# 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.