Microsoft Dynamics AX

Demand Forecasting
Last Updated: June 2014
AX 2012 R3 / Version 1.0.0

Table of Contents
Demo Overview................................................................................................................................. 3
Introduction.................................................................................................................................... 3
Target Audience.............................................................................................................................. 3
Demo Scenario............................................................................................................................... 3
Background................................................................................................................................. 3
Problems this demo addresses.................................................................................................... 4
Purpose of demo (solutions to pains, benefits, value proposition)..............................................4
List of Personas........................................................................................................................... 4
Technology..................................................................................................................................... 4
Microsoft Technology................................................................................................................... 4
Demo Step-by-Step............................................................................................................................ 5
Conclusion......................................................................................................................................... 9
Glossary and Additional Background Content.................................................................................... 9
Disclaimer........................................................................................................................................ 10

Microsoft Dynamics AX 2012 R3 | Demand Forecasting | Last Updated: June 2014

Demo Overview
Introduction
This document and its included script will showcase how you can use the forecasting
capabilities in Microsoft Dynamics AX 2012 R3 and combine them with weather data (historical
and forecast) to adjust the forecast.
When you complete this document and demo script you will be able to:

Analyze forecast accuracy.

Analyze trends that cause forecast inaccuracies.

Adjust the demand forecast from Microsoft Dynamics AX based on the weather forecast.

Important Note: This is not a standard feature, but it is a scenario that can be
implemented on top of the demand forecasting capabilities.
Target Audience
The included script should be used to demonstrate the value of Microsoft Dynamics AX 2012
R3 to a production planner.
The executives that you are presenting to will find value in this script if they are challenged
with inaccurate sales forecasts.
Demo Scenario
Background
This demo focuses on beer sales in southern California. Specifically, we analyze the sales
forecast accuracy of three types of beer (pale ale, IPA, and alcohol-free). By overlaying
historical forecast accuracy with historical weather information, we find trends such as
people leaving a heavily populated San Jose, CA when the weather is hot to go to the beach
in Monterey. After identifying the trends, we apply those trends to our demand forecast,
making future forecasts even more accurate by overlaying the weather forecast for the next
two weeks and automatically suggesting demand forecast adjustments. After this is done, a
production planner can review and approve the final data and publish it back into Microsoft
Dynamics AX.
This script focuses on the following processes:

Gather historical transactional data from the Microsoft Dynamics AX database.

Analyze the forecast accuracy of a specific product in a specific region.

Analyze how weather data can have an effect on forecast accuracy.

Generate a statistical forecast based on historical demand.

View and make changes to the statistical forecast based on outside factors such as
the weather forecast.

Microsoft Dynamics AX 2012 R3 | Demand Forecasting | Last Updated: June 2014

Problems this demo addresses

Inaccurate sales forecasts can lead to out-of-stock and overstocked product, which can lead
to:
o

Missed sales opportunities

Poor product freshness

Purpose of demo (solutions to pains, benefits, value proposition)

By utilizing the demand forecasting capabilities in Microsoft Dynamics AX 2012 R3 and
incorporating outside factors such as weather, organizations can more accurately predict
product demand, which can lead to increased sales and higher customer satisfaction.
List of Personas
Production Planner (Eduardo): Eduardo manages scheduling and planning of production.
He often needs to shuffle existing orders to make room for more urgent orders. He considers
exceptions to be the rule.
Technology
Microsoft Technology
Microsoft Dynamics AX 2012 R3, Microsoft SQL Server Analysis Services (SSAS), Microsoft
Excel, Microsoft Power View (an interactive data visualization experience in Microsoft Excel
2013), and Power Map (a three-dimensional (3-D) visualization add-in for Excel 2013).

Microsoft Dynamics AX 2012 R3 | Demand Forecasting | Last Updated: June 2014

Demo Step-by-Step

Microsoft Dynamics AX 2012 R3 | Demand Forecasting | Last Updated: June 2014

Analyze forecast accuracy by county

Fresh beer is our number-one priority. We want our customers to feel that they are drinking the
beer for the first time every time. Inaccurate forecasts lead to understocked and overstocked
beer. This means customers are not able to get the beer when they want it, and it may not be
fresh when they do get it. Both of these scenarios equate to a poor customer experience, so in
this part of the demo we are analyzing forecast accuracy and determining where we are
inaccurate so we can focus on improving the accuracy of future forecasts.
This part of the demo highlights the following business processes:

Gather historical transactional data from the Microsoft Dynamics AX database.

