Microsoft Dynamics Sales Forecasting For Item, Item Group, Customer and Customer Group

Hi Everyone, 

Long back in 2017, I have written this blog post for sales forecasting. The assignment was to prepare one presales demo for Qatar Duty-Free. The demo was scheduled in Qatar for the SCM and core focus was newly introduced Warehouse Management with Mobile Device and Demand Planning. 

In this blog post, I would like to cover demand forecasting in this quick blog post. If your customer is looking for some simple and powerful way to forecast demand in Dynamics AX2012, then keep reading this blog for 15 minutes and you will get the value for your time. 

What is demand forecasting?

Demand forecasting is predicting future demand for the product. It is based on past and present data and most commonly by analysis of trends.

How We Can Create Demand Forecast In AX20212

We can create a demand forecast by item, item group, customer and customer group. 

Step by Step Process

Below is the list of steps which we need to perform in order to generate the demand forecasting 

• Create item Sony_LCD for demand forecasting
• Setup the demand forecast model
• Create demand forecast entry for
  • Item
  • Item group
  • Customer
  • Customer group

• Run master planning for the item Sony_LCD
• AX has generated the planned purchase order
• Approve and firm the planned order 
• AX has created the purchase order with a delivery date for each line
• Confirm the purchase order and post the product receipt and invoicing

Moreover, I will also cover the demand forecast allocation method "Period". The demand forecast generated for three periods Nov, Dec, and Jan. Based on this run the master planning and system will propose the planned purchase orders with delivery dates in Nov, Dec, and Jan. 

Create Item in item master form (Sony_LCD)

In the release product form select the item and make sure to enter the purchase, default vendor, and sales price for the item.

Note: Once you run the master plan, the default vendor will be associated with the planned purchase order.

Forecast model

Make sure to create the forecast model and item allocation key. Also, associate the item to the item allocation key. 

Forecast Entry

We can create demand forecast for the item, item group, customer and customer group

Path: Inventory and warehouse mangement> periodic> forecast> entry> Select Item

Demand forecast for item

In the below screenshot I have filtered and selected the item "Sony_LCD". 

In the right column press the demand forecast button and create the line in the demand forecast form.

Enter the customer, site, sales quantity, and sales price.

Once the details are entered close the form. 

Demand forecast for item group

In the below screenshot I have defined the demand forecast for the item group "Audio". Filter and select the item group and click the demand forecast button in the right column. 

Create a new line in the demand forecast form and select the item, enter the sales quantity and sales price for the item.

Note: In this example, I have selected only one item, you can enter the demand forecast for multiple items in the same form. 

Demand forecast for customer

In the below screenshot I have created the demand forecast for a specific customer and item. 

Demand forecast for customer group

In the below screenshot I have defined the demand forecast for the customer group. Please note that multiple items are selected in this case for a specific customer group.

Run Master Planning for Sony_LCD

Now go to the master planning module and run the Master plan. 

Press "Ok"

Note: Make sure to select the item "Sony_LCD" otherwise the system will run the master plan for all the items. 

Planned orders generated through Master planning

Once the master planning job is completed, the system has proposed the planned purchase orders in the below screenshot.   

The planned purchase order for Customers

The planned purchase order has been generated for the customer "000009", it's the same customer we selected to define the demand forecast. 

In the below screenshot kindly note that the system has selected the default vendor "1001". It's the same default vendor that we have defined at the item master level in the "Released product form".

The planned purchase order for Customer and Customer group

In the below screenshot system has generated the planned purchase order for the customer "000009"

Approve planned orders

Make sure to approve the planned purchase orders. 

Item Sony_LCD Demand forecast and Forecast balance

In the below screenshot we can see that the system is showing the balances by period, we can view these balances in the balances of period form. 

Demand forecast 

In the below demand forecast form I have selected the allocation method by period. 

Allocation method: "Period". 

Run Master planning 

Based on the demand forecast allocation method "Period", the system has generated the Planned purchase orders for Nov, Dec, and Jan.

Approve and Firm 

Approve and Firm the planned orders, the system will generate the purchase order with each line have it's respective delivery dates in Nov, Dec and Jan based on demand forecast allocation method "period" 

Net requirements 

Below are the Item net requirements based on the demand forecast defined by the item allocation method "Period". 

We can see the reference "Demand forecast" for the customer "000009". Each demand forecast is referring to the purchase order "001837" 

Supply Forecast

To check the item supply forecast, go the release product form and select your item "Sony_LCD".

In the Action pane select the "Purchase" tab, the purchase order group contains "Open purchase order lines" 

In the Open Purchase order line form, we can see the delivery dates for the item.

Master planning has generated one consolidated purchase order "001837" for three different delivery dates. 

Conclusion and Recommendation

• Organizations usually hire demand forecast domain specialists, their core job is to develop effective forecast models based on industry trends and demand patterns. 
• Microsoft Dynamics offers four different ways to enter the demand forecast. Businesses can estimate the demand forecast by item, item group, customer and customer group.  
• After the first six months of implementation businesses usually prefer to forecast at group level (by item group and customer group) as it's easy for them to understand and predict the demand at the group level.
• For B2B customers, once the historical sales record will be available for one year then demand forecast specialists prefer to plan at item level or customer level. 
• It's easy for the business to forecast the fast-moving items at group level. 

I hope this blog post will provide you the fair idea of generating demand for the item, item group, customer, and customer group. 

If you have any feedback or question feel free to share.

Thanks,

Ali Danish

Microsoft Dynamics Solution Architect