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Forecast Consumption

Forecast Consumption: Forecasts are estimates of demand and sales orders are actual demands. Forecast consumption is a process in which an estimate of demand is replaced by actual demand i.e. forecast by sales order. Forecast consumption ensures that demand is not duplicated in supply planning process.

Consumption Options: Local: Forecasts are created for individual organizations. You create and manage them in an organization in the source instance and that organization is their ship from organization. Global: Forecasts with no pre-specified ship from organization associated to them. Forecast for all shipping organizations is combined in global forecast.

For forecast consumption, the planning engine uses:• Schedule Shipment Date• Customer Request Date• Promise Date

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Example-

In a forecast consumption process, the forecast quantities are relieved based on the schedule shipment date in the sales order line.Assume, for product SO-0070,Sales order is for 25 nos. and has a scheduled shipment date of D1 in Week 3

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Backward and Forward consumption days

• Backward days = 10• Forward days = 20

Forecast consumption (For SO = 25 nos.) - On schedule shipment date = 5, In backward consumption days = 5+5, In forward consumption days = 8+2

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Now, there is a sales order (SO-0071) of 25 nos. has scheduled shipment date of D1 in Week 3 and SO-0071 is for 15 nos. and has a scheduled shipment date of D2 in Week 4.

The total demand statement now looks as given below

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Role of past due forecasts and shipped sales orders in the consumption process

• Lets assume that the planning process was run on D1 of W1 and current day is D2 of W3.• SO-0070 (25 nos.) will get shipped out on D1 of W3 and SO-0071 (15 nos.) will get shipped out on D2 of W4.• So by default, the planning process drops off past due forecasts and does not collect closed (shipped out) order lines.

• This results in incorrect total demand statement as forecast of W4 and W5 earlier got consumed by 8 nos. and 2 nos. respectively by SO-0070.• To avoid this, we need to collect past due forecasts and closed sales orders during data collection process and make them available for forecast consumption process which is executed when the supply chain plan is launched.

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Setups involved-

Following setups are involved to enable forecast consumption in ASCP.

1. Define forecast control attribute for items forecasted.

2. Define consumption enabled forecast sets.

3. Define backward and forward days for forecast sets.

4. Define outlier percentage for forecast sets.

5 Collect data and specify forecast sets to be used in the demand schedule in the "Organizations” tab of plan options.

6. Enable “Include Sales Orders” check box.

7. Check “consume by forecast bucket” to allow only those SOs falling in a forecast bucket to consume forecast of that forecast bucket.

8. Ensure that Launch Snapshot is set to Yes while launching the supply chain plan as forecast consumption in ASCP happens during the snapshot phase.

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Defining Forecast set-

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Forecast consumption related profile options

• MSC: Consume forecast within demand time fence ( Yes…first consume and then drop, No……first drop and then consume beyond DTF)

• MSC: Consume forecast with no demand class ( Yes… will ensure that forecast that are not associated with a demand class will also get consumed)

• MSC: Sales Orders Offset Days ( Used to decide the extent of closed sales order lines that ASCP will collect and use in the forecast consumption process)

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Approach to decide collection time-spans for past due forecasts and Closed orders

Option 1:Forecasting efficiency is good up to 90%.

Shipment Collection Span = Forward consumption days

Shipment Collection Span = Forward consumption days

Current Week(Day of plan run)

There is minimal possibility of having unconsumed forecasts in this time span.

Option 2: Forecasting efficiency is not good up to 90%.1. Update of backward and forward days in such a manner that forecast accuracies will be higher over this time span and then follow option 1.2. The collection time span for both old forecast and sales orders need to be set equal to “forecast revision frequency”.3. In spite low levels of accuracy if the policy is not to carry past unconsumed forecasts to current planning bucket, then again Option 1 can be followed.

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