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Collaborative Demand Planning between manufacturers and their distributors allows both partners to streamline their work processes and ultimately benefit from a more accurate forecast, better market transparency, greater stability, reduced inventory and better communication.
Within Collaborative Demand Planning the buyer and seller develop a single forecast and update it regularly based on information shared over the Internet.
Agree on the process: define role of each partner, establish confidentiality of shared info, commit resources, agree on exception handling and performance measurement.
Create a joint business plan and establish products to be jointly managed including category role, strategy and tactics.
Develop a single forecast of consumer demand based on combined promotion calendars and analysis of POS data and causal data.

Develop a single order forecast that time-phases the sales forecast while meeting the business plan's inventory and service objectives and accommodating capacity constraints for manufacturing, shipping, etc. Identify and resolve exceptions to the forecast, particularly those involving the manufacturer's constraints in delivering specified volumes, creating an interactive loop for revising orders.
Use the SAP Community Network (SCN) to find additional help content, such as discussions and blogs. The following is an example using the Collaborative Planning, Forecasting and Replenishment (CPFR) model. It is a business-to-business workflow, with data exchanged dynamically, designed to increase in-stock customer stock while cutting inventory.

This is achieved by comparing current measured values such as stock levels in each store adjusted for changes such as promotions against the agreed-upon exception criteria (in-stock level, forecast accuracy targets).

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