What is a necessary condition when setting up Demand Sensing for analyzing demand changes?

In the context of Demand Sensing within SAP Integrated Business Planning (IBP), an essential condition is to run the Demand Sensing (full) algorithm regularly while updating it frequently. This approach allows the system to capture the most recent changes in demand patterns and fluctuations, thereby improving forecasting accuracy. Running the algorithm weekly ensures that the system is frequently recalibrated to optimize responsiveness to market dynamics, while daily updates allow for quick adjustments in demand forecasts as new data becomes available.

This practice is critical, as demand can shift rapidly based on various factors such as consumer preferences, seasonality, or external events. Regular execution of the algorithm and daily updates provide a framework for the system to adapt and respond promptly to these changes, ensuring that demand planning aligns closely with actual market conditions.

In contrast, focusing solely on customer feedback, analyzing historical data at an aggregated yearly granularity, or relying exclusively on external market reports would not provide the same degree of agility and responsiveness necessary for effective Demand Sensing. These approaches may lack the timeliness and frequency needed to accurately reflect real-time demand shifts, thereby limiting the system's effectiveness in adapting to changing market circumstances.