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Optimizing Forecast Consumption in SAP APO: Q&A with SCM 2015 Speaker Sean Mawhorter

January 22, 2015

Sean Mawhorter

Thanks to everyone who joined our live online chat with SCM 2015 speaker Sean Mawhorter of SCM Connections. Sean took readers' questions on optimizing forecasting for more accurate demand and supply planning results.

To review the entire chat, view the chat replay and edited transcript below. The live chat is now ended, but we invite you to continue the conversation by posting your comments below.

Live Blog Optimizing Forecast Consumption in SAP APO: Q&A with Sean Mawhorter| Jan 22 12:30pmET

Live Blog Optimizing Forecast Consumption in SAP APO: Q&A with Sean Mawhorter| Jan 22 12:30pmET


James Ciccone, SCM 2015: Thanks to everyone for joining us today for a chat on consumption settings in SAP APO.

Joining us today to take your questions is Sean Mawhorter. Sean is a supply chain consultant with SCM Connections, and a speaker at this year’s SAPinsider SCM 2015 conference.  He will be presenting a session on tips for optimizing forecast consumption in SAP APO, and he’ll be taking your questions today on the topic.

Welcome, Sean, and thanks for joining us in today’s chat!

Sean Mawhorter, SCM Connections:  Thanks for the introduction, James.


James Ciccone: I’ll let you get started on those questions that are already waiting for you!


Comment From Rohit

We changed the packaging specifications for a couple of SKUs and gave them a new material number. How do we forecast for these new materials using the forecast of the old ones? We have tried life cycle planning, but the demand planners think it is too tedious to maintain all the entires. Is there any other option other than life cycle planning and realignment/copy?  

Sean Mawhorter: Unfortunately, there are not too many more options to address these requirements (although they are fairly common). One option is to copy the sales history from the old item to the new item, but that can throw off your aggregate sales history. Plus, it’s a manual process.


Comment From Pavani

Can we assign a custom category to TLB order STO in APO system, so that we can influence consumption of forecast by this custom category?

Sean Mawhorter: It is possible to set this up in the consumption configuration. It is a combination of the requirements planning strategy and ATP categories and assignments.


Comment From Anna

Do you have any recommendations on when to use backward vs forward consumption methods and the time frame for the orders to be considered?

Sean Mawhorter: This is a great question, but would require a long answer. Short answer is that a combination of the sales order volume/quantities, order drift, and forecast bias should lead to segregation of your materials and/or material-location combinations and backward/forward settings should be established and managed using these groups.


Comment From Rangarajan

Can you explain order drift?

Sean Mawhorter: Order drift is the propensity for an order to be in a different bucket that its intended forecast. An indicator of this can be where the forecast accuracy for a single bucket (month) is usually much lower than the forecast accuracy of a multi-bucket window (e.g., 3 months). So timing is more the issue than the quantity itself.


Comment From Rangarajan

Can we maintain forecast consumption settings in SNP different for each material?

Sean Mawhorter: This is standard functionality. The consumption parameters are set in the product master at the product-location level.


Comment From Suat

Consumption of different forecasts: If we have more than one forecast line (50 pcs and 100 pcs for example) in SNP relevant for consumption by a sales order of 120 pcs, how we can find a way to consume fully the first one and partly the second one? The reason why we have more than one forecast figure is because we want to add specific characteristics to represent priorities, for example.

Sean Mawhorter: Have you investigated the use of extra forecast characteristics for this one (i.e. adding priority as an additional characteristic to the customer to be used in the consumption)?


Comment From André

How can we use forecast and safety stocks together to increase the SNP plan quality?

Sean Mawhorter: This is an area where many are confused as to what dial to turn when...
Safety stock is really the dial to turn to adjust inaccuracies in the forecast quantity itself, versus consumption settings, which are used to address inaccuracies in the timing of that forecast.
There are many variables that can affect these; the key is knowing which dial to turn when. ;-)


Comment From Rangarajan

Can forecast consumption work other than the Active 000 Planning version?

Sean Mawhorter: It can, but you need to use the save_multi bapi to create the sales orders in the other version. Sales orders are normally sourced from ECC and only populate version 000 by default.


Comment From Dave Jones

One of the biggest challenges we face is how to balance stock across a number of Distribution Centres. We disaggregate forecasts from Customer to Location based on 6 months history. We supply stock based on availability. Forecast consumption then becomes an issue. Is there a recognised approach for consuming forecasts at an aggregated level, e.g. Country, rather than individual location?

Sean Mawhorter: This is a very common issue that we see a lot...and we've seen a lot of ways to attempt to address this. The distribution point and the forecast are not always in alignment and in some cases they may never be.

One of the solutions that seems to work better is to have the forecasting group forecast at an aggregate (typically product/customer/market) and have the supply group manage a mapping table that disaggregates that forecast to the DC level.


Comment From Guest

Is there a way to manage scenario where SKU is forecasted at the DC level, but due to transportation cost savings can be sometimes shipped directly from Manufacturing Unit?

Sean Mawhorter: This would depend on whether this is an ongoing scenario (i.e., you are usually sending from the manufacturing site to the customer) or whether it is just an occasional event.
If it is the usual case, you can have the sales history "realigned" in BW to point the sales history to the location that you will typically ship from. If it is only an occasional event, you can just do a temporary change manually.