Analyze the forecast accuracy of a specific product in a specific region.

This part of the demo showcases the following product/function/technologies:

Microsoft Dynamics AX 2012 R3

SQL Server Analysis Services

Excel

Presenter: We're going to start out in

Excel. What we have here in Excel is an
analysis of the forecast accuracy of our
beer sales in California.
Action: Start Excel, open the
Microsoft Dynamics AX 2012 R3
Demand Forecasting Power BI
demo file in C:\DemoFiles\BI\Power
BI, and click the Forecast Analysis
tab.
Presenter: We can see here that in
Monterey alcohol-free beer from a
forecast accuracy perspective is red, so
that is not good. We are looking pretty
good on IPA. With pale ale, we are
somewhat good, but there is room for
improvement.
Obviously it is important to better
understand how we got into this
situation and where the inaccuracies
are coming from.
Summary: This part of the demo showed how key performance indicators (KPIs) gathered from
the Microsoft Dynamics AX database can give us past sales forecast accuracies to help us better
determine where we need to focus our attention in future forecasts.

Microsoft Dynamics AX 2012 R3 | Demand Forecasting | Last Updated: June 2014

Microsoft Dynamics AX 2012 R3 | Demand Forecasting | Last Updated: June 2014

Analyze trends that cause forecast inaccuracies

Weather affects the consumption of beer and where it is consumed. By overlaying historical
forecast accuracy with historical weather information, we can find trends such as people leaving
a heavily populated San Jose when the weather is hot to go to the beach in Monterey. After
identifying the trends, we can apply those trends to our demand forecast, making future
forecasts even more accurate.
This part of the demo highlights the following business process:

Analyze how weather data can have an effect on forecast accuracy

This part of the demo showcases the following product/function/technologies:

Microsoft Dynamics AX 2012 R3

Excel

Presenter: Lets go ahead and drill

down on this and look at a particular
map that we call a Power Map.
Action: Click Insert > Map > Launch
Power Map > Beer Forecast
Accuracy tour.
Presenter: This is Power Map, a 3-D
visualization add-in for Excel, but the
underlying data that is surfacing here is
from Microsoft Dynamics AX.
What we are doing now is trying to
correlate historical weather information
with our ability to forecast accurately,
and we then want to see if we can
combine that with a future-looking
perspective when we do our
forecasting.
We are going to run a tour, which is a
standard thing when you do an analysis
over time in Excel. When we click the
Play Tour button, Excel will display a
video of the data over time on top of
the map.
Action: Click Play Tour.
Presenter: Now we are taking the
weather data and overlaying
temperatures for each day and
combining that with the accuracy of our
forecast. One of the things that you can
derive from this is that, as it gets really
hot in the Bay Area, people start
moving out to the cooler coastal areas,
and you will see that the inaccuracies
are mostly coming from alcohol-free
beer. People are obviously responsible,
so if they are driving an hour or two to
the beach and they have to drive back
home, they are not going to drink beers
8with
Microsoft
Dynamics AX 2012 R3 | Demand Forecasting | Last Updated: June 2014
alcohol.
So that is just an example of how we

Microsoft Dynamics AX 2012 R3 | Demand Forecasting | Last Updated: June 2014

Adjust beer forecast based on weather forecast

In Microsoft Dynamics AX 2012 R3, we now have the ability to calculate demand forecast based
on historical data by using SQL SSAS time series algorithms. This means that we get a pretty
good forecast based on historical data and trends. But when the weather is significantly
different compared to previous years, our forecast can be off, which we showed in the animation
in the previous demo.
So to fix this, we take a look at the demand forecast, and we overlay the weather forecast for
the next two weeks, and the system automatically suggests demand forecast adjustments. Then
the sales manager reviews them and approves the final data and can publish them back into
Microsoft Dynamics AX.
This part of the demo highlights the following business processes:

Generate a statistical forecast based on historical demand.

View and make changes to the statistical forecast based on outside factors such as the
weather forecast.

