Forecast Consumption for TS Supply Planning

kunalroy · ‎04-01-2023

The theory of forecast consumption is explained here. In this blog, I wanted to share examples to show the effect of configuration parameters through different scenarios. This blog only focuses on Forecast Consumption for TS Supply Planning. Forecast Consumption for Order Based Planning would be shared in a separate post. While most of the forecast consumption scenarios are easy to understand, the scenarios related to Forecast consumption direction- Backward from boundary end & Forward from boundary start could be confusing. I have attempted to explain those scenarios with a few examples as well.

Given:

8 Materials- FERT1 to FERT7.

1 Location- LOC1

Forecast Consumption modes- 7 modes with different settings as shown below (Fig01).

Assignment of the modes to the Location Products in Location Product Master- FERT1 to 101, FERT2 to 102 and so on). Refer Fig02.

Here are the 4 key figures used in forecast consumption profile (I have copied & pasted their definitions from SAP help)
- Input Forecast: This key figure represents the forecast that is available for consumption by the incoming sales orders.
- Input Sales Order: This key figure represents the sales order quantities that consume the input forecast.
- Output Open Forecast: This key figure is filled by the forecast consumption algorithm and represents the open forecast. It is calculated by deducting the consumed forecast from the input forecast.
- Output Total Demand: This key figure is filled by the forecast consumption algorithm and represents the total demand. It is calculated by adding the input sales order to the output open forecast.

Other settings in forecast consumption Profile settings (See Fig03):
- Forecast Consumption Level: Location ID- Product ID
- Time Boundary Level: Quarter (this is the time boundary within which you want the forecast to be consumed). It is only activated if the Boundary ID attribute in Forecast Consumption Model Master data has values other than 0 or null.

Fig01: Forecast Consumption Mode Master Data settings.

Fig02: Location Product Master Data Settings.

Fig03: Forecast Consumption Profile settings.

Scenarios:

Please note that for all the 7 scenarios, I have considered data in monthly buckets for a 1-year horizon- Jan-23 to Dec-23. The “Input forecast" is 100 in every month and the "Input sales order" is 600 and 400 in the months of Mar-23 & Dec-23 respectively. There is no data in any other time buckets.

Fig04: Job template settings

Scenario01:

Forecast Consumption Mode settings (as shown in figure 01)

Fig05: Forecast consumption mode- Scenario 01

Output for Forecast Consumption Run:

- 600 first consumes 100 in the Mar bucket, then consumes 3 buckets forward and 2 buckets backward.
- 400 first consumes 100 in Dec bucket, then consumes 3 months backward (as there is nothing to consume forward).
- Boundary =0 means there is no boundary restriction and hence the “quarterly” boundary set in the forecast consumption profile is not applicable here.

Fig06: Output- Scenario 01

Scenario02:

Forecast Consumption Model Settings:

Fig07: Forecast consumption mode- Scenario 02

Output for Forecast Consumption Run:
- 600 first consumes 100 in the Mar bucket. Since there is a boundary restriction, it cannot consume anything outside of its current boundary (which is Quarter 1 - Jan to Mar).
- 400 first consumes 100 in the Dec bucket. Since there is a boundary restriction, it cannot consume anything outside of its current boundary (which is Q4 -Oct to Dec).
- Boundary =1 means the forecast consumption is limited by the boundaries defined left and right of the sales order.

Fig08: Output- Scenario 02

Scenario03:

Forecast Consumption Model Settings:

Fig09: Forecast consumption mode- Scenario 03

Output for Forecast Consumption Run:

- 600 first consumes 100 in the Mar bucket. Since there is a boundary restriction, it cannot consume anything outside of its current boundary (which is Q1 - Jan to Mar). Also, it cannot get backward as the direction of consumption is restricted to forward.
- 400 first consumes 100 in the Dec bucket. Since there is a boundary restriction, it cannot consume anything outside of its current boundary (which is Q4 - Oct to Dec). Also, it cannot get backward as the direction of consumption is restricted to forward.

Fig10: Output- Scenario 03

Scenario04:

Forecast Consumption Model Settings:

Fig11: Forecast consumption mode- Scenario 04

Output of Forecast Consumption Run:

- 600 first consumes 100 in the Mar bucket. Since there is a boundary restriction, it cannot consume anything outside of its current boundary (which is Q1 - Jan to Mar). Also, it cannot get forward as the direction of consumption is restricted to backward and so it consumes 200 in the backward direction from Feb & Jan.
- 400 first consumes 100 in the Dec bucket. Since there is a boundary restriction, it cannot consume anything outside of its current boundary (which is Q4 - Oct to Dec). Also, it cannot get forward as the direction of consumption is restricted to backward and so it consumes 200 in the backward direction from Nov & Oct.

