Dynamics 365 – Supply Forecast versus Demand Forecast
When forecasting in Dynamics 365 for Finance and Operations (or however we call it this month), there are two main methodologies available: the Supply forecast and the Demand forecast. Since there is not a wealth of information available on what this means when managing your forecast, let’s take a quick journey into the fundamental differences between the two.
Supply Forecast
As its name suggests, the Supply forecast allows a user to plan for items that need to be procured through their sourcing departments to supply their business with the materials needed to operate. The Supply forecast is used to help a company drive Planned purchase orders within Master planning, assisting the Procurement team by showing them what they should expect to order based on a variety of factors, such as past performance, contracts with vendors, and projected need.
Supply forecasts can be entered by Item, Item group, Vendor, and Vendor group.
Demand Forecast
The Demand forecast allows for a user to generate demand for a customer. In typical situations, the Demand forecast is used by a company to generate Planned production orders within Master planning. The Demand forecast helps the Sales team provide data to the Production and Inventory teams with what the expected demand will be over the upcoming period of time forecasted.
Demand forecasts can be entered by Item, Item group, Customer, and Customer group.
Where to Enter a Forecast
Forecasting has become a hot topic in the world of Dynamics 365 with the growth and availability of such capabilities as Azure Machine Learning. If this topic is of interest to you, you can read more about it here: https://ellipsesolutions.com/taste-sales-forecasting-using-azure-machine-learning/
However amazing that process may be, there may still exist a fundamental need to enter a rudimentary forecast. The forecast in AX 2012 was located in the Inventory management module, but has since been relocated in D365FO to the Master planning module.
In AX 2012 – Inventory management > Periodic > Forecast > Entry
In D365FO – Master planning > Forecasting > Manual forecast entry
As stated earlier in this post, depending on the forecasting methodology being used, forecasts can be entered by Items, Item groups, Vendors, Vendor groups, Customers, and Customer groups.
Conclusion
Both types of forecasting, Supply and Demand, offer different benefits to an organization in regards to planning and preparation. While only an estimate or prediction of what the future may be, forecasting is typically developed using data and trend analysis. Even if you “just know” what a customer plans on ordering, providing that data in a Demand forecast can provide greater insight into the business for multiple teams, bringing a cohesive understanding of the business and how to anticipate and plan for the future.
If you would like to begin utilizing forecasting within your company and need some help getting started, Ellipse Solutions has a team of experts willing to work with you and show you how to leverage this great functionality.