SAP R/3 Forecast Module

Vincent A. Mabert

Indiana University February 2004

Outline
Introducing a student to forecasting R/3 Forecast Module Background Navigating the Forecast Module Applying Forecast Module with GlowBright Data Participant Hands-on Experience Educational Objectives
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Student Introduction to Forecasting

Focus upon time series models Start with moving average and simple exponential smoothing models Use Excel as primary analysis tool to understand parameter estimation and starting conditions Employ a short case (Northwestern Parts) to introduce trend and seasonal issues, with Excel. Then move to SAP R3 system with the same data set. Finally, assign a more complex case (Glow Bright) for students to complete, normally in teams.
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SAP General Approach

A number of time series forecast models are available in SAP R/3 for forecasting, such as constant, trend, and seasonal models, as well as models for moving average values and weighted moving average values. The user can assign a forecast model manually, or have the system determine one. The user controls the forecast in the logistics data of the material master by maintaining parameters such as the number of historical periods and factors for exponential smoothing. By making the appropriate settings for the material master, user can estimate consumption figures for material that are smoothed, removing random elements from the data. Also, there are some user options to adjust data because of outliers.
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Forecast Module Features

Multiple time series analysis modeling options User or system determined components for trend and/or season inclusion User or system determined parameter values System evaluation and tracking messages Consumption and forecast data graphing
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Glow Bright (40-100C) Example

Glow-Bright Exercise
Some Observations
Highly variable Recent strong trend Some seasonal swings No apparent outliers

Approach
Navigate around the forecast module & see features Employ trend model with user selected parameters Employ trend model with automated system selected parameter Participants explore other options within the SAP R/3 forecast module.
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Navigation to Forecast Module

Logistics Production Master Data Material Master Material Change Immediately (click)

Type a part number (e.g. 40-100c) and Enter

Click forecasting in Selected View

8 Type a plant number (i.e. 3200) and Enter

Move to R/3 Forecasting Module

Highlight Forecasting option

Click to transfer to forecasting tab

Open Material Master Record for Part Number

Note there are no Consumption history data for item. It will need to be added.

To load data, Click on Consumption Vals button

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Adding Data History:

Determine Data Timeline and Origin
Need to know current time point for forecast origin that is established by SAP R/3 system clock , e. g. August 2003, and eliminate the remaining data from use

Glow Bright data in sequence of oldest to most recent. However, R/3 system wants data in most recent to oldest sequence.
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Adding Data History: Sequence Data

Determine most recent data point that matches R/3 clock, say August 2003 Sequence data history from most recent time to oldest

Original Glow Bright data sequence, oldest to most recent

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Adding Data History: Data Copy

Highlight data segment in Excel to be transferred and click COPY button. Note: Eleven data cells will be the maximum set size per transfer Open R/3 Consumption Values screen and highlight the start cell for data transfer

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Adding Data History: Data Paste

To transfer data, use the Ctrl and V keys. This will paste the copied data set of 11 or less points into the R/3 Material Master Consumption Values history. Repeat the sequence of highlight-COPY of the spreadsheet data and then CrtlV in R/3 until all data are transferred. Then save the data by clicking on the save icon in upper left corner
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Forecasting Within R/3

With data loaded within the material master forecasting record for an item, an individual now has two forecasting options to select.

User Selection Approach (USA) all forecast

parameters and models are manually entered by user.

System Selection Approach (SSA) a set of

specific forecast parameters and models (e.g., smoothing constant values, simple versus enhanced smoothing, etc.) are determined by R/3 system.
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User Selection Approach (USA) to Forecasting

Go to the FORECATING tab within material master record to start forecasting process.

