IBP Demand Sensing Configuration Guide

Configuration and Usage of Demand
Sensing
February, 2016
Objectives Slide
At the end of this lesson, you will be able to:

Explain the demand sensing functionality within SAP Integrated
Business Planning for demand 6.1 in detail.
List the key features of short-term demand forecasting
Understand the prerequisites for short-term demand forecasting
2015 SAP SE or an SAP affiliate company. All rights reserved. Early Knowledge Transfer Customer 2
Agenda
Create a forecast model for demand sensing

Manage snapshot configuration
Load historic snapshot data and schedule snapshot jobs
Run demand sensing from the SAP IBP add-in for Microsoft Excel
Create a Forecast Model for
Demand Sensing
Create a New Forecast Model for Demand Sensing
Set up a new forecast model for the demand sensing algorithm via the
Manage Forecast Models app.
On the next screen, click Create in the

lower right corner and select your
planning area from the appearing list.
Time Settings
Mandatory: Periodicity needs to be set to Daily for the demand sensing algorithm
The periods are entered in days when the periodicity is set to Daily.
Historical Periods: As best practice from past customer projects, we recommend using 52 or more weeks
as historic data input. This showed very good demand sensing results.
Forecast Periods: This depends on the business case. Demand sensing is usually used in a forecasting
range of 4-8 weeks.
There is a minimum of historical periods that needs to be used in order to expect good results.
This depends on your overall settings. The UI will give recommendations upon saving the model
when the number you entered is too small.
Preprocessing Step Promotion Sales Lift Elimination (optional)
As of SAP Integrated Business Planning for demand 6.1, you will find a new
preprocessing step called Promotion Sales Lift Elimination . This step needs to
be used in combination with Demand Sensing (Full) in case you have
promotional sales lift information in your system.
Preprocessing steps other than Promotion Sales Lift Elimination do not work with
Demand Sensing algorithms.
The Promotion Sales Lift Elimination preprocessing step is not limited to Demand
Sensing in its usage. It can for example also run standalone.
Preprocessing Step Configuration of Promotion Sales Lift Elimination
Outlier Multiplier: A decimal number by which the system is to multiply the range of accepted values
when the variance test is used, thus including additional values in the range or excluding a set of values
from it.
Sales History: Key Figure that contains the Sales History including the sales lift from the promotions
(total). For Demand Sensing, this is usually the Confirmed Quantity or the Delivered Quantity.
Planned Sales Lifts: Key Figure that contains the planned promotion uplifts or downlifts in the history
and future. In case of SAP6, this is PROMOSPLIT (Promotion Uplift)
Consensus Forecast: Key Figure that contains the Consensus Forecast excluding the sales lift from
promotions! In case of SAP6, this is CONSENSUSDEMAND (Consensus Demand w/o Promotions)
Save Results In: Output Key Figure in which the results should be stored. This would provide the Sales
History exluding the promotions
Excurse: Promotion Sales Lift Elimination Preprocessing
Step
Identify outliers (sales lifts) associated with promotions,

and to remove them from the sales history
Identifies outliers within the sales history with Outlier Detection Logic. Range
Step 1 for outlier detection is calculated based on Variance Test.
It detects both positive and negative outliers. Result: Outlier Periods
Identifies positive sales lifts, caused by promotions in the sales history where
Step 2 promotion quantity is greater than zero. Result: Promotion Periods
Searches for correlations to identify the periods when the outliers were
Step 3 actually caused by promotions
Eliminates the values from the sales history where a correlation was found
Step 4 between outlier and promotion periods
Looks for closest match to adjust values proportionally, in case no exact

