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Demand Planning and Forecasting

You can use this business process to perform your Demand Planning and Forecasting in SAP Supply Chain Management (SCM). Demand Planning is often the starting point of the entire supply chain planning process and is used to create a forecast of market demand for your company's products. The business process Demand Planning and Forecasting contains the following major planning processes:    Consensus Demand Planning Forecasting and Lifecycle Planning Promotion Planning

Consensus Demand Planning Consensus demand planning brings together all available information and enables a collaborative planning process that includes all partners. Forecasts and promotion plans are included automatically. Various calculations can be carried out to combine all information or to check for critical situations that are highlighted as alerts. The result of consensus demand planning is a final demand plan that can be transferred to: Supply planning for further planning Execution (in the ERP System and in SAP R/3) to trigger production or procurement SAP Business Intelligence (SAP BI) for archiving, reporting, or integration to other systems and solutions Consensus demand planning includes the following areas:    Data handling Collaborative demand planning Macro calculation

Data Handling Demand Planning should include all available information regarding historical sales, budgets, strategic company plans, or sales targets. This data can be obtained from different sources. Then, it can be transferred from any source to InfoCubes of SAP Business Intelligence (SAP BI). From there, the data can be read directly or transferred first to the liveCache to improve performance. Furthermore, the data can be restructured to generate characteristic combinations to be used as a planning basis. For aggregated planning, the results often need to be disaggregated to lower levels of detail. In this case, the historical data can be used to calculate the corresponding proportions of all details. Planned data (such as forecasts or a demand plan) is stored in liveCache. From there it can be extracted to InfoCubes for reporting, archiving, or integration into other systems or solutions. Collaborative Demand Planning

The required macros must exist. strikes. Forecasting and Lifecycle Planning A company's product portfolio probably includes a variety of products that are in different stages of their lifecycle and have different demand types. Furthermore.   . a single forecasting method that creates accurate statistical forecasts for mature. For example. free-standing inserts. trade discounts. such as quarterly advertising campaigns. coupons. simulation. such as hurricanes or earthquakes. Other examples of promotions are trade fairs. which increases the flexibility and strength of the application. Therefore. all Demand Planning data is available on the web so as to include internal and external partners in the planning process. they are used to combine different kinds of information. see the SAP Library under mySAP Business Suite SAP Supply Chain Management (SAP SCM) SAP Advanced Planning and Optimization (SAP APO) Demand Planning Demand Planning Process Planning Book Design Advanced Macros. The settings for the data transfer are maintained. to derive dependent measures. The complete planning environment exists. product displays. and work on critical situations for all involved planners. various methods have to be used to get the right answers. and natural disasters.Demand Planning includes a very flexible interactive planning interface to enable manual planning. Prerequisites      The planning object structure and the planning area exist. contests. and some manual adjustments. slow-moving or new products does not exist. Unfortunately. and conditions. Promotion Planning In Demand Planning. In particular. horizons. The ITS (Internet Transaction Server) is installed for web collaboration. market intelligence. dealer allowances. The corresponding master data and environment exist. Macro Calculation Macros enable calculation on the planning grid. as well as non-sales-related events. to create a macro that calculates the final demand plan as the sum of the forecast. the promotions. You can use promotion planning to record either one-time events or repeated events. This ensures that all partners agree on the defined quantities. They can be freely defined by planners using a simple macro language in the easy-to-use MacroBuilder. Macros can be executed during background processing and on the planning grid. Forecasting and Lifecycle Planning offers a toolbox for practical. proven forecasting that can be divided into three methods:    Statistical Forecasting Causal Forecasting Composite Forecasting Lifecycle Planning can be combined with each of these methods. such as competitors' activities. forecasting. you can plan promotions or other special events separately. upward/ downward economic trends. or to calculate alerts based on any check. More sophisticated macros can also add new planning logic.

