Master planning with supply forecasts

Article
11/03/2022

Supply forecasts let you specify the supply that you expect to need during some future period. Typically, you will base the estimate on the previous year's sales history and then use the forecast for budgeting purposes. You can also set up your master plans to consider forecasts during planning.

Set up a master plan to consider supply forecasts

You can specify whether each master plan should consider forecasts when it runs. Use the following procedure to set forecasting options for each plan.

Go to Master planning > Setup > Plans > Master plans.
Either select an existing master plan in the list pane, or select New on the Action Pane to create a new one.
On the General FastTab, set the following fields:
- Forecast model – Select the model that contains the supply and/or demand forecasts that should be considered by the master plan.
- Include supply forecast – Set this option to Yes if the master plan should consider supply forecasts.
- Include demand forecast – Set this option to Yes if the master plan should consider demand forecasts. Although this setting is independent of the Include supply forecast setting, some of the other settings on the page apply to both supply forecasts and demand forecasts. For more information about planning that considers demand forecasts, see Master planning with demand forecasts.
- Method used to reduce forecast requirements – Select the method to use to reduce forecast requirements during master planning:
  - None – Forecast requirements won't be reduced during master planning.
  - Percent - reduction key – Forecast requirements will be reduced according to the percentages and time periods that are defined in the reduction key.
  - Transactions – reduction key – Forecast requirements will be reduced by the transactions that occur during the time periods that are defined in the reduction key.
  - Transactions – dynamic period – Forecast requirements will be reduced by the order transactions that occur during the dynamic period. The dynamic period covers the current forecast dates, and it ends when the next forecast begins. The Transactions – dynamic period method doesn't use or require a reduction key, and when you use it, the following conditions apply:
    - If the forecast is completely reduced, the forecast requirements for the current forecast become 0 (zero).
    - If there is no future forecast, forecast requirements from the last forecast that was entered are reduced.
    - Time fences are included in the forecast reduction calculation.
    - Positive days are included in the forecast reduction calculation.
    - If actual order transactions exceed the forecasted requirements, the remaining transactions aren't forwarded to the next forecast period.
  Note
  
  The Method used to reduce forecast requirements setting also applies to demand forecasts if you've enabled them for the master plan, and it affects them in a similar way. For more information, see Master planning with demand forecasts.

Set reduction options for coverage groups

To set options that control how a coverage group will reduce its forecast requirements for master plans that use transaction-based reduction, follow these steps.

Go to Master planning > Setup > Plans > Coverage groups.
Either select an existing coverage group in the list pane, or select New on the Action Pane to create a new one.
On the Other FastTab, in the Reduce forecast by field, specify how supply forecast requirements should be reduced for items in the coverage group, for master plans where the Method used to reduce forecast requirements field is set to Transactions - reduction key or Transactions - dynamic period. Select one of the following values:
- All transactions – All transactions should reduce the forecast.
- Orders – Only orders of the same type should reduce the forecast.
For example, the default order settings for an item indicate that it should be produced. There is a supply forecast line for a quantity of 50, and there is an existing purchase order for a quantity of 20. If the Reduce forecast by field is set to Orders, a planned production order will be created for a quantity of 50. If it's set to All transactions, the planned production order will be reduced to a quantity of 30.

This setting also applies to demand forecasting reduction. For more information, see Master planning with demand forecasts.

Enter a supply forecast for a product

To enter a supply forecast for a product, follow these steps.

Go to Product information management > Products > Released products.
Select the product that you want to enter a forecast for.
On the Action Pane, on the Plan tab, select Supply forecast.
On the Supply forecast page, on the Action Pane, select New to add a forecast to the grid.
Enter information on the new line as required to specify your forecast.

Plan for an item with supply forecast lines

When you run a master plan that includes an item that a supply forecast exists for, the system will create a purchase order for the supply lines that have been entered. Default order settings for the item are respected. If those default order settings specify a Default order type value of Purchase order, and no vendor account is specified on the supply forecast line, the system will use the default vendor for the item.

Check whether a planned order is a supply forecast order

Use the following procedure to learn whether a planned order was created as a result of a supply forecast.

