Intercompany planning groups for demand forecasting
Tip
This article describes demand forecasting functionality that's built into Microsoft Dynamics 365 Supply Chain Management. For an even better planning and forecasting experience, we recommend that you try Demand planning in Microsoft Dynamics 365 Supply Chain Management, which is Microsoft's next-generation collaborative demand planning solution. For details, see the Demand planning home page.
This article describes how you can use intercompany planning groups during the demand forecasting process.
Collaboration is a vital aspect for many large-scale projects. When working with other legal entities (companies) during the development of a product or service, you can create intercompany planning groups to assist you during the demand forecasting process.
This gives all companies involved a greater understanding of the anticipated revenue that the product or service will generate. It also gives them the information necessary to devise and conduct business plans accordingly.
Many organizations utilize other companies within their organization to oversee various facets within collaborations and projects. Logistics operations that depend on other companies are handled by using intercompany sales and purchases since each legal entity has a separate chart of accounts.
Intercompany planning groups are created during the demand forecasting process after creating forecast models and removing outliers. For demand forecasts, set up downstream companies first, then set up upstream companies afterwards.
To further understand intercompany planning groups for demand forecasting, understand the following terms:
- Demand forecast – Allows your company to create "what if" scenarios and efficiently and cost-effectively plan for and meet demand. Accurate forecasts can make a critical difference in customer satisfaction levels about order promising dates and on-time delivery. Allows businesses to predict future sales demand and use that data to drive certain business decisions.
- Upstream – A relative reference in a firm or supply chain. It indicates movement in the direction of the raw material supplier.
- Downstream – A relative reference in a firm or supply chain. It indicates movement in the direction of the customer.
- Planned intercompany demand – Planned demand for a product in a company, based on planned demand for the product from a downstream company.
A plan in one company can include planned intercompany demand that is related to orders from another company's plan. This capability is useful, because it provides full visibility into planned orders across companies. It also ensures that all required planned supply orders are created, but without requiring that planned orders be firmed for the intercompany demand.
To propagate the demand throughout the intercompany chain, you must set parameters to ensure that planned purchase orders are automatically firmed; that is, orders can't be changed in terms of time or quantity. Set up the Firming time fence on the coverage group, or the Firming time fence in the master plan.
If no Firming time fence is set up, no intercompany purchase orders are created automatically. Only the first execution of the master scheduling results in planned orders; however, because the intercompany purchase order is not actually created, no intercompany sales order is created, and, therefore, no additional intercompany purchase orders are created, and so on.
Learn more in Intercompany planning groups.