Customizations that help increase the accuracy of your Supply Chain Forecast and Demand Signals in Dynamics 365

Customizations that help increase the accuracy of your Supply Chain Forecast and Demand Signals in Dynamics 365

Customizations for Demand Forecasting in Dynamics 365

Demand Forecasting | Inventory Management | Inventory Replenishment | Forecast Model | Demand Signal Repositories

Forecast analysis is used in demand forecasting to determine consumer demand trends based on previous data. Many firms have always used demand forecasting to define independent and dependent sales orders. However, rapidly expanding worldwide marketplaces and interconnected business models demonstrate a rising need for improved demand forecasting responsiveness and flexibility.

Making these modifications benefits firms in the following ways:

  1. For one-time and complete delivery, prepare shipping items in advance.
  2. Keep inventories under control while being flexible to meet unexpected needs through inventory forecasts.
  3. Anticipate and forecast product demand depending on the market hierarchy, location, climate, time zones, and other factors.
  4. Make a name for yourself in the market by continuously providing at minimal prices.


Forecasting sales requires an understanding of past demand and precise inventory management. It guarantees that there is enough merchandise on hand. Inventory management issues affect everything from shipments to sales. When resources are not allocated correctly, companies become highly reactive in their inventory planning. Reprioritizing orders regularly throws off previous demand monitoring. Adding a random order may cause significant issues. Forecasting inventory accurately helps businesses understand what they have. It also aids in the visualization of the sales funnel. A factory may take calculated risks and make educated choices with precise demand forecasts, resulting in greater profitability.

Basic Demand Forecasting Techniques
Technique Qualitative Methods
Delphi Method Market Research Panel Consensus
Description Panel of experts is interrogated by questionnaires in which the responses to one questionnaire are used for another questionnaire. It is a systematic and a formal procedure for evolving and testing hypothesis. It is based on the assumption that several experts can arrive at a better forecast than one person. Communication is encouraged and there is no secrecy.

Short term (0-3 months)

Medium term (3 months to 2 years)

Long term (2 years and above)

Fair to very good

Fair to very good

Fair to very good



Fair to good

Poor to fair

Poor to fair


Typical Applications Long range forecasts of new products, margin forecasts Long range forecast of new products sales Long range forecast of new products sales

Demand Forecasting Overview

Demand forecasting is used to anticipate customer-initiated demand and demand created when client orders fall out of synchronization. Mass customization, when implemented, may benefit from demand forecasting and demand reduction recommendations.

The demand forecasting features are listed below:

Key Demand Forecasting Features include

  1. Incorporate primary data to provide a baseline statistical forecast.
  2. For the forecast, use a dynamic range of dimensions.
  3. See how the supply, market expectations, and projected changes seem to shift.
  4. This updated prediction for planning processes should be made available for use.
  5. Elimination of outliers.
  6. To make the forecasts more accurate, provide predictive accuracy measurements.


Forecasting customer demand has long been a mainstay for companies, along with sales forecasting. Although, demand forecasting is used to predict customer-initiated demand and demand generated when client orders fall out of synchronization. However, demand forecasting is used primarily to forecast customer-initiated demand. This is because manufacturers need to keep stocks under control yet must adapt quickly when new demands arise. They also have to estimate the quantity of a product demanded by many variables (including market hierarchy, location, climate, time zones, and others) and forecast demand patterns for specific products.

Basic Flow in Demand Forecasting

Supply chain management theory says that demand forecasting begins at the supply chain’s inception. Previous transactional data for the supply chain management is built up using staging. This Machine Learning service is notified as soon as the first data is submitted. Adjust the settings, and you will be able to connect several data sources to the staging table. This Machine Learning service is notified as soon as the first data is submitted. Adjust the settings, and you will be able to connect several data sources to the staging table. In addition to Microsoft Excel spreadsheets, CSV files, and data imported from Microsoft Dynamics AX 2009 and Microsoft Dynamics AX 2012, data sources include the information from the respected files. You may use preliminary data from several systems to create demand projections. You may use preliminary data from several systems to create demand projections. Master data, such as item names and unit measures, should remain consistent across all data sources.

The Demand forecasting Machine Learning tool uses multiple forecasting techniques. It computes a baseline prediction, and supply chain management configuration settings are controlled to discover the optimum fit between various forecasting methodologies.

Once predictions, historical data, and demand estimations changed in earlier iterations are included, the methodology may begin.

