Forecast and Forecast Consumption

Forecast

A forecast is the expected consumption of a part or group of parts as expressed in quantity or monetary value. The forecast is often based on historical results, known market activities, knowledge about new products, local market variations, and experience. Different business areas can store their own forecasts. Master scheduling (MS) and project master scheduling are based on the forecast you enter and the actual backlog of orders. Based on this information, they create a master schedule or a project master schedule, i.e. a manufacturing plan or a purchasing plan. MS means matching your company's sales forecast to the company's available resources and capacity in order to balance supply and demand.

Forecast consumption is the process of decrementing forecast based on the registration of actual orders. The essence of forecast consumption is that forecast, together with actual demand, forms a blended picture of the total demand over the planning horizon. You can also say that actual demand consumes forecast in the forecast consumption process.

When an actual order is received, the system subtracts it from the forecast in the period the order is scheduled to ship. You can choose to consume forecast in the period corresponding to the customer need date or in the original quoted shipment date. If there is no forecast remaining for the period, the system can consume forecast in earlier or later time periods. When a customer order line is booked or changed, a check can be made against the unconsumed forecast to determine whether the order line can be fulfilled or not. This process is further described in About Available to Promise.

Online Consumption for MS Handled Parts

Forecast consumption for Master Scheduled (MS) parts is always calculated when you run the MS Level 1 calculation.

If Online Consumption is enabled on the Inventory Part, it is also calculated when you enter or change a customer order line/sales quotation line.

Forecast consumption for Material Requirement Planned (MRP) spare parts takes place when you enter or change a customer order line or a sales quotation line.

The forecast consumption functionality works a bit differently depending on the setting for

If Online Consumption is True and Promise Method is Unconsumed Forecast, the process consumes forecast backwards only and with no time limit, i.e. the definition of forecast consumption window is not used.

For all other combinations the definition of forecast window according to below is used.

Forecast Consumption Window

This is a range of days, defined for each part, in which forecast could be consumed for a customer order or a sales quotation. The default value for backward forecast consumption is 30 days, and the default value for forward consumption is 0 days, meaning no forward consumption at all.

If for example a value of 5 is entered in backward forecast consumption field, then when demand is entered for this part, forecasts are consumed going back up to 5 days from the due date of that demand. If further forecast/supply needs to be consumed to satisfy the demand order, then system tries to consume forward until the limit of days is reached.
Action message(s) are created for the part to inform the user about the forecast consumption, like for example “Insufficient unconsumed Forecast to satisfy Actual Demand”. The messages are connected to the forecast date.

Unconsumed Forecast

Unconsumed forecast is calculated for each day with existing forecast as the forecast quantity minus the consumed forecast according to the consumption process previously described.

You can choose what the system should do with any unconsumed forecasts that cross the demand time fence. There are two main principles, unconsumed forecasts can either roll out or can be dropped.
Rolling out the unconsumed forecasts means the system rolls out or front loads any unconsumed forecasts crossing the demand time fence into the first period outside the demand time fence.
Dropping unconsumed forecasts means the system does not roll out or front load any unconsumed forecasts crossing the demand time fence. The remaining forecasts are discarded.
In addition to the roll out of unconsumed forecast, you can also control the process in terms of time and quantity of unconsumed forecast to roll.

Max Unconsumed Forecast: Determines the upper limit of the total volume of unconsumed forecasts that can be rolled out.

Roll by Percentage: Controls how much of unconsumed forecast is allowed to roll out expressed as a percentage. The percentage factor is applied against single records and only the first time a record is being rolled out.

Roll Window: Defines how many calendar days a single record of unconsumed forecast will remain until being dropped by running MS calculation.

Projected Balance

Since Forecasts are supposed to be replaced by actual orders the Forecasts are not directly used as demand when the projected balance is calculated, Instead, the unconsumed forecast is seen as demand together with actual demand. Unconsumed Forecast within the demand time fence is ignored.
The projected balance is calculated as follows:

Projected Balance (PB) = Previous period PB + Current period supply - (Unconsumed forecast + Actual Demand)

The unconsumed forecast is calculated as follows:

Unconsumed Forecast = Current period forecast - Current period consumed forecast