Why Traditional Demand Planning Is Failing in Volatile Markets

Introduction 

In recent years, supply chains have faced unprecedented turbulence. Global pandemics, geopolitical conflicts, inflationary pressures, and climate-related disruptions have created a new reality: volatility is now the baseline

In this context, companies that continue to rely on outdated demand planning methods are exposing themselves to major risks — from stockouts and overstocking to missed revenue and eroded customer trust.

This article explores why traditional demand planning processes are no longer fit for purpose, the key challenges companies are facing, and why action is urgently needed. 

Volatility Is the New Normal

The 2025 Reuters Events & Maersk Supply Chain Europe Report offers clear insights: more than two-thirds (68%) of supply chain professionals expect increased volatility in the next 6 months.

From Brexit to tariff changes, labor shortages, and global shipping delays, supply chains are being stretched from all sides.

What’s even more concerning is that while nearly 70% of supply chain professionals say they could respond to disruption within 72 hours, 30% estimate to take a week or more, leading to considerable losses. 

Why Traditional Methods Fall Short

Many organizations still rely on Excel-based planning or rigid ERP systems to build demand forecasts. But these tools were not built for today’s environment :

• Manual processes delay response time
  
• Static models fail to adjust to changing market signals
  
• Lack of external data (e.g. weather, events, macroeconomic indicators)
  
• Little to no simulation capability for testing disruption scenarios

These limitations make it nearly impossible to plan accurately in a volatile market.

The Bullwhip Effect Reimagined

One of the most dangerous side effects of poor demand forecasting is the bullwhip effect — when small changes in demand at the consumer level result in massive distortions further upstream.

With longer lead times and more complex product portfolios, this distortion is becoming even more pronounced.

The Cost of Inaction

When companies fail to modernize their planning processes, they suffer from:

• Excess inventory leading to write-offs and high holding costs
  
• Stockouts and loss of customer satisfaction
  
• Inefficient use of production and logistics resources
  
• Inability to plan promotions or product launches effectively

In short, outdated planning systems cost companies money, market share, and agility.

Conclusion: Time to Adapt

As volatility becomes the norm, companies need to fundamentally change their approach to demand planning. The question is no longer whether disruption will happen — but how prepared you are to respond. This means adopting more agile, intelligent, and integrated planning tools.