Sales Forecasting for Sage 500 ERP

Sales Forecasting for Sage 500 ERPSage 500 ERP has several tools to facilitate robust sales forecasting. Sage 500 offers four primary means to create demand for inventory that can be used to drive MRP plans. A third party alternative, Anytime Supply Chain, is available as a fifth option. Below is an overview of each demand forecasting option for Sage 500 ERP.

Dummy Sales Orders – Some companies create dummy sales orders in the system and use a user defined field to define these sales orders as “Forecast Orders.” The dummy sales orders are easily filtered out of other sales order lists by using the type field. These sales orders are accurately accounted for as planned demand within the Sage 500 MRP application. However, actual sales orders will duplicate demand since the forecasted demand is not consumed buy the real sales order demand. Further, this is a manual process that is prone to error and is very labor intensive to maintain.

Inventory Replenishment – Sage 500 ERP has a fairly sophisticated inventory replenishment system that can use historical demand to predict future demand. Some of these native features may be useful for customers. For example, Sage 500 allows you to create custom lead time formulas for inventory items by warehouse location. It also allows you to create safety stock formulas to determine accurate safety stock settings for each inventory record. The system also includes demand formulas which apply a weight to previous inventory periods to utilize sales history to predict future demand. This works really well if products have a predictable demand pattern such as well-established items that have some seasonality.

The downside to Sage 500 Demand Formulas is that they are not dynamic and do not recognize items that are trending up, trending down, or where seasonal patterns are changing. It is imperative that planners review demand formulas frequently – especially for items where there are supply and demand issues. Further, demand formulas only generate forecasted demand in the inventory calendar period. For example, most companies use a monthly inventory calendar which affects demand planning as well as their financial periods. However, many companies prefer to forecast demand in different period sizes that differ from their inventory calendar – such as weekly or quarterly forecasts. Further, Sage 500 demand forecasts are by item and by warehouse and cannot be managed by customer which is often a requirement that companies need to get a more accurate demand forecast. For these reasons, Sage 500 Inventory Replenishment is difficult to use for demand forecasting for most businesses – especially manufacturing businesses.

Demand Adjustments – Sage 500 includes a Demand Adjustment task (Figure 1) where planners can manually enter a demand adjustment by inventory period for future demand. This is used in MRP. There are several problems with using Demand Adjustments for Forecasting. As mentioned previously, demand must be entered in the inventory calendar period (typically monthly), cannot be entered by customer, and must be manually maintained and manually input in the system. This simply is not a realistic method for most Sage 500 customers.

Sage Inventory AdvisorSage Inventory Advisor is a new endorsed solution available for Sage 500 ERP 2013 and beyond. This product is similar to Inventory Replenishment and is designed primarily for wholesale distributors (not for manufacturers requiring an MRP planning tool.

Anytime Supply Chain – Sales Forecasting

e2b teknologies provides Anytime Supply Chain for Sage 500 which allows companies to define demand forecasts which can be used to drive MRP planning. Statistical forecasts can be developed using products such as ForecastPro or others to develop statistic-based forecasts which can be used to drive MRP plans within Anytime Supply Chain.

For more information on Sales Forecasting for Sage 500 ERP, download our free Sage 500 ERP Owner’s Manual available here or by clicking the button below.

Related Posts