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# Demand Signal

## Definition

Information about consumer purchasing activity that propagates upstream
through a supply chain to inform supplier replenishment and production
decisions. A demand signal may be a point-of-sale data feed, a retailer's
replenishment order, or a forecast. Signal quality — latency, accuracy,
and granularity — determines how well upstream production can be
synchronised with downstream consumption.

## Source

Coordination Mechanisms in Modern Supply Chains, §Demand Signals and
Information Flow

## Supply Chain Domain

Coordination

## VSM Assignment

S2 — The demand signal is the primary coordination variable of the supply
chain, analogous to the price signal in a market. It tells each upstream
node what the downstream node requires, enabling synchronised response
without central direction.

## WoN Concept

Effectual Demand — Smith's effectual demand — the demand of those willing
and able to pay — is the signal that calls productive resources into action.
The modern demand signal is effectual demand made explicit and machine-readable:
instead of inferring demand from price movements, modern supply chains
transmit demand data directly. Both serve the same coordination function
(telling producers how much to produce), but where Smith's effectual demand
works through price as a lagged, aggregated signal, the modern demand signal
aims for real-time, granular transmission.
