Sales Forecasting & Planning using SAP Analytics Cloud

Introduction

SAC provides a wide variety of Analytical & Planning Functionality that can be leveraged to help the supply chain management of a company to carefully plan their manufacturing and stocks of their products ensuring they can deliver and satisfy their customers. The aim is to bring about a balance between having sufficient inventory levels to meet customer demands without having a surplus.

Since SAC has both forecasting and planning capabilities in a single platform Demand Forecasting and planning can be handled with great ease.

Sales Forecasting & Planning

Time Series Forecasting :

For this blog post, we will take sales data for the past 4 years ( 2018 -2021 ). The below image shows the model structure used.

Model Structure

The Actuals version of the data is used to run a Time series Forecast Predictive Scenario. The below image shows the settings used for the Time Series Forecast. The Signal for forecasting is the Sales quantity and is Forecasted for each Product Sub Category and Region of Sales.

Time Series Forecast Settings

The Forecasting is done for 12 months in the future forcing only positive forecasts since a negative sales quantity doesn’t make sense. Adding influencers to the model will reduce MAPE which increases the accuracy of the predictions.

SAC provides recommendations and MAPE% for each of the entities such as increasing data source size to get better predictions, Follow the recommendations to improve the model

Once the Scenario is Trained and you are happy with the MAPE% The Forecasts can be saved to a private version of the same planning model which can be used as a base for the planning scenario.

Planning :

For this Blog Post let us consider the Sales quantity planning is done for the Product Sub-category and Region of Sales. The planning granularity is as per user requirements and can be done at any level. But there is a restriction with the number of entities for a forecast. The time series forecast only supports 1000 entities by default, Follow this blogpost to go beyond 1000 entities.

To help the Planners with a base set of values we can use the Sales quantity that has been forecasted. A simple data action with a copy step can copy the values from the forecast version to the plan version is used to act as a reference or guide for Planning future stock.

The below image shows the Demand Forecasting & Planning Dashboard developed with all the Predictive and Planning Features

Demand Forecasting and Planning Dashboard

Conclusion :

This Blogpost shows how to implement Demand Forecasting and Planning in SAP Analytics Cloud using the inbuilt Forecasting & Planning Capabilities.