The Lifecycle Planning Active flag is set in the Master forecast profile. but not necessary. For batch processing. The promotion key figures. the corresponding characteristic combinations or a grouping of them in selections exist. promotion attribute types. . promotion base.      Process The forecast can be carried out on any level. the corresponding activities and jobs need to be created. However. The life cycle profiles and their assignments exist. Assignments are recommended. and cannibalization groups exist. The forecast profiles exist.

Demand planning is based on historical information. Upload historical data to BI (SAP BI). historical orders must be provided from the order entry system. Therefore. or files.1. Possible sources of this data are the ERP System. non-SAP systems. SAP CRM. .

In most cases. Characteristic combinations describe all the details to be planned. Realign data structure (SAP SCM). 2.SAP BI can import the data from all these sources. Lifecycle planning is taken into consideration during the forecast calculation to model the different demand patterns during the life cycle. The historical data (or parts of it) is loaded to the SCM liveCache. 3. Plan life cycle (SAP SCM). it is recommended to read all data from liveCache. see the SAP Library under mySAP Business Suite SAP Supply Chain Management (SAP SCM) SAP Advanced Planning and Optimization (SAP APO) . it can be read directly from SAP BW during planning. whereas a phase-out profile mimics the downward sales curve that you expect the product to display during its discontinuation phase. proportional factors are used for this. 5. see the SAP Library under mySAP Business Suite SAP Supply Chain Management (SAP SCM) SAP Advanced Planning and Optimization (SAP APO) Demand Planning Demand Planning Process Master Data Setup Generation of Proportional Factors. see the SAP Library under mySAP Business Suite SAP Supply Chain Management (SAP SCM)SAP Advanced Planning and Optimization (SAP APO) Demand Planning Demand Planning Process Planning Area Administration DP Data Mart Exchange of Data Between InfoCubes and Planning Areas Loading Data from an InfoCube into a Planning Area. For more information. For more information. Therefore. and discontinuation phases by using so-called phase-in and phaseout profiles. the consecutive steps are independent of the original source of the historical data. maturity. A product's life cycle consists of different phases: launch. If data is stored in BI InfoCubes. manual maintenance is also possible. For more information. 6. InfoProviders (such as BI InfoCubes). and discontinuation. A phase-in profile mimics the upward sales curve that you expect the product to display during its launch and growth phases. that define the fraction for each detail. To facilitate this. 4. For better performance. Update characteristic combinations (SAP SCM). see the SAP Library under mySAP Business Suite SAP Supply Chain Management (SAP SCM) SAP Advanced Planning and Optimization (SAP APO) Demand Planning Demand Planning Process Master Data Setup Maintenance of Characteristic Value Combinations Realignment and Copying of Data. Calculate proportional factors (SAP SCM). . Planning is often not carried out on a very detailed level. Alternatively.Demand Planning Demand Planning Process Planning Area AdministrationDP Data Mart. new combinations can be loaded from planning object structures. the planning results on the aggregated level must be disaggregated. Load data to LiveCache (SAP SCM). or files to a worklist. However. For more information. New combinations can also be added manually. growth. The factors can be calculated automatically based on recent historical data. You can represent the launch. growth. Here they can be further maintained before the characteristic combinations are finally created.

the above profiles can be generated and assigned automatically. A forecast is created and stored in the key figure defined in the master forecast profile. other factors are not taken into account. 7.or univariate . If freely definable borders are exceeded.  Trend Demand falls or rises constantly over a long period of time with only occasional deviations. The system can automatically identify the optimal method for any item to be forecasted. Life cycle planning works on any level. This can be done using what is known as like-modeling.forecasting predicts future demand based on historical data. Univariate forecasting provides methods that recognize the basic time series patterns as a basis for the forecast:  Constant Demand varies very little from a stable mean value. Statistical forecasting needs historical information. it is proven practice to use historical data of corresponding products (such as the predecessors) as the basis for forecasting. Execute forecasting (SAP SCM). For more information. but with a continual increase or decrease in the mean value.  Intermittent Demand occurs only in some periods. Using the central maintenance transaction for interchangeability relationships.  Seasonal-trend Demand shows periodically recurring peaks. detailed or aggregated. As opposed to causal forecasting. . see the SAP Library under mySAP Business Suite SAP Supply Chain Management (SAP SCM) SAP Advanced Planning and Optimization (SAP APO) Demand Planning Demand Planning Process Lifecycle Planning. The corresponding key figure is defined in the univariate forecast profile. o Statistical forecasting Statistical .  Seasonal Demand shows periodically recurring peaks that differ significantly from a stable mean value.For new products. different error measures are calculated by the system and alert planners.

