demand forecasting must correct for a variety of external factors (like promotional events) to calculate base demand. Planning inventory replenishment requires scrubbing the sales data of events that will not repeat. Likewise, it also necessitates the ability to buy inventory for future, new events.

Demand forecasting and Sales Forecasting are different and their respective uses should not be the same for the many reasons highlighted today. Technology hardware and the resulting software runs faster for less money and more accurately than even5 years ago. That means today you have better choices to pick and choose for your business need. These choices provide significant opportunities to improve your inventory replenishment practices and achieve higher sales, lower operating costs, and better service for your customers.

Forecasting the total quantity of a good/service needed/wanted by the consumers irrespective to the their financial capability  is the demand Forecast (e.g. Demand for milk).  This is followed by Forecasting the market for a particular product (s) (e.g. Processed Milk) and lastly forecasting firm's market share (s) (e.g. how much processed milk the firm is expected to sell) ending up with a sales forecast.

Demand forecast deals with possible demand of a particular good or commodity or a service in a given span of time or territory. This helps companies to adjust their sales and marketing strategy. For example, in share market the prices of the shares are adjusted as per the demand forecast.

However, Sales forecast deals with probable total sales number for the organization in all territories and is generally used to plan future budget and ventures of the same or sister concerned companies.

Totally agree with VENKITARAMAN KRISHNA MOORTHY VRINDAVAN 

VENKITARAMAN KRISHNA MOORTHY VRINDAVAN Project Execution Manager & Accounts Manager at ALI INTERNATIONAL TRADING EST.

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