Import the adjusted forecast back into the Microsoft Dynamics AX forecast models.

This part of the demo showcases the following product/function/technologies:

Microsoft Dynamics AX 2012 R3

SQL Server Analysis Services SSAS provides the Time Series Mining Model for forecast
calculation.

Excel

Presenter: The final thing we want to

show is that it is not only about showing
the data. It is actually about making
actionable insight and taking actions
out of it.
Action: Close Power Map and click the
Forecast tab in the Excel workbook.
Presenter: So the analysis we just ran
can now be incorporated back into our
forecast engine in Microsoft Dynamics
AX, and it has now recommended to the
forecaster some adjustments to the
forecast based on the weather forecast.
The forecaster can now manually adjust
the forecast based on the suggestions
and then submit them back to Microsoft
Dynamics AX.
Note: All the columns in this
spreadsheet are standard except for the
Recommended Adjustment columns,
which come from the weather forecast.
The bar chart and filters are also not
standard.
So we can stop worrying about
scenarios of overstocked and
understocked beer, because we will
always have fresh beer available to our
customers.
10 Microsoft Dynamics AX 2012 R3 | Demand Forecasting | Last Updated: June 2014
Summary: What we showed in this part of the demo was the forecast generated by the SQL

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Microsoft Dynamics AX 2012 R3 | Demand Forecasting | Last Updated: June 2014

Conclusion
With the new demand forecasting capabilities in Microsoft Dynamics AX 2012 R3, new forecasting
scenarios can more easily be enabled. We now have a lightweight yet powerful demand
forecasting tool that lets users forecast demand based on historical data, adjust the forecasted
demand, and import the values into Microsoft Dynamics AX forecast models. By design, Microsoft
Dynamics AX uses the basic concepts of gathering the historical data, taking that data and
generating a statistical forecast based on that demand, and then giving the user the ability to
easily make changes to those forecasting recommendations in Excel. This lets you extend the outof-box forecasting capabilities and combine them with external data, such as the weather
information, to further increase forecast accuracy.
Demand forecasting is a cost-effective solution that relies on the power of SQL Server Analysis
Services, and it lets you also incorporate data outside of Microsoft Dynamics AX. Finally, to
visualize the forecast, adjust the forecast, and view or create new KPIs, we rely on the extensive
functionality of Excel.

Glossary and Additional Background Content

Things to Note:

12

This model is built in PowerPivot so that everything can be run locally for the demo.
o PowerPivot or tabular models do not support the writeback functionality of the cube.
o Therefore, to demo this capability, the user has to refresh the dataset by clicking the
refresh buttons in PowerPivot.
o This mimics the writeback functionality that would natively be present within the
online analytical processing (OLAP) cube model.
o Besides the need to work around this functional limitation for the purposes of the
demo, the capability demonstrated can be implemented in a cube model by using a
similar set of underlying tables and multidimensional expression (MDX) queries.

Microsoft Dynamics AX 2012 R3 | Demand Forecasting | Last Updated: June 2014

Disclaimer
2014 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista, Microsoft Dynamics
and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other
countries. Other names and brands may be claimed as the property of others.
The information herein is for informational purposes only and represents the current view of Microsoft
Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it
should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the
accuracy of any information provided after the date of this presentation.
Sample code included in this presentation is made available AS IS. THE ENTIRE RISK OF THE USE OR THE
RESULTS FROM THE USE OF THIS CODE REMAINS WITH THE USER.
MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE
INFORMATION IN THIS PRESENTATION. NO LICENSE, EXPRESS OR IMPLIED, BY ESTOPPEL OR
OTHERWISE, TO ANY INTELLECTUAL PROPERTY RIGHTS IS GRANTED BY THIS PRESENTATION.
Microsoft products are not intended for use in medical, life-saving, or life-sustaining applications.
Microsoft Dynamics is a line of integrated, adaptable business management solutions that enables you and your
people to make business decisions with greater confidence. Microsoft Dynamics works like and with familiar
Microsoft software, automating and streamlining financial, customer relationship and supply chain processes in a
way that helps you drive business success.
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Worldwide +1-701-281-6500 www.microsoft.com/dynamics

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Microsoft Dynamics AX 2012 R3 | Demand Forecasting | Last Updated: June 2014