Fig12: Output- Scenario 04

Scenario05:

Forecast Consumption Model Settings:

Fig13: Forecast consumption mode- Scenario 05

Output of Forecast Consumption Run:

- 600 first consumes 100 in the Mar bucket. Since there is a boundary restriction, it cannot consume anything outside of its current boundary (which is Q1 - Jan to Mar). It consumes 200 backward in the same quarter from Feb & Jan.
- 400 first consumes 100 in the Dec bucket. Since there is a boundary restriction, it cannot consume anything outside of its current boundary (which is Q1 -Oct to Dec). It consumes 200 backward in the same quarter from Nov & Oct.

Fig14: Output- Scenario 06

Scenario06:

Forecast Consumption Model Settings:

Fig15: Forecast consumption mode- Scenario 06

Output of Forecast Consumption Run:

- Forward from boundary start: This means that for all sales order, the consumption will start from the start of the planning horizon (in our case- Jan 2023)
- Boundary ID =3. This means that the forecast consumption ends in the period before the nearest boundary that is right from the period of the sales order.
- So, based on the above 2 points, 600 can consume forecast starting from Jan- 23 till Mar- 23(boundary ending right of the sales order).
- And 400 can consume forecast stating from Jan- 23 to Dec- 23. Hence it consumes forecast from Apr- 23 to Jul- 23 (as the first 3 periods are already consumed by order 600).

Fig16: Output- Scenario 06

Sub-scenario- When the number of forward consumption periods is limited to say 4(in this example): this means the total number of periods that can be consumed is now limited to 4. Number of backward consumption periods is of no significance for direction “Forward from boundary start".

Fig17: Forecast consumption mode- Sub-Scenario-Scenario 06

Fig18: Output- Sub-Scenario-Scenario 06

Scenario07:

Forecast Consumption Model Settings:

Fig19: Forecast consumption mode- Scenario 07

Output of Forecast Consumption Run:

- Backward from boundary start: This means that for all sales order, the consumption will start from the end of the planning horizon (in our case- Dec- 23)
- Boundary ID=2. This means that the forecast consumption ends in the period before the nearest boundary that is left from the period of the sales order.
- So, based on the above 2 points, 600 can consume forecast starting from Dec- 23 till Jan- 23(boundary ending left of the sales order).
- And 400 can consume forecast stating from Dec- 23 to Oct- 23(boundary ending left of the sales order).
- However, it is important to mention the significance of one more setting here- Sales Order sequence (attribute in Forecast Consumption Mode Master Data- See Fig19). The sales order sequence attribute defines the order in which sales orders are processed by the forecast consumption algorithm. Possible values are as follows:
  - 0: From left to right and from right to left are both calculated. The sequence that leads to more consumption is used.
  - 1: From left to right only
  - Output when consumption is from left to right:
    - 400 consumes forecast starting from Dec to Oct.
    - 600 consumes forecast from Sep to Apr.
    - Total consumption= 900

Fig20: Backend consumption calculation with SO consumption sequence- L to R-Scenario 07

- - Output when consumption is from right to left:
    - 600 consumes from Dec to Jul.
    - There is nothing for 400 to consume as it can only consume from Dec to Oct which has already been consumed by order 600.
    - Total consumption= 600

Fig21: Backend consumption calculation with SO consumption sequence- R to L-Scenario 07

- Hence, with Sales Order consumption sequence =0, more consumption happens in 1^st case and that will be shown as output.
- However, you can force left to right consumption by changing the sales order consumption sequence attribute value to 1 in which case, the output will be as shown in case 2 above.

Fig22: Forecast consumption mode- Scenario 07 (Alternate Case)

**Note: Before the above-mentioned scenario, Sales Order Consumption sequence was not explained because irrespective of the value of 0 or 1, the output would have been the same in all cases.

Sub-scenario- When the number of backward consumption periods is limited to say 7(in this example): this means the total number of periods that can be consumed is now limited to 7. Number of forward consumption periods is of no significance for direction “Backward from boundary end".

Fig23: Forecast consumption mode- Sub-Scenario-Scenario 07

Fig24: Output- Sub-Scenario-Scenario 07

I hope the example shared above simplifies the understanding around “Forecast Consumption in TS Supply Planning".

Please feel free to share your feedback/thoughts.