Step 5 correlation can be detected
Stores the results for sales history, cleansed by the sales lifts in the output key
Step 6 figure
Create a New Forecast Model for Demand Sensing (Full)
Forecasting Steps (1)
Main Input for Forecasting Step: Key Figure that contains the data that acts as the main sales
history. For Demand Sensing, this is usually the Confirmed Quantity or the Delivered
Quantity.
Note that the Main Input for Forecasting Steps needs to be the sames as
Either one of the inputs for Historical Ordered Quantity or Delivered Quantity for the
Demand Sensing (Full) Model.
Input for Algorithm on the Preprocessing Step for Promotion Sales Lift Elimination
Excurse: Demand Sensing Full and Update Runs
Demand Sensing can be run in full and update modes.
A Full Run
Is normally scheduled at the beginning of a week to get the regression weights.
In most cases, a full run in demand sensing would follow an updated weekly mid-
term forecast and, subsequently, a snapshot that has been taken based on that.
These outputs are then used in the final sensed demand calculation.
An Update Run
Is scheduled whenever there are delta changes in the inputs
(new open orders/shipments) during the week.
Thus, it takes into account any new information for orders/shipments during the
week and then calculates the sensed demand based on the regression weights
obtained as part of the full run that was done at the beginning of the week.
An update run cannot be scheduled until and unless a full run is already done.
Forecasting Steps (2) Please refer to the naming
conventions for certain key figures
that are used as input for demand
Add the Demand Sensing (Full) algorithm to the model sensing.
This is described in detail in the
SAP6 Planning Model slide deck.
Forecasting Steps (3) Key Figures
Consensus Forecast: Needs to be in sync with the

same entry on the Preprocessing Step for Promotion
Sales Lift Elimination. In SAP6, this is
CONSENSUSDEMAND (Consensus Demand w/o
Promotions).
This key figure should not contain promotion information!
Future Ordered Quantity:

Key Figure that contains the open orders for the future
horizons. In SAP6, this is FUTUREORDEREDQTY
(Future Ordered Quantity)
Historical Ordered Quantity: Key Figure that contains

the Sales History. Usually, this is the Confirmed Quantity.
In SAP6, this is CONFQTY (Confirmed Quantity)
Delivered Quantity: Key Figure that contains the

delivered quantities from the past weeks. In SAP6, this is
ADJDELIVQTY (Delivered Qty Adjusted).
Forecasting Steps (4) Further Settings Bias Horizon: Bias in SAPs Demand Sensing can
be better defined as the consumption or ordering
patterns of the customers. It determines or predicts
what the future consumption looks like, based on
Consensus Demand Snapshot Suffix: calculated weights from the past buckets.
Needs to match the suffix that is used
when creating the forecast snapshot Bias Horizon 1|2|4|6|8|9 as in the screenshot is an
(see chapter 2) example and varies depending on your individual
data. Maximum is 10 as the highest bias horizon
entry. The last 2 entry fields can also be left blank in
case that is needed for the specific data set.
These four values are used for capping the final sensed demand
numbers. See next slides for more information.
These thresholds are checking the result of the Demand Sensing
Run (before putting uplifts back) against the Consensus Forecast
without promotions.
Daily Average Calculation Horizon:

Rolling window (number of weeks in the past) over which
we average daily shipments for every Monday,
Tuesday,, Sunday of the weeks.
In this case, for the last 4 weeks.
Threshold Settings
The maximum forecast increase / decrease settings are used to cap the demand in case of exceptions in the data and smooth
the results. The user can define absolute and percentage values.
The threshold settings cap the outcome of DS before the order adjustment.
It is a global threshold for all planning objects that are planned with the forecast model, and thus has to be set very carefully.
In case you have items with very different volumes, one might think of creating different sensing profiles to avoid setting too
aggressive or too limiting thresholds.
Example:
Max Forecast Increase (absolute value): 50 PC (MAX_INCREASE)
Max Forecast Increase (percentage value): 30% (MAX_PCT_INCREASE)
The consensus demand is 100 PC (CONSENSUSDEMAND)
The sensed demand that would be calculated without taking the forecast increase factors into account is 300 PC
UPPER_BOUND = Max (100+50 , 100*1.3) => Max (150,130) = 150 PC

So, if the final sensed demand numbers calculated during the sensed demand run are higher than 150, then they are capped.
Sensed Demand (300 PC) > UPPER_BOUND (150 PC) => Sensed Demand = 150 PC
Example: Daily Average Calculation Horizon
The Daily Average Calculation Horizon is a rolling window (number of weeks in the past) over which the demand sensing
averages daily shipments to determine the daily shipment profile.
In this case, for 4 weeks into the past, the shipments for each day of the week are averaged. For last four Mondays,
Tuesdays etc. This in turn is used in calculating the shipment profile of each day.
Lower numbers than 4 weeks will influence the results in a negative way. We recommend using a value equal or higher than
4. The default value is therefore set to 4.
Forecasting Steps (5) Workdays
Select Workdays: You can control the calculation of the

sensed demand with the workday selection. By this, the
system will not determine any quantities from the
consensus forecast for the unmarked days.
However, in case there are quantities booked for these
days as part of sales orders (confirmed qty), these will
still show up as sensed demand later on.
Forecasting Steps (6) Minimum Data Points and WMAPE Threshold
Baseline WMAPE threshold:

