Forecast (VMI)

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.

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.

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.

After LN calculated the forecast, the customer can optionally change the forecast manually. Before 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.

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.

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.

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.

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.

For more information, refer to Planning methods (VMI).