Supply Chain Management should be used to display baselines and make predictions. However, before predictions may be utilized for planning, manual adjustments must be performed.

Limitations in Demand Forecasting

Several manufacturing firms often struggle to make use of large amounts of data. As a result, inadequate interpretations and communication mistakes may result from a lack of knowledge and efficient use of data.

Various stakeholders in the supply chain may use multiple Enterprise Resource Planning (ERP), Data Management (DM), and Supply Chain Management solutions (SCM). However, when these various systems predict demand, they often result in duplicate data and data loss.

A company’s capacity to adapt software for its specific requirements is limited if it does not utilize an integrated, comprehensive demand forecasting system.

Demand Forecasting in Microsoft Dynamics 365

Microsoft Dynamics 365 Supply Chain Management (SCM) makes it easier for companies to modify predictions and track key performance indicators (KPIs). Companies that use this tool may track demand patterns and adjust predictions accordingly. The new forecasts are easily integrated into the inventory planning process. In addition, Dynamics 365 provides reliable measurements by eliminating outliers.

For demand forecasting, Dynamics 365 Supply Chain Management solution follows a complete flow:

  1. The system collects transactional historical data.
  2. Data is used by machine learning to create forecasts and insights.
  3. The data collected allows for forecast visibility while also allowing for forecast modifications.
  4. Projections that have been approved are then authorized.

Benefits: Demand Forecasting

Microsoft Dynamics 365 SCM aids in the management of complicated demand patterns and inventory planning. It has the following characteristics:

  1. Using demand forecasts in conjunction with planning optimization to make educated master plan choices.
  2. Using operational models and business needs, creating, producing, or importing demand forecasts.
  3. Creating demand estimates tailored to the process, minimizing intercompany orders, and taking client forecasts into account.
  4. Lean demand forecasting improves accuracy and profit.
  5. Generating interactive demand predictions for real-time feedback anywhere on the trend line by graphing and creating interactive demand projections.
  6. Integrating the demand forecasting tool with an existing ERP system. This method collects data and produces accurate predictions, resulting in better inventory management and bottom-line results.

By bolstering their IT infrastructure with the appropriate tools, firms can better anticipate demand. In addition, they may enhance their inventory planning by using simpler-to-use software, more accessible, and more accurate. Integrated solutions, such as Microsoft Dynamics 365, offer a robust and comprehensive demand forecasting tool that helps companies set up and maintain optimum inventory management.

Visit our website for a free Dynamics 365 trial now.

Key Takeaways

  1. Demand forecasting in the manufacturing industry must transition from conventional spreadsheet-based models and tools toward more flexible digital solutions.
  2. Companies may more accurately forecast inventory levels using Microsoft Dynamics 365’s visible, customizable, and interactive features.
  3. Companies may avoid stockouts and overstock by concentrating their efforts on more accurate demand forecasting. It increases profitability, strengthens supply chains, and improves overall customer satisfaction.


A demand prediction is started at the beginning of the supply chain. The Demand Forecasting Machine Learning tool utilizes many forecasting methods and runs a baseline prediction. Companies that use this technology can keep track of market demand trends and alter their forecasts appropriately. Businesses can change forecasts and monitor key performance metrics with Microsoft Dynamics 365 (KPIs). According to Microsoft Dynamics 365 SCM, a complete demand forecasting solution, companies can better predict demand. Firms may improve inventory management and bottom-line outcomes by using the right technologies to enhance their IT infrastructure.

Optimize Results with Robust D365 Planning and Demand Forecasting

Take Control of Your Planning

Without working with numerous spreadsheets stored on different PCs, improve company outcomes with a more comprehensive and efficient planning process for Dynamics 365 Finance and Supply Chain Management. Save much time with an automated budget and forecast consolidation, which is constantly linked to your D365F&SC data in real-time. In addition, Bizview allows you to create any budget, forecasting, or planning in a web-based, spreadsheet-like interface.

  1. A spreadsheet-like web-based interface.
  2. Spread keys, system-proposed forecasting, overhead cost distribution based on preset parameters, and other features of task automation boost productivity.
  3. Make budgeting models that are bottom-up, top-down, zero-based, or hybrid.

Demand Forecasting Setup in Microsoft Dynamics 365

Add Items to Item Allocation Keys:

A demand forecast is calculated for an item and its dimensions only if it is part of an item allocation key. This rule is enforced to group large numbers of items to create demand forecasts more quickly. The item allocation key percentage is ignored when demand forecasts are generated. Forecasts are made based on historical data only.

