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Sales and Demand are two completely different parameters.
Integrated Planning in supply chains typically starts with Demand Planning. Most companies use some version of S&OP or IBP for this process. The question is… how do we define Demand?
Is it the consumption of our products by consumers? Is it consumer purchase? Or the purchase done by retailers (for the offline channel)? Or the sales made by the company to its distributors? The answer varies widely across companies.
Let me shock you a little. All these definitions of demand are erroneous. Real demand is what the consumers would have bought if the product was available on the retail shelf (or the online catalogue).
If we use Sales as a surrogate for Demand, we run into two types of problems. If an item is out of stock, its sales will suffer. If we use this value of sales for our demand projections, we would underestimate demand and perpetuate stockouts.
On the other hand, companies also have significant influence over their channel partners to push extra sales at times. Using this figure in demand planning leads to higher projections and excess inventory.
We must correct for stockouts and push sales before trying to use Sales figures as a surrogate for Demand.