Monday, March 28, 2011

Use Demand Class in Forecasting

Accurate demand forecasting is vital for holding optimal inventory.  The better you forecast your demand, the less residual inventory you will hold. Forecasting your demands is the key to plan your capacity, inventory & pricing. No forecasting method is 100% correct. Multiple forecast methods are used - based on judgement & based on data. I don't intend to write a long one on forecasting in this note; rather focus on "demand class" concept used in forecasting in Oracle Planning suite.

Business might have requirements to forecast its demand in multiple dimensions to help analyze the trend in actual sales order demands that consume the forecasts. As business, you would want to forecast your demand for certain regions and analyze how your actual sales demands were. While analyzing the regional forecasts consumption, you also might want to forecast on the customer segment you receive orders from - like automotive, energy, pharma or FMCG based on your product.

Attach the demand class to the forecasts you define and mark the sales order demands with relevant demand class. In the above example, you can opt to attach a "region" demand class to order types defined for each region. You can use the demand class ATP functionality to check the availability for certain demand class. Demand class can be optionally attached to your Inventory organization definition. If demand class is not attached to the forecast, Planning engine takes the demand class from the organization to which the demand belongs. 

Remember the thumb rule, consumption takes place only if the demand class of the sales order and forecast match.

Questions? Drop me a note on

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