In the context of SAP IBP, what does External Demand refer to?

External Demand in the context of SAP Integrated Business Planning refers specifically to customer-driven demand that necessitates orders from outside the organization. This underscores the importance of understanding the needs and preferences of external customers, as they directly influence inventory levels, production schedules, and overall supply chain management.

External Demand is distinct from internal factors such as sales strategies or marketing promotions; it focuses on the actual orders placed by customers, which are crucial for accurately forecasting and aligning supply chain operations with market requirements. Recognizing this type of demand enables organizations to better respond to market trends, enhance customer satisfaction, and optimize their inventory levels based on real external requirements rather than just internal estimates or assumptions.

This comprehension of customer-driven demand helps businesses to build responsive and agile supply chains that are capable of adapting to changing market conditions and customer preferences.