Many modeling options within R/3 system

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USA Example: Employ trend model with user selected parameters - SETUP
Decisions to be made: Model choice: T History Periods: 60 Initialization Periods: 12 Forecast Horizon: 12 Season cycle (if appropriate): 12 Auto Initialize: X Smoothing Factors - Forecast: = .10 & = .20 - Error (MAD): = .10 Save choices Select Execute Forecast
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USA Example: Employ trend model with user selected parameters - Forecast Execution

Echo Selected Basic Choices: Click Forecasting to accept

Forecast Origin Choice: Click Check to accept Echo Smoothing Choices: Click Forecasting to accept
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USA Example: Employ trend model with user selected parameters - Forecast Output
Forecast Summary Table - Basic Metrics - Periods estimates Forecast Process Performance Graph Select Check to return

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System Selection Approach (SSA)

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System Selection Approach

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SSA Example: Employ trend model with system determined parameters -SETUP
Decisions to be made: Model choice: T History Periods: 60 Initialization Periods: 12 Forecast Horizon: 12 Season cycle (if appropriate): 12 Auto Initialize: X Smoothing Factors - System determined - Error (MAD): = .10 Save choices Select Execute Forecast
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SSA Example: Employ trend model with system determined parameters -Forecast Output
Forecast Summary Table - Basic Metrics - Periods estimates Forecast Process Performance Graph Select Check to see system determined smoothing values

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SSA Example: Employ trend model with system determined parameters - System Estimated Smoothing Factors

Smoothing Factor Values Select save icon if all work is to be retained

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Online Help Steps

1. Click on ? button to activate on line help at top of screen.

2. You will see local help screen for current cursor location. Click on book icon with question mark.

3. At web online page type in forecasting and execute search. The search engine will list all pertinent documents.

Questions?
Participant Exercise
Using the assigned material number (e.g., 40-100C), explore the following features of the forecast module Configure a trend and seasonal model with user provided parameters Configure a trend and seasonal model with system determined parameters Use a different number of consumption history Try a different number of initialization periods Have fun !
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Available Material Numbers for Participant Use within SAP

40-100R 40-100F 40-100Y 60-100C 60-100R 60-100F 60-100Y 80-100C 80-100R 80-100F 80-100Y 40-200R 40-200Y 80-200Y 60-200C 60-201C 60-200F 60-200R 60-200Y 80-200C 80-201C 80-200F 80-200R
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Creating New Part Numbers in SAP

While there are useable part numbers in the R/3 database, it is often useful to have unique part numbers so that data sets can be assigned to different users for assignments. The following illustrates the required steps.

1. Navigation to Create New Part:

Logistics Production Master Data Material Master Material Create (General) Immediately (click)

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Creating New Part Numbers in SAP

2. Create Material Initial Entry:
Insert unique part number in material entry window (e.g., mabert-201) Click drop down button for Industry Sector and then Material Type to select appropriate entries (e.g., Plant Engin/Constn and Additionals). Hit enter key or click check mark in upper left of screen.

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Creating New Part Numbers in SAP

3. Next will appear the Selected Views screen. Pick Forecasting option and click check mark.

4. The Organization Level will be presented, requiring a plant number (e.g., 3200). Enter value and click check mark.
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Creating New Part Numbers in SAP

5. At the Forecasting Tab screen three data entries are minimum required entries:
a. Enter a descriptive name

b. Using drop down for Base unit of measure, select appropriate option

c. Using drop down for Forecast model, select appropriate option d. Click check mark
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Creating New Part Numbers in SAP

6. Once the three minimum data entries have been complete, the record should be retained by clicking the save icon (Disk) in upper left corner.

Note: If desired, other screen entry options can be input at this point and saved.
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Educational Objectives: Introductory Exercise

Introduce student to moving average and smoothing models Plot consumption data and determine patterns present. Talk about data management and correcting for outliers Have students select and use different smoothing models, looking at MAD error to measure performance Possible evaluation options for student investigation: Which smoothing model (simple or enhanced) is best? What is appropriate smoothing factor value? What should be the initialization period length? How much demand history should be used? Other depending upon instructor creativity

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Educational Objectives: Advanced Exercise

Play the role of a consulting team and advise the client (e.g., GlowBright0 on the best approach to implement and use the SAP Forecast Module. Issues to address: 1. What guidelines for implementation and use would you provide the clients staff to lead an individual through the forecast process? 2. What SAP model selection features should the client use within the forecast module? Does the recommended approach depend upon the type of patterns in the data like trend, seasonal, noise, etc.? Are there other important factors that need to be considered? 3. What observations would you provide the client concerning the Forecast Modules strengths and weaknesses? Remember your role as a consultant. The written team report should be typed, double spaced, and no longer than 10 pages excluding exhibits. All team member names should 34 be on the cover page. Due .