A successful demand planning process accurately forecasts demand and revenue streams, and subsequently drives the next steps in the S&OP process which are Inventory, Supply Planning, and Optimization. Therefore, it is a crucial step in an organization's S&OP process.

One of the many ways to improve the forecast is to forecast using a pyramid process, starting at the base, then forecasts the subsequent levels moving upwards. The objective of using the pyramid forecast process is to use the less detailed portions of the pyramid to improve the base level forecast of the pyramid.

Sometimes statistical prediction is confused with statistical forecasting. Forecasting can be considered a prediction model but not all prediction models can be considered forecast models.