How to determine the confirmed forecast

This topic describes how to set up the algorithm to determine which part of the total forecast is confirmed forecast and which part is unconfirmed forecast.

The general concept is explained in the Confirmed forecast and unconfirmed forecast topic.

Two available methods

If you are the customer that sends forecasts to a VMI supplier, you can choose between two approaches to distinguish confirmed forecast from unconfirmed forecast:

  • Based on Order Type
    You can define a collection of sources of demand, such as, Sales Order, Maintenance Sales Order, and so on, you consider to be confirmed demand. All other sources of demand are automatically considered unconfirmed demand. The part of the component forecast pegged to confirmed end-item demand is confirmed forecast.
  • Based on First Periods
    You can define the first few forecast periods as confirmed forecast. For example, you can define that all demand forecast for the first 4 weeks is considered confirmed forecast, and all demand forecast for the longer-term future is considered unconfirmed forecast.

These approaches are further explained in the following sections.

Confirmed forecast based on order type

If the distinction between confirmed and unconfirmed forecast is based on order type, the customer must determine which part of the forecast is considered confirmed forecast. The customer can specify which types of orders are confirmed forecast in the Propagate as Confirmed Demand (cpvmi0101m000) session. The independent demand and dependent demand originating from these order types are considered confirmed forecast. For an example calculation, refer to the Help of the Base Confirmed Forecast on field.

Then, the customer can pass this information on to the supplier as additional information in the messages that communicate the forecast from customer to supplier.

Note
  • The customer can ignore the order types and proceed as if all of the forecast is confirmed forecast, or proceed as if none of the forecast is confirmed forecast.
  • The customer can manually modify the values of the confirmed forecast and the unconfirmed forecast before the customer sends the forecast to the supplier.
Confirmed forecast based on first periods

If you base the definition of confirmed forecast on the distinction between the demand for the near future and demand for the far future, use one of the following methods:

  • In the forecast message the customer sends to the supplier, the customer indicates which forecast is confirmed forecast and which forecast is unconfirmed forecast.
  • The number of periods in which the forecast quantities are considered to be confirmed forecast is defined in the terms and conditions agreement. The customer does not send any additional information to the supplier.
Note

The terms and conditions agreement can also specify that all forecast is considered confirmed forecast.

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