The system calculates the WMAPE (Weighted Mean
Absolute Percentage Error) results for the Consensus
Forecast (based on the snapshot input). For certain
Minimum Data Points: planning objects (product/location/customer), the
It is the minimum number of weeks of historical data consensus forecast might already compute the best
(forecast, open orders, deliveries) that the demand forecast.
sensing algorithm needs to recommend reliable short
This threshold value is therefore used to determine
term forecasting results.
whether or not the Demand Sensing algorithm could
15 weeks are a recommended value based on the improve the results or not.
experience from past projects.
So if the calculated WMAPE for the Consensus Forecast
is less below this threshold, then the demand sensing
algo will not run and the Consensus Forecast values are
taken.
The calculation is done per individual planning object.
The WMAPE calculation results are not stored.
Create a New Forecast Model for Demand Sensing (Update)
Forecasting Steps
Add the demand sensing (update) algorithm to the model
Postprocessing Steps
Error measures are not calculated during the demand sensing run
Manage Snapshot
Configuration
Introduction What is a Snapshot?
A snapshot is the current picture of any time key figure for any time range.
In case of demand sensing, it is for the mid-term forecast (e.g. consensus demand)
A forecast snapshot is needed by the demand planners
to review how the forecast changed over a period of time
to learn the patterns of demand and correlate forecast with demand for different
lags
Historical snapshots are needed by the demand sensing algorithm in the calculation
of the sensed demand regression metrics. Note that it is mandatory to load historic
snapshot data. It is a mandatory input factor to the demand sensing
algorithms.
Historical forecast snapshots are loaded manually before the first demand sensing
run.
After the first run, the snapshot creation needs to be scheduled on a regular
basis via the SAP IBP add-in for Microsoft Excel (e.g. weekly or monthly,
depending how often your mid-term demand plan is generated)
Generate Snapshot Key Figure for demand sensing
A new snapshot key figure is automatically generated for your planning area
when a snapshot configuration is saved (see next slides)
This snapshot key figure

stores the snapshot values when a snapshot is taken on a regular basis.
is used to save the historical snapshot values during the initial system set up.
Note that historic snapshot values are needed by the demand sensing algorithm to
calculate high-quality results. So a certain snapshot history needs to be loaded
during the initial system setup (see chapter 3) and while productively using demand
sensing, the snapshot creation needs to be scheduled regularly.
Generate Snapshot Key Figure for demand sensing
Productive use of demand sensing
Time
Load historic snapshot data for a certain Generate snapshots regularly

historic timeframe at this point and up to (e.g. weekly) via the SAP IBP add-in for
this point Microsoft Excel
Manage Snapshot Configuration (1)
Create a new snapshot key figure via the Manage Snapshot Configuration UI:
On the next screen, select your planning area via the dropdown list.
Manage Snapshot Configuration (2a)
Mandatory:
Snapshop Type =
Change History
REV
Mandatory: Use the same

planning level on which the
input key figure is defined.
In this case:
Suffix: Make sure it is the LOCPRODCUSTWEEKLY
same suffix that is also (Location | Product |
entered in the Forecast Customer | Weekly level)
Model
Forecast Model:
Mandatory:select the key figure that is defined as the Consensus

Forecast in your Forecast Model (see slide 13)
e.g. consensus demand without promotions or statistical forecast qty
Manage Snapshot Configuration (2b)
How to calculate the To timeframe:

The amount of data that needs to be captured within the
snapshots for demand sensing depends on certain factors.
The following formula should be used to calculate the
snapshot future horizon that is needed for demand sensing:
To = [SensingHorizon + Snapshot Frequency -1] * 7
---------------------------
Sensing Horizon in weeks should represent the number that
REV you entered in the Forecast Model at Forecast Periods for
your respective demand sensing model:
In this case, 42 days would translate to 6 weeks.