Go to Master planning > Master planning > Planned orders.
Open the planned order that you want to inspect.
On the General FastTab, look at the value of the Supply forecast field. If the order was created to cover a supply forecast, this field will be set to Yes.

Examples of master planning with supply forecasts

This section provides several examples that show how supply forecasting affects master planning.

Example 1: Supply forecast for an item

You have an item where the default order type is Purchase order and the default vendor is US-002. It has the following supply forecast line.

Model	Date	Vendor account	Vendor group	Quantity	Unit	Site	Warehouse
CurrentF	10/10/22			35	ea	1	11

When you run master planning, a planned purchase order will be created for 35 ea from vendor US-002.

Example 2: Several supply forecast lines, with and without a vendor

You have an item where the default order type is Purchase order and the default vendor is US-002. It has the following supply forecast lines.

Model	Date	Vendor account	Vendor group	Quantity	Unit	Site	Warehouse
CurrentF	10/10/22			35	ea	1	11
CurrentF	10/10/22	US-101		25	ea	1	11

In this case, the system treats the line that doesn't specify a vendor as a generic forecast, and it assumes that the line that does specify a vendor should be subtracted from the generic forecast. Therefore, master planning will create the following planned purchase orders for the item:

A planned purchase order for a quantity of 25 ea from vendor US-101 (The vendor and quantity that are specified on the forecast line are used.)
A planned purchase order for a quantity of 10 ea from vendor US-002 (Because no vendor was specified on the other forecast line, the default vendor is used, and the quantity of this forecast line is reduced by the quantity of the vendor-specific forecast line.)

Example 3: Plans that use the Transactions - dynamic period reduction method in a single forecast period

For master plans that use Transactions - dynamic period as the forecast reduction method, master planning will reduce forecast quantities if there are existing transactions that match those supply characteristics.

For example, you have an item where the default order type is Purchase order. It has the following supply forecast line.

Model	Date	Vendor account	Vendor group	Quantity	Unit	Site	Warehouse
CurrentF	10/10/22	US-101		25	ea	1	11

Because there is only one supply forecast line, there is only one forecast period.

When you run a master plan that is set up to use Transactions – dynamic period as the reduction method, one of the following results can occur:

If a purchase order exists for vendor US-101 and a quantity of 10 ea, and the Supply forecast field is set to Yes, master planning creates a new planned purchase order for the remaining quantity of 10 ea. The forecast line is reduced, because the vendor matches the existing purchase order.
If a purchase order exists for vendor US-102, site 1, warehouse 11, and a quantity of 10 ea, and the Supply forecast field is set to Yes, master planning creates a new planned purchase order for the full quantity of 25 ea. The forecast line can't be reduced, because it has a different vendor than the existing purchase order.

Note

This situation can occur for planned purchase orders, because a vendor is associated with them. However, for transfer orders and production orders, the supply forecast amounts will always be reduced by existing orders, because no vendor is specified for these types of orders.

Example 4: Plans that use the Transactions - dynamic period reduction method over several forecast periods

You have an item where the default order type is Purchase order. It has the following supply forecast lines.

Model	Date	Vendor account	Vendor group	Quantity	Unit	Site	Warehouse
CurrentF	10/10/22	US-101		25	ea	1	11
CurrentF	10/15/22	US-101		25	ea	1	11

In this example, there are two forecast lines, each of which has a different date. Therefore, the dates establish the boundaries of the forecast periods. The first period is from October 10 through October 14, 2022 (10/10/22–10/14/22). The second is from October 15, 2022 (10/15/22) onward.

There is an existing purchase order for vendor US-101, a quantity of 10 ea, and the date 10/12/22 (October 12, 2022). When you run a master plan that is set up to use Transactions – dynamic period as the reduction method, it will create the following orders:

A planned order for a quantity of 15 ea and the date 10/10/22 (The quantity is reduced by the existing purchase order that is dated during the same forecast period.)
A planned order for a quantity of 25 ea and the date 10/15/22 (The quantity is the full quantity of the forecast.)

Example 5: Plans that use no reduction

When you run a plan where the forecast reduction method is None, master planning will always create planned supply for all supply forecast lines. After that planned supply has been approved, it will reduce future planned orders. However, purchase orders won't reduce the supply forecast lines.

For example, you have an item where the default order type is Purchase order. It has the following supply forecast line.

