What This Article Covers
- How does Best Fit Forecasting Work?
- How Does it Work in SAP DP?
- What is The Problem with Best Fit Forecasting in SAP DP?
Best Fit Forecasting in SAP DP?
Best fit forecasting is provided in most supply chain forecasting applications, which fits a forecast model to a demand history. A full definition is found here.
How SAP Best Fit Forecasting is Configured
This essentially sets up different supply chain forecasting methods in competition with one another per demand history trend line. The software goes back in history and uses the previous period to forecast more recent period for which the actual demand is known. By comparing multiple forecast methods and compare the error between the forecast and the actual, the software picks a forecast methodology which “best fits” the historical trend.
In SAP APO DP, this can do by selecting the Auto Model Sel 1 or 2 on the Model tab of the planning book.
The best fit is selected either with Auto. Model Sel. 1 or Auto. Model Sel. 2.
This can be found by going to the options button in the planning book.
Univariate Forecast Profile
The other way to set this is in the Univariate Forecasting Profile. This can be found off the SAP Easy Access Menu:
This takes us right into the Univariate Forecast Profile
Next, we want to select the “Forecast Strategy” drop down which will show the following options. Two of the options are the best fit options, although it is not direct and obvious as to which of these options are the best fit procedures, which is why I have highlighted it below:
It can also be selected from within profile maintenance.
The only decision the planner has to make is the time horizon which the best fit calculation will be made. This is controlled under the horizons tab in the planning book. Obviously, different time selections can yield different results. However, at account after account, I am finding that this functionality does not work. That returns the constant model, and so clients are not able to use it. Here are two samples.
Best Fit Forecasting Samples
Auto Selection Model seems to always choose a constant model for the statistical forecast, even when there is a clear seasonal and trend pattern. This does not meet the business’s need to account for seasonality and trend.
I have told another forecasting vendor about the problems with best-fit supply chain forecasting in SAP DP, and they find it almost impossible to believe that a commercial forecasting system would have such a problem performing a best fit analysis. I get that response a lot with SAP DP.
On SAPExpert, an article recommends using a macro to perform best fit functionality. However, this is completely unacceptable. Best fit functionality is “core functionality” for any enterprise forecasting software, and the fact is it should simply work.
However, I have found that best fit can be made to work in SAP DP, but it must be run in batch mode. If best fit can be made to work, SAP DP has good mathematics, but there is some problem that ensues when running the system in batch mode. There is much more to having an effective best fit capability beyond the mathematics. Overall, with the availability of best fit in other forecasting applications, it is hard to justify using best fit in DP. When I work on DP recovery projects — and most DP implementation typically needs a full recovery or at least a final tune up post implementation — I use a separate prototype environment and perform best-fit forecasting there. The next step is mapping the right forecasting model to the right product and location combination. However, best fit in DP could never be run as part of the normal forecast planning run, so this is no much of change from how one would run best fit in DP.
This and several other experiences have to lead me to prefer to run best-fit outside of SAP, in software that is much better at doing it, and which can provide my projects with more visibility and a better teaching tool. Many companies are running themselves ragged attempting to run the best fit in SAP DP when inexpensive applications can do a better job of running best fit at much lower effort level. Companies are often disappointed to hear this, but SAP APO often needs help from other applications and often cannot do all the heavy lifting itself. Clients often want everything to be done in SAP, but in fact, all APO projects have some enhancement. Whether you call it an enhancement and code it yourself, or use a third party application, the fact is that SAP is not doing all the work.
If the client must use DP, then we can simply code the supply chain forecasting method to be used in SAP DP after the fact. This can allow the best fit to be run much more often, and much more efficiently. Best fit does not have to be run for every forecast but can be run just periodically.
Supply Chain Strategy, McGraw Hill, Edward Frazelle
Sales and Inventory Planning with SAP APO by SAP Press
Supply Chain Management for Advanced Planning, Springer Press
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