---------------------------
This is the range of periods that the snapshot should be taken for. Snapshot Frequency in weeks depends on whether you
want to take the snapshots weekly, monthly, etc. for weekly
These numbers represent days. snapshots use 1, bi-weekly use 2, for monthly snapshots use
From = 0 means that the snapshot will be taken always from the 4 as input. The frequency depends on how often your mid-
current day, the snapshot run is executed, onwards. E.g. if the term forecast (e.g. consensus demand) is being updated.
snapshot is scheduled every Monday, the data included in the At least one snapshot should be taken every four weeks!
snapshot starts from that respective Monday onwards. Example:
To = 63 means that the snapshot will be taken for the next 63 days Sensing Horizon = 6 weeks
(9 weeks) in the future. Snapshot Frequency = monthly
To = [6 + 4 - 1] * 7 = 63 days
Manage Snapshot Configuration (3)
Once you save the snapshot configuration, a new key figure will be generated
for the respective planning area.
Note that the planning area is set to Inactive now, so you need to reactivate it.
Load Historical Snapshot
Data and Schedule Snapshot
Jobs
Historical Snapshot Upload
Prerequisites
It is mandatory to have a Snapshot Key Figure as defined in chapter 2 and at

least one data point loaded for this snapshot key figure to be able to run
demand sensing at all.
Please note that high qualitative results in demand sensing can only be
achieved with enough historic snapshot information loaded (we recommend
52 snapshot revisions - see chapter 2 for more information)
Procedure:
Create a new snapshot key figure for the planning area
Check and adjust mandatory settings in the planning area
Pay attention to prerequisites during data upload of master data and key figures
Load Statistical Forecast qty/ Consensus Demand Plan qty for the past periods
that you want to use as historical periods in your forecast model.
Either load Statistical Forecast qty / Consensus Demand Plan qty for the future
(at least one data point is needed) or generate it via a statistical forecast run.
Load the historical forecast snapshots before the first demand sensing run
Mandatory Settings in Planning Area
Change History
Change History: must be Planning Area Enabled

Prerequisite for demand sensing as the latter requires a snapshot key figure
Snapshot key figures can only be defined for planning areas with change history enabled
Prerequisites for Master Data Upload
Make sure to load the master data in the correct order.

First, the data for the master data of type simple, then compound, then reference (if available), e.g.,
in SAP6:
MDT Simple MDT Compound

1 Time Profile
2 Location, Product, Customer 3 LocationProduct (optional)
4 Currency (optional) 5 Exchange Rate (optional),
Currency To
6 UoM To 7 UoM Conversion
8 Sales Order 9 Delivery
10 Promotions
11 Key Figure Data (e.g., Consensus Demand, Delivered Quantity, etc)
Important: many key figures are now stored in technical weeks. If you upload
data for such key figures you should either upload the data also in technical
weeks or you upload it aggregated by the time, e.g. on calendar week or
monthly level, by using the new Time Profile Level within uploading (new with
IBP 6.1):
12 Historical Snapshot Data for Consensus Demand Quantity
Upload the Historical Snapshot via the WebUI
Create a new import job of data type

Snapshots to upload your historical
snapshot file.
Sample Snapshot File
Forecasted Forecasted QTY

periods
within
revision
(14 weeks in
this example)
Revision of
April 20, 2015
Revision of
April 27, 2015
How Many Historical Snapshots Should Be Loaded?
The amount of weekly snapshot history to be loaded should be equal to the

Historical Periods value (in weeks!) that you entered in the time settings of your
forecast model.
E.g. If the Historical Periods value is 280 in your forecast model, that would be 40
weeks and in this case, weekly snapshots for the last 40 weeks should be loaded.
Note that the quality of the results

will decrease in case you load
less snapshot data (in this case less than 40 weeks). Loading more data will not
produce better the results!
Troubleshooting
Error: Cannot import data because period & planning object data doesnt exist for
the selected revision, Invalid Revision for Planning Object or Period.
Solution: This means the UoM (Unit of Measure) templates are not imported or
imported in the wrong order.
So, reload all master data types that have Attributes as key figures and then
reimport the snapshots (see the Prerequisites during Data Upload slide).
In the SAP6 template, there are two Attributes as key figures used for UoM and
currency conversion:
UOMCONVFACTOR
EXCHANGERATE
Set up Batch Job to Automatically Create New Snapshots
for Future Periods (1)
Schedule the snapshot operation to run automatically via the SAP IBP add-in
for Microsoft Excel
Set up Batch Job to Automatically Create New Snapshots
for the Future Periods (2)
Run Demand Sensing from
the SAP IBP add-in for
Microsoft Excel
Demand Sensing Run
Demand Sensing can be run in two modes:
Batch mode (as a background job)
Simulation mode (directly in MS Excel)
Run Demand Sensing in Batch Mode(1a)
Log on to your respective planning area in the SAP IBP add-in for Microsoft
Excel and create a daily or a weekly view.
Note: Demand sensing is