Model	Date	Vendor account	Vendor group	Quantity	Unit	Site	Warehouse
CurrentF	10/10/22	US-101		25	ea	1	11

There is an existing purchase order for vendor US-101, site 1, warehouse 11, a quantity of 25 ea, and the date 10/10/22.

When you run a master plan that is set up to use None as the reduction method, it will create a planned purchase order for vendor US-101, site 1, warehouse 11, a quantity of 25 ea, and the date 10/10/22. In other words, the existing purchase order won't be reduced, because the forecast reduction method is None.

You now edit the planned purchase order that was created after the last planning run, and change the quantity to 15 ea. You then approve the order. The next time that you run the master plan, it will create a planned purchase order for vendor US-101, site 1, warehouse 11, a quantity of 10 ea, and the date 10/10/22. This time, the quantity will be reduced to reflect the quantity of the existing approved order from the previous planning run.

Differences between Planning Optimization and the deprecated master planning engine

Supply forecasts work slightly differently, depending on the planning engine that you're using (Planning Optimization or the deprecated master planning engine). This section describes the differences.

Vendor groups

When you add a forecasted line, you can specify a vendor and a vendor group. In the deprecated master planning engine, planned orders that are created are grouped by the combination of the vendor and vendor group values. In Planning Optimization, planned orders are grouped by vendor.

The following table provides some examples of supply forecast lines for an item.

Model	Date	Vendor group	Quantity	Unit	Site	Warehouse
CurrentF	10/10/22	VendorGroupA	5	ea	1	11
CurrentF	10/10/22	VendorGroupA	6	ea	1	11
CurrentF	10/10/22		7	ea	1	11

Vendor VendorA is the default vendor for vendor group VendorGroupA. It's also the default vendor for the item.

The deprecated master planning engine will create the following orders:

A planned purchase order for vendor VendorA, vendor group VendorGroupA, and a quantity of 11
A planned purchase order for vendor VendorA and a quantity of 7

Planning Optimization will create just one order:

A planned purchase order for vendor VendorA, vendor group VendorGroupA, and a quantity of 18

Reduction of general forecasts by more specific forecasts

In the deprecated master planning engine, the result is unpredictable if some forecasts have a vendor but others don't.

In Planning Optimization, general forecasts are always reduced by more specific forecasts, as the following example shows.

The following table provides some examples of supply forecast lines for an item.

Date	Quantity	Vendor	Vendor group
02/11/2022	5.00	Vendor-A	VendorGroup-A
02/11/2022	6.00	Vendor-A	VendorGroup-A
02/11/2022	15.00

The general forecast (for 15.00 pieces) is reduced by the more specific forecasts (for 5.00 + 6.00 = 11.00 pieces). The remainder is assigned to the default vendor. The following table shows the planned orders.

Date	Quantity	Vendor	Vendor group
02/11/2022	11.00	Vendor-A	VendorGroup-A
02/11/2022	4.00	Vendor-A	VendorGroup-A

Respect for default order settings when planned orders are generated

Each item can have default order settings, such as a minimum purchase order quantity. The deprecated master planning engine ignores these settings, and therefore translates forecasts into planned orders that have the same quantity. Planning Optimization respects these settings when planned orders are generated from supply forecasts.

Aggregation of planned orders as a result of reduction by approved orders

The deprecated master planning engine assumes that only one order will reduce the existing supply forecast. Therefore, if several orders match a supply forecast line, only the first order will reduce it. In Planning Optimization, all orders that match the supply forecast line will reduce it.

Reduction of forecasts by matching vendors only

When the deprecated master planning engine reduces a forecast by existing released purchase orders, it doesn't ensure that the vendor on the purchase order matches the vendor from the forecast. Planning Optimization reduces forecasts only by purchase orders that have a matching value in the vendor field.

For transfer and production orders, the vendor field is always ignored, because it isn't relevant for those order types.

Reduction of forecasts by transfer orders

If the default order type for an item is Transfer, forecasts can be reduced only by existing planned transfer orders. However, for production orders and purchase orders, only released orders reduce the supply forecast.

The deprecated master planning engine reduces for all transfer order states, whereas Planning Optimization reduces forecasts only by transfer orders that are in the Released state.