What Is Firm Demand in Planning? Committed Orders Explained

Firm demand is committed, real demand from confirmed customer orders, as opposed to a forecast, which is only an estimate. It represents units a customer has actually ordered and that you are obligated to deliver, so it drives requirements at full value and is never reduced by a planning rule. Firm demand is the backbone of a defensible plan: it is what you must satisfy, while forecast is what you predict you will need to satisfy.

This entry defines firm demand and shows how it behaves inside EDGEBIC by User Solutions. For the wider index of planning terms, see the manufacturing glossary, and for the estimate that firm orders gradually replace, see forecast consumption.

How it works

The difference between firm demand and forecast is the difference between a signed contract and a sales projection. A forecast says "we expect to sell 400 units of Widget A in July." Firm demand says "these specific customers have ordered these specific quantities for these specific dates." The book's shorthand for the confirmed state is a purchase order that has been received and accepted, not a draft still under negotiation.

Firm demand behaves differently from forecast in three ways:

• It is never suppressed. Consumption rules that combine forecast and firm always pass firm demand through at full value; only the forecast portion is reconciled.
• It dominates near term. Inside a demand time fence, forecast is ignored and only firm demand counts, because close to today the real orders should already have overtaken the estimate.
• It is the promise baseline. Available-to-promise subtracts firm demand from supply to decide what is still free to sell, so the accuracy of a promise rests on the accuracy of firm demand.

The cleanest source of firm demand is the confirmed sales-order line, measured by its open balance, the ordered quantity minus what has already shipped, and placed in the bucket of its due date.

A concrete example

A make-to-stock product opens with 80 units on hand and weekly buckets. Two confirmed sales orders are due next week and one the week after. The forecast for each week is 30.

Read the firm-demand column. Week 2 carries 60 of committed orders, which exceeds both its forecast of 30 and the 50 units projected to be on hand, so the balance drops to minus 10, a projected stockout driven by real orders, not by a guess. Because the firm demand is committed, the planner cannot wish it away; the only levers are to build more supply or to renegotiate the orders. Notice too that in week 2 the gross requirement follows the firm figure of 60 rather than the forecast of 30, because firm demand, being committed, wins wherever it is larger.

How EDGEBIC uses it

In EDGEBIC's master production schedule, firm demand is sourced from confirmed sales-order lines, using each line's open balance bucketed by its due date, and displayed in its own Firm Demand column alongside forecast and gross requirements. Build-to-stock orders are treated as supply, appearing as scheduled receipts rather than as demand, so the demand and supply sides never overlap and the same order is never counted twice.

This sourcing rule is deliberate. A make-to-order job is derived from a sales-order line, so counting both would double the demand; the plan counts the sales line once and lets the fulfilling build show up as a receipt. Firm demand also interacts with the demand time fence: inside the fence, only firm demand drives requirements, giving the planner a near-term picture built on committed orders rather than a stale forecast. A line only counts once its parent sales order is confirmed, so unconfirmed and draft orders never inflate the plan.

For the full picture of firm demand, forecast, and fences together, read firm demand, forecast and time fences in EDGEBIC. To see how firm demand feeds the build plan and gets promised against, continue with the master production schedule bucket and available to promise.