Because sooner or later you will have to change an employee’s duties in a way the employee sees as a demotion. You may call it a transfer, or a reassignment. But the employee will know it as a dreaded demotion. And a demotion (no matter what you might call it) is hurtful and embarrassing. By putting a demotion and change-in-duties policy in your employee handbook, your employees will know the circumstances under which they might experience a demotion or reassignment.
If you think of demotion always as a negative form of discipline, take another look.