Comment From Brent Gallmann

Our firm knows technically how forecast consumption works in APO. However, do you have any recommended approaches for how to optimally set the forecast horizons (backward/forward/etc.) for each product in the portfolio?

Sean Mawhorter: We will be giving a presentation at the SAPinsider SCM conference on this exact subject. The short answer is that you should segregate your materials based on volume, order drift, and forecast bias and adjust the consumption periods accordingly.


Comment From Suat

Consumption within the month: We have to define another characteristic called calendar month. Is this the only way?

Sean Mawhorter: Have you investigated the use of bucketed consumption that was introduced in 7.0 EHP2?

Comment From Suat: Indeed we heard about this option in EHP 2 about bucket consumption. We are at 7.0 without any EHP. However we upgraded a sandbox to 7.1.3 but couldn't manage to find and test this option.

Sean Mawhorter: I believe you need EHP 2 to get this functionality. It will create a new consumption mode in addition to the standard modes. Ensure that the business function is activated in the switch framework.


Comment From Mark

What is the best way to develop a consensus demand signal between sales, logistics and manufacturing to minimize inventory and maximize delivery performance?

Sean Mawhorter: This would be a very large answer... ;-)
That said, the use of bucketed consumption can (in some cases) help align the sales side of the house with the manufacturing side of the house so that they are at least dealing with the same bucket sizes. This can drive down inventories and increase your customer service levels if implemented properly.


Comment From Kristi

In DP, we have a CVC that’s realigned from one SKU to another and the original CVC is deleted as part of the realignment. The new CVC’s forecast is published to SNP and PP/DS. However, the old CVC’s forecast is still out there too, which shows unneeded demand. The clean-up program only addresses old forecasts. How can you remove the forecast for the old CVC automatically?

Sean Mawhorter:  You have to copy to the new without deleting the old, resend the forecast for the old SKU (this would delete the individual requirements), and then do the deletion of the old SKU. Another option is to RLCDEL the old SKU's forecast.


Comment From Mark

When using APO for forecast consumption, what gets passed to ECC from APO? I am assuming Planned Independent Requirements are not generated, but not sure what is?

Sean Mawhorter: The CIF integration model has to be defined to see this in ECC. If all of the planning is taking place in APO, then this may be unnecessary.


Comment From Guest

Hello Sean, Is there way to retain FCST consumption in SNP?

Sean Mawhorter: It is intended to be dynamic, so to capture a snapshot of what the consumption situation was at a specific time would likely be a custom solution.


Comment From Rohit

Sean, Is there an option to write a macro or something to copy from one material to another material in the same date view? Because I know how to write a macro to copy from one key figure to another key figure for the same material, but not sure if we could automate the process by copying data from one material to another?

Sean Mawhorter: This is not a definitive answer, but I think you might need to use a user exit macro to get that done.


James Ciccone

Thanks to everyone who has posted! We'll get through as many readers' questions as possible - and they're some great questions!


Comment From Pavani

Can we change the behavior of the forecast consumption BADI, so that forecast consumption occurs for all locations except for D-D(distribution locations)?

Sean Mawhorter:

I'm not intimately familiar with the code for the BADI, but that seems like something that should be possible.


Comment From Mark

In an engineer-to-order or make-to-order business, what techniques are used in demand planning to build a master schedule while catering to the changing configurations?

Sean Mawhorter: I've not done any ETO forecast consumption, but I think one of our partners may have done this.


Comment From Suat

Backward or forward consumption by order type: Is it possible to define different consumption directions for sales order and quotation?

Sean Mawhorter:  Definitely not in the standard setup. I would assume that you would need to do something custom to accommodate this in order to get the additional master data fields.


Comment From Mark

Our sales order dates often change, so that an order that was consuming forecast in a given period ends up being changed to a date several months earlier. This then throws off consumption, and forecast appears to increase in a period when, in fact, the orders just moved. Is there a good way to handle this scenario in SNP without setting very large consumption windows?

Sean Mawhorter:  Yeah, unfortunately you are probably left with either opening up the consumption windows or updating the forecast to more closely match reality.


Comment From Rohit

Does EHP2 have any better locking logic ability?

Sean Mawhorter: I don't know the exact inventory of the enhancements contained in EHP2, but I am not aware of any changes to locking.


Sean Mawhorter: Thanks again to all of you for taking the time to discuss this topic today. If you have any additional questions regarding forecast consumption or any other supply chain focused topics, please feel free to contact me at: 


James Ciccone: Thank you everyone for joining us! 

For more on demand forecasting and supply planning, join us at SCM 2015 this spring - March 30-April 1 in Las Vegas. Sean will be presenting his session on forecast consumption   as part of our dedicated Supply and Production Planning track in Vegas. We hope to see you there!

A big thank you to Sean Mawhorter of SCM Connections for taking the time for these questions. We’re looking forward to seeing you in Las Vegas in just a few weeks!  

Sean Mawhorter: Thanks again to all and to James and Kristine for all their help in setting this up!

SAPinsider: Thanks again to Sean and to everyone for the great questions. While we weren't able to get to every question in the hour, we were able to cover the range of topics you asked about on forecast consumption.

To review the Q&A anytime, the replay is available next, and you will be alerted when the the edited Q&A transcript is posted in the next few days.   For more SCM advice, you'll find all the details on SCM 2015 here and on our SCM Channel. Thanks!


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