| Forecast (VMI) |  |
| A forecast in a vendor managed inventory (VMI) setup is the demand for parts, calculated by the customer that purchases that item, and aggregated to forecast periods according to the agreed terms and conditions. The customer sends the forecast to the supplier that plans the item supply. Note For information on the demand forecasting process that you use to estimate future demand based on historic sales data, refer to Demand forecasting in Enterprise Planning. These two subjects are unrelated. Life-cycle of forecast data During an order-based planning run, Enterprise Planning generates planned production orders, planned purchase orders, and planned distribution orders to fill the demand. However, if a plan item is purchased from a VMI supplier, Enterprise Planning does not generate planned orders for that item. Enterprise Planning generates a forecast instead of planned orders. The customer sends the forecast to the supplier. The supplier uses the forecast to plan the supply and optionally to calculate the confirmed supply. Terms and conditions To use vendor managed inventory (VMI), the supplier and the customer must define a terms and conditions agreement, which is stored in the Terms and Conditions module in the Common package. A terms and conditions agreement is linked to a contract. The supplier stores this contract as a sales contract and the customer stores the contract as a purchase contract. For more information, refer to Overview of terms and conditions. Aggregation period Generally, the customer aggregates the forecast to forecast periods, such as, one day, one week, or five weeks. The terms and conditions agreement defines the forecast periods' length. The customer can also send detailed demand data without aggregating over periods. Example If the forecast period is a week, the forecast message for item X can specify the following data:
Period | Forecast
Week 20 | 350 piece
Week 21 | 410 piece
Week 22 | 360 piece
Approval After ERP LN calculated the forecast, the customer can optionally change the forecast manually. Before ERP LN sends the forecast to the supplier, the customer must approve the data. If a forecast revision has been approved, you cannot change that forecast revision, unless you undo the approval. After a forecast revision was sent to the supplier, you can no longer undo the approval. Revisions The customer can send as many forecast messages as desired. Every revised forecast message gets a revision number that is incremented by one. You can specify whether and how many previous revisions must be stored for future reference. If the supplier sends a confirmed-supply message to the customer, the relationship with the forecast revision on which the confirmed supply was based is retained. Forecast frozen zone Supplier and customer can agree that the forecast for the immediate future cannot be increased or decreased. This restriction ensures that the supplier has sufficient time to adapt the supply plan if required. For more information, refer to Forecast frozen zones. Total forecast and confirmed part of the forecast Optionally, you can split the forecast in confirmed forecast and unconfirmed forecast. The supplier can use this information in several ways. For example, the supplier can base its internal production plans on the total forecast, and replenish the customer based on the confirmed forecast. When more sales information becomes available and the customer sends new forecast revisions, the unconfirmed forecast can be gradually replaced by confirmed forecast. For more information, refer to Confirmed forecast and unconfirmed forecast. Supplier actions Before the supplier uses the received forecast in the planning process, the supplier must accept the forecast. Optionally, you set the system up to automatically accept all forecasts. The supplier uses the forecast for the following purposes: To calculate the confirmed supply, which is subsequently sent to the customer. To generate the planned distribution orders to replenish the customer's warehouse. For more information, refer to Planning methods (VMI). Related topics Supply planning by supplier Overview of terms and conditions Forecast frozen zones Confirmed forecast and unconfirmed forecast Planning methods (VMI) |