Demand forecasting

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Demand forecasting can be a part of the procurement process. It estimates the quantity of products that you will need to buy to cover the future demand. The estimation is based on business activities in the previous periods.

If you correctly estimate demand, you keep the right amount of stock on hand. This ensures you do not lose sales due to the lack of the goods supply. You also avoid goods surplus that can cause financial loss.

1C:Drive provides you with the Demand forecasting tool. It helps you do the following:

• Estimate future demand.
• Generate purchase orders based on estimated demand.

Estimating future demand

You can estimate product demand based on the average product consumption within a previous period.

To estimate future demand:

1. Go to Purchases > Planning > Demand forecasting.
2. At the top of the window, enter or select the following:

   Field	Description
   Forecasting horizon (days)	A future period that you make a forecast for. The maximum horizon is 99 days.
   Base period (days)	A base period for calculating average product consumption. You have the following options: Specify the period start and end dates manually. Select a standard period such as This year or From the beginning of the year. The dates are filled in automatically. You can view them in the Select period window. It affects the forecast Reference period.
   Filter by	An option to filter forecast results. You have the following options: To filter the results by supplier, select Supplier, then specify a supplier. To filter the results by product group, select Product group, then specify a product group.

3. Click Calculate demand.

The forecast results appear on the Products tab. They include the following details:

Field	Description
Supplier	A product supplier. A product supplier name is displayed if specified on the product card.
Product	A product description from the Products catalog.
Variant	A product variant such as size or color. It is available if the following conditions are met: The Inventory accounting by variants checkbox is selected in Settings > Purchases / Warehouse > Inventory (products). Accounting by variants applies to a product.
On hand	The product quantity currently in stock.
Consumed	The quantity of product items consumed within the specified Base period. The quantity is based on posted documents that register product sale or shipment, or another type of product consumption. The documents can be sales invoices, sales slips, or charges to expense.
Reference period	The number of days that the product has been in stock within the specified Base period. Consider the following examples: You receive 100 product items on 01.03.2019 and sell 50 items on 21.03.2019. On 18.09.2019, you calculate demand with Base period=From the beginning of this year. In this case, the Reference period is 202 days. It is calculated from 01.03.2019 to 18.09.2019 because 50 product items still remain in stock. You receive 100 product items on 01.03.2019 and sell 50 items on 21.03.2019. On 18.09.2019 you calculate demand with Base period=This year. In this case, the Reference period is 306 days. It is calculated from 01.03.2019 to 31.12.2019 because it is assumed that 50 product items will remain in stock up to the end of the year. You receive 100 product items on 01.03.2019 and sell 100 items on 21.03.2019. On 18.09.2019, you calculate demand with Base period=From the beginning of this year or This year. In both cases, the Reference period is 21 days.
Average consumption a day	An average number of product items sold, shipped, or consumed in another way within a day. It is calculated according to the following formula: Consumed/Reference period.
Demand	The estimated number of product items that you need to buy to cover future demand within the forecasting horizon. It is calculated according to the following formula: Average consumption a day * Forecasting horizon - On hand.

You can quickly create multiple purchase orders based on the demand forecasting results. To learn more, see Generating purchase orders based on estimated demand.

Generating purchase orders based on estimated demand

To generate purchase orders based on the estimated demand:

1. Estimate future demand.
2. On the Products tab, select the checkboxes of the products that you decide to buy.
3. Click Generate purchase orders.

The purchase orders appear on the Purchase orders tab. They include products based on the estimated demand. You can double-click a purchase order and edit its details. To learn more, see Purchase orders.

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