Concept: What They Represent
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Sales refer to actual customer purchases — the products that were bought, paid for, and fulfilled.
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Demand reflects the true market need or desire for a product — including purchases that were attempted but couldn’t be fulfilled due to stockouts, capacity issues, or other constraints.
Put simply: Sales show what happened. Demand shows what customers wanted to happen.
Data Sources: Where They Come From
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Sales data comes from historical transactions such as shipments, customer pickups, and invoices. It represents fulfilled orders.
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Demand includes sales but goes further — incorporating lost sales, backorders, market signals, and research to capture unmet needs.
Availability Impact: What Limits Them
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Sales are directly affected by product availability. If a product is out of stock or there are fulfillment delays, sales can be lower than actual demand.
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Demand exists regardless of whether the product was available. Even if nothing could be delivered, demand may still be high.
Time Period: Past vs. Future
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Sales are a backward-looking metric. They show what was purchased in the past.
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Demand has a forward-looking component. It reflects what customers want now and in the future, which is key for planning.
Ownership: Who Manages It
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Sales data is typically owned and managed by Sales or Commercial teams, as it reflects revenue performance.
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Demand is owned by Demand Planners or S&OP (Sales & Operations Planning) teams, who use it for forecasting and inventory decisions.
Use in Forecasting: Role in Planning
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Sales data is used to identify trends and performance benchmarks.
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Demand is the foundation for replenishment, production planning, and capacity forecasting. Without demand insight, planners are essentially guessing.
Risk in Forecasting: What Could Go Wrong
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Relying only on sales can be misleading. It may result in:
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Stockouts, if real demand exceeds past sales
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Excess inventory, if historical sales were unusually high
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Cash flow issues, from holding the wrong stock
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On the other hand, using demand data with poor assumptions can lead to the same problems:
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Forecasting demand that doesn’t materialize results in waste.
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Missing true demand causes lost sales.
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Conclusion: Why It Matters
Understanding the difference between sales and demand enables better planning, reduces risk, and improves service levels. It ensures that decisions are based on what the market wants, not just what was delivered.
Whether you’re in supply chain, finance, sales, or operations, recognizing this distinction helps align teams, balance inventory, and deliver value to customers without surprises.
In short:
✅ Sales show what happened
✅ Demand shows what should have happened
🔍 Use both — but plan with demand in mind.