A forecast is created and stored in the key figure defined in the master forecast profile. For more information. Composite forecasting combines different statistical and causal forecasts. The weights can be fixed or can vary over time. o Causal forecasting Multiple Linear Regression (MLR) enables you to include causal variables (such as climatic conditions. 8. Promotions can be created on various levels. You can set up different scenarios for causal variables to simulate possible developments in order to identify possible risks and opportunities. but different techniques are used. Composite forecasts that use several methods have been proven to outperform individual forecasts that use any one of the methods used to generate the composite. price. Causal forecasting needs historical information not only for the item to be forecasted. Alerts are generated if the error measures exceed the borders defined in the diagnosis group. They are used for two purposes: o o To correct the historical sales history to receive a representative level that can be used as the basis for forecasting. Thus. or advertising) in the forecasting process. see the SAP Library under mySAP Business Suite SAP Supply Chain Management (SAP SCM) SAP Advanced Planning and Optimization (SAP APO) Demand Planning Demand Planning Process Creation of the Demand Forecast. A forecast is created and stored in the key figure defined in the Master forecast profile. The corresponding key figures or time series must be included in the MLR profile. each forecast is based on the same historical data. Plan promotion (SAP SCM). To include the expected demand changes in the planning to secure enough supply. Promotion planning is used to model marketing activities that influence the normal demand. By combining the forecasts. o Composite forecasting Different individual forecasts (statistical or causal forecasts) are combined. but also for all causal variables (such as temperature or price). The underlying objective is to take advantage of the strengths of each method to create a single "one number" forecast.Alerts are generated if the error measures exceed the borders defined in the diagnosis group. the planner can also let the system automatically select the individual forecast that delivers the lowest statistical error. However. the business analyst's objective is to develop the best forecast possible. You can average the forecasts by giving weights to each forecast. . MLR investigates the historical influence of these variables on demand to produce a forecast. Therefore the historical information has to exist for all forecast methods considered. 9.

