From time to time, a company has to introduce new products in the current product portfolio. This can be caused by legal reasons, by the need of new packaging, or the new product can establish a new product category for the company.
Demand planning aims to create a high-quality automated forecast for future demand of a product. This is done by sophisticated statistical algorithms that calculate a future time series with the knowledge of past values. For new products, such past values, which equal the number of sold items of the product in the past, do not exist. This problem can be solved by manual creation of forecast data or by copying historical data of reference products to the new product.
The best way to deal with a new product is nevertheless to define reference products for the new product that are taken into account dynamically in the forecast engine at the time of the forecast run.
The main business goal of lifecycle planning for demand planning processes is improving forecast accuracy for new products.
Example: A marketing campaign is started. Customers want to buy the new product, but it is already out of stock in the supermarkets because of wrong planning.
Like modeling: Leverage the sales history of an existing reference product to forecast a new product.
Phase-in: Leverage different phase-in curves to introduce the product. Usually, sales slowly pick up or show an exponential trend and then flatten after some time. We have already made good progress in the last releases where we added the Like Modeling piece as well as the support for Phase-in. In SAP Integrated Business Planning (SAP IBP), we already have some predefined Phase-in curves as well as user-defined curves.
Phase-out: The other way around – the product is slowly taken off the market using excess inventory. Maybe it is also replaced by another product.
Product references are defined for new products via the Manage Product Lifecycle SAP Fiori app.
Product references weighted factors and daily offsets can be defined. Several references can be defined for one new product.
Within the Manage Forecast Models SAP Fiori app, the flag Consider products lifecycle information needs to be set for the individual forecast model if the system should consider the product references defined in theManage Product Lifecycle app. The forecast model can be set up for statistical forecast algorithms, as well as demand sensing.
The forecasting engine is on-the-fly replacing the historic data for the new product with the historic data of the products' references. If you want to use the history of the new product as quickly as possible, you may assign the new product itself as a reference product with a weighing factor of 100%.
In order to define reference products for a new product in SAP IBP for demand, your planning area must fulfill some prerequisites. These prerequisites are checked when the user enters the Manage Product Lifecycle SAP Fiori application.
Business meaning: Define which attribute of the planning area represents the Product ID.
To define assignments of reference products and to run forecasting for new products, the respective planning objects need to be created for these products first.