Running a Leading-Indicator-Based Forecast

Purpose

If you do not wish to generate your forecast based on historical values or not only based on historical values you can also use leading-indicator-based forecasting.

Your installed base is the basis for this type of forecast. Your installed base includes all your equipment that is currently on the market. If you know certain things about your installed base, that is, about your equipment or certain key figures relating to your equipment, you can use this knowledge in leading-indicator-based forecasting. For example, if you have information about the failure rate, you can define that in a coefficient. The system then multiplies this coefficient with the equipment that is on the market and can thus forecast how many service parts you will require in the future.

Example Example

You manufacture planes. You currently have 1,000 planes on the market. From experience you know that your customers need service part A after about 200 landings. You can utilize this knowledge in leading-indicator-based forecasting for forecasting service part A by using the leading indicator Number of Uses and defining each landing as one use.

End of the example.

We supply the following leading indicators:

  • Installed Base

  • Operation Time

  • Number of Uses

However, you can also define your own leading indicators in addition to the ones provided by us.

Note Note

Note that you must assign the same leading indicator to all locations of a bill of distribution (BOD).

End of the note.

Prerequisites

Additional information about the prerequisites is available under Settings for Leading-Indicator-Based Forecasting .

Process Flow

  1. The system generates the demand histories for the leading indicators used. It then uses these histories to determine a value for the coefficient for each period in the past.

    To do so, it executes the planning service SPP: Preparation Service for Leading-Indicator-Based Forecast (SPP_LFI_SERVICE). For more information, see Running the Preparation Service for Leading-Indicator-Based Forecasting .

  2. Based on the demand history generated in step 1, the system generates the forecast for the leading indicator and the coefficient.

    For this, you can either schedule the planning service SPP: Forecast Service (SPP_FCS_SERVICE), which generates the demand histories, or you can start the forecast manually in the Interactive Forecasting screen. You get to the Interactive Forecasting screen on the SAP Easy Access screen under Start of the navigation path Advanced Planning and Optimization Next navigation step Service Parts Planning (SPP) Next navigation step Planning Next navigation step Forecasting End of the navigation path .

    In both cases the system proceeds as follows:

    1. It generates the forecast for the leading indicator. In doing so, it proceeds as specified by you in the Leading Indicator Values field on the Leading Indicator tab page in the forecast profile. You have the following options:

      • Forecasted

        In this case, the system performs the forecast on the basis of the demand history and takes into account the forecast profile that you have defined for the leading indicator.

      • Determined from Installed Base

        In this case, the system performs a naïve forecast. It reads the values from the demand history from the InfoCube SPP: Installed Base Key Figures ( 9AIBASKF ), and copies the value of the current period as the forecast value for future periods.

      • Uploaded / Manually Entered

        In this case, you can either enter the forecast values manually in the Interactive Forecasting screen or upload them, for example, with a Business Application Programming Interface (BAPI).

        You get to the Interactive Forecasting screen on the SAP Easy Access screen under Start of the navigation path Advanced Planning and Optimization Next navigation step Service Parts Planning (SPP) Next navigation step Planning Next navigation step Forecasting End of the navigation path .

    2. It generates a forecast for the coefficient. In doing so, it proceeds as specified by you in the Coefficient Values field on the Leading Indicator tab page in the forecast profile. You have the following options:

      • Forecasted

        In this case, the system performs the forecast on the basis of historical data and takes into account the forecast profile that you have defined for the coefficient.

      • Constant value

        In this case, you must enter a value in the Constant Coefficient Constant field on the Leading Indicator tab page in the forecast profile. The system then uses this value as the forecast value for the coefficient.

      • Uploaded / Manually Entered

        In this case, you can either enter the forecast values manually in the Interactive Forecasting screen or upload them, for example, with a BAPI.

  3. The system determines the leading-indicator-based forecast for your location product on the basis of the forecast values for the leading indicator and the coefficient. As in step 2, this step is either part of the planning service SPP: Forecast Service (SPP_FCS_SERVICE) or part of the interactive forecast that you can start manually in the Interactive Forecasting screen.

    To generate the leading-indicator-based forecast for your location product, the system multiplies the forecast values of the leading indicator determined in step 2a by the forecast values of the coefficient determined in step 2b. It does so for each period in the future.

  4. You can display the calculated forecast values on the Interactive Forecasting screen. For more information, see Displaying Forecast Results and under Key Figures of the Leading-Indicator-Based Forecast .