always run on product
location customer level. So
in order to see the demand
sensing forecast model, you
need to select the data on this
level.
Optional step: Filter based on any attribute (e.g. Product ID, Product Group,
etc).
Note: The demand sensing algorithm will then only run on the filtered subset
of data.
Pick an appropriate Unit of Measure for the conversion of these key figures
Start the full demand sensing job after picking the forecast model that
includes your demand sensing algorithm
Monitor Job Status
Run Demand Sensing in Simulation Mode(1b)
Log on to your respective planning area in the SAP IBP add-in for Microsoft
Excel and create a daily view.
Note: The demand sensing algorithm will only run on the filtered subset of
data in case filters were applied.
Simulation of DS can only happen on a Daily View since the
DS algorithms are always set to a periodicity of Daily in the
forecast model (Slide 12)
Run Demand Sensing in Simulation Mode (2b)
Run demand sensing from the Simulate drop down after picking the forecast
model that includes your demand sensing algorithm.
Demand Sensing Run (3)
In comparison to the mid-to long-term

statistical algorithms, there are some
differences for demand sensing (full and
update) algorithms.
Demand Sensing Models

are run on Location Product - Customer level
only only visible in the forecast model list if
the corresponding IDs are selected attributes
are run for the baseline version only the other
versions are disabled and baseline is pre-
selected automatically
Time Period is set to daily.
Demand Sensing (Full) Outputs (1)
Demand sensing outputs show up once the job is completed successfully

and the data is refreshed from the database (Click Refresh).
Run Demand Sensing (Update) 1
Situation: Future ordered quantities (Current Open Order QTY) were modified
in the middle of a certain week. In this example, new orders came in during
the middle of the week and the current open order quantity was increased
from 340 to 600 pieces.
Run Demand Sensing (Update) 2
Re-run demand sensing and observe

the new outputs.
In such a case, we would choose the
demand sensing (update) algorithm
Pick the demand sensing update forecast model

that you created earlier
Lesson Summary
You should now be able to

Explain the demand sensing functionality within SAP Integrated
Business Planning for demand 6.1 in detail.
List the key features of short term demand forecasting
Understand the prerequisites for short term demand forecasting
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Configuration and Usage of Demand

At the end of this lesson, you will be able to:

Create a forecast model for demand sensing

On the next screen, click Create in the

Identify outliers (sales lifts) associated with promotions,

Looks for closest match to adjust values proportionally, in case no exact

Demand Sensing can be run in full and update modes.

Consensus Forecast: Needs to be in sync with the

Future Ordered Quantity:

Historical Ordered Quantity: Key Figure that contains

Delivered Quantity: Key Figure that contains the

Daily Average Calculation Horizon:

UPPER_BOUND = Max (100+50 , 100*1.3) => Max (150,130) = 150 PC

Select Workdays: You can control the calculation of the

Baseline WMAPE threshold:

Add the demand sensing (update) algorithm to the model

A forecast snapshot is needed by the demand planners

to review how the forecast changed over a period of time

This snapshot key figure

Productive use of demand sensing

Load historic snapshot data for a certain Generate snapshots regularly

Mandatory: Use the same

Mandatory:select the key figure that is defined as the Consensus

How to calculate the To timeframe:

In this case, 42 days would translate to 6 weeks.

It is mandatory to have a Snapshot Key Figure as defined in chapter 2 and at

Change History: must be Planning Area Enabled

Make sure to load the master data in the correct order.

MDT Simple MDT Compound

Create a new import job of data type

Forecasted Forecasted QTY

The amount of weekly snapshot history to be loaded should be equal to the

Note that the quality of the results

Demand Sensing can be run in two modes:

Batch mode (as a background job)

Simulation mode (directly in MS Excel)

Note: Demand sensing is

Monitor Job Status

In comparison to the mid-to long-term

Demand Sensing Models

Demand sensing outputs show up once the job is completed successfully

Re-run demand sensing and observe

Pick the demand sensing update forecast model

You should now be able to

National product specifications may vary.

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