Promotions can be defined on any level. Predefined levels can be used to separate them or to assign different disaggregation rules. For more information. The interactive planning screen supports this with various alternatives. 10. Each data view is also available on the web. or distributors. The planner can select single promotions and confirm or reject them. The user logs on to the web and defines a horizon. can be freely defined using macro calculations. For more information. These promotions can be transferred directly to SAP APO Promotion Planning using BAPI technology. Promotion patterns can be identified and stored for future use in similar promotions. see the SAP Library under mySAP Business Suite SAP Supply Chain Management (SAP SCM) SAP Advanced Planning and Optimization (SAP APO) Supply Chain Processes with SAP APO Demand and Supply Planning Collaborative Supply and Demand Planning. A partner can accept or reject a promotion on a web screen. Plans needs to be modified manually for various reasons. Then the system selects all promotions in these periods. and conditions. Alternatively. A business partner can see and maintain data on a web screen. For more information. such as forecast or manual adjustments. the way they are combined with other information. This ensures that all partners agree on the defined quantities. but offers fewer functions than the interactive planning transaction. For this purpose a Management by Exception process should be developed that is based on alerts created in various ways. see the SAP Library under mySAP Business Suite SAP Supply Chain Management (SAP SCM) SAP Advanced Planning and Optimization (SAP APO) Demand Planning Demand Planning Process Monitoring Alerts for Demand Planning (DP). Cannibalization groups can be used to model the effect on other products. . Promotions are available on the web for a review by customers. Promotions can be defined in absolute quantities or in percentages for any periodicity and horizon. see the SAP Library under mySAP Business Suite SAP Supply Chain Management (SAP SCM) SAP Advanced Planning and Optimization (SAP APO) Demand Planning Demand Planning Process Promotion PlanningPromotion Planning Desktop . This includes Management by Exception that is supported by the alert concept of SAP SCM. Interactive Planning should normally be carried out for critical items only. the correction of historical data can be defined in the univariate forecast profile. The created promotions are directly integrated in Demand Planning. For more information. Plan and calculate interactively (SAP SCM). retailers. However. see the SAP Library under mySAP Business Suite SAP Supply Chain Management (SAP SCM) SAP Advanced Planning and Optimization (SAP APO) Demand Planning Demand Planning Process Promotion Planning Collaborative Promotion Planning. horizons. Promotions can also be created in the SAP CRM Marketing Planner. see the SAP Library under mySAP Business Suite SAP Supply Chain Management (SAP SCM) SAP Advanced Planning and Optimization (SAP APO) Demand Planning Demand Planning Process Creation of the Demand Forecast Interactive Demand Planning Interactive Demand Planning Desktop. For more information.

For more information. The accuracy of the prognosis is analyzed in comparison with the reality and deviations identified. the promotion plan. The objective is to achieve improved planning in the future. Here. Transfer consensus demand plan (SAP SCM). see the SAP Library under mySAP Business Suite SAP Supply Chain Management (SAP SCM) SAP Advanced Planning and Optimization (SAP APO) Demand Planning Demand Planning Process Release of the Demand Plan to SNP. Analyze planning / forecasting accuracy (SAP BI). see the SAP Library under mySAP Business Suite SAP Supply Chain Management (SAP SCM)SAP Advanced Planning and Optimization (SAP APO) Demand Planning Demand Planning Process Transfer of the Demand Plan to R/3 Demand Management.A final demand plan is calculated based on the forecast. o Extraction to SAP BI Data can be extracted to SAP BI for reporting or archiving. see the SAP Library under mySAP Business Suite SAP Supply Chain Management (SAP SCM) SAP Advanced Planning and Optimization (SAP APO) Demand Planning Demand Planning Process Fine-Tuning of the Demand Plan. o Release to the ERP System or SAP R/3 The final demand plan can be transferred to the ERP System or SAP R/3 for MRP (Multiple Resource Planning). For more information. the quality and accuracy of the planning/forecasting. The release functionality will create the corresponding orders in the SCM liveCache. see the SAP Library under mySAP Business Suite SAP Supply Chain Management (SAP SCM)SAP Advanced Planning and Optimization (SAP APO) Demand Planning Demand Planning Process Forecast Storage and Further Processing in Other Systems Extracting Data from a Planning Area. can be checked. and sometimes manual adjustments. For more information. If the data has been extracted and stored in SAP BI. For more information. macros are used to carry out the necessary calculations. 12. This is especially the case for situations in which the demand plan is created on a plant level and no supply network planning is needed. for example. see the SAP Library under mySAP Business Suite SAP Supply Chain Management (SAP SCM)SAP Advanced Planning and Optimization (SAP APO) Demand Planning Demand Planning Process Forecast Storage and Further Processing in Other Systems. For more information. After finalizing the demand plan. . The data can also be used by other systems that are connected to SAP BI. 11. it must be transferred for processing by other applications. There are 3 basic alternatives: o Create orders of type independent requirements The demand plan is converted to orders of type-independent requirements to be used by Supply Network Planning (APO-SNP) or Production Planning and Detailed Scheduling (APO-PP/DS).

Process .