An item and its dimensions must be part of only one item allocation key if the item allocation key is used during forecast creation.

To add a stock-keeping unit (SKU) to an item allocation key, go to Master planning > Setup > Demand forecasting > Item allocation keys.

  Step 1

Select an item allocation group from the list and click on Assign Items.

  Step 2

Select (Tick) Items to add in items allocation group

  Step 3

Move selected Items to the item allocation group

  Step 4

Confirm selected items are moved.

Intercompany Planning Groups

Demand forecasting generates cross-company forecasts. In Dynamics 365 Supply Chain Management, companies planned together are grouped into one intercompany planning group. To specify, per company, which item allocation keys should be considered for demand forecasting, associate an item allocation key with the intercompany planning group member by going to Master planning > Setup > Intercompany planning groups.

  Step 1

Open Intercompany planning groups form

  Step 2

 Create New Intercompany Planning Group

  Step 3

 Add Name and Description

  Step 4

Add Legal Entity and Master Plan

  Step 5

 Repeat step 4 for all the companies you want to group

Demand Forecasting Parameters

To set up demand forecasting parameters, go to Master planning > Setup > > Demand forecasting > Demand forecasting parameters. Because demand forecasting runs cross-company, the setup is global. This means that the setup applies to all companies.

  Step 1

Open Demand forecasting form

  Step 2

Select Forecast generation strategy

  Step 3

Add Lines in the strategy

  Step 4

 Add Lines and values as Required

Settings for the Demand Forecasting Machine Learning Service

To view the parameters that can be configured for the demand forecasting service, go to Master Planning > Setup > Demand forecasting > Forecasting algorithm parameters. The Forecasting algorithm default parameters page shows the default values for the parameters. You can set up the following options.

Confidence Level Percentage

  • A confidence interval consists of a range of values that act as good estimates for the demand forecast. A 95% confidence level percentage indicates a 5% risk that the future demand falls outside the confidence interval range.

Force Seasonality

  • Specifies whether to force the model to use a certain type of seasonality. Applies to ARIMA and ETS only. Options: AUTO (default), NONE, ADDITIVE, MULTIPLICATIVE.

Demand Forecasting Model

  • Options: ARIMA, ETS, STL, ETS+ARIMA, ETS+STL, ALL. To select the best fit model, use ALL.

Maximum Forecasted value

  • Specifies the maximum value to use for predictions. Format: +1E[n] or numeric constant.

Minimum Forecasted Value

  • Specifies the minimum value to use for predictions. Format: -1E[n] or numeric constant.

Missing Value Substitution

  • Specifies how gaps in historical data are filled. Options: numeric value, MEAN, PREVIOUS, INTERPOLATE LINEAR, and INTERPOLATE POLYNOMIAL

Seasonality Hint

  • For seasonal data, provide a hint to the forecasting model to improve forecast accuracy. Format: integer number, representing the number of buckets a demand pattern repeats itself. For example, enter “6” for data that repeats itself every 6 months.

The Test Set Size Percentage

  • Percentage of historical data to be used as a test set for forecast accuracy calculation.

  Step 1

 Open Forecasting algorithm default parameters form

  Step 2

Create a new forecast algorithm default parameter

  Step 3

Add values in a new line

The Dynamics 365 Sales Insights Add-On Enables Sales Teams to Harness Artificial Intelligence Capabilities Easily

  1. Sales Insights analyses performance and interactions using data from Dynamics 365 and Exchange Online and provides proactive insights. Across various visualizations, users may quickly and easily access additional prebuilt sales dashboards, integrated insights, and aggregated KPIs. In addition, the user hierarchy in the Azure Active Directory may be customized for each display.
  2. By combining analytics and data science with Office 365 data, sales insights allow sellers and executives to solve their most pressing business problems.

Forecasting skills are integrated into a company’s operations using demand planning software. Finally, these technologies allow you to offer better service to your customers by planning production and inventory ahead of time rather than reacting to market changes on the fly, which is a critical component of company success. After all, you won’t be able to produce money or keep the lights on if you can’t fulfill customers’ requirements on a regular and timely basis.


Finance and supply chain management (Finance & Supply Chain) D365F&SC’s planning methodology is more thorough and efficient. Budget and forecast consolidation that is continuously connected to your data in real-time will help you save time. Bizview is a web-based, spreadsheet-like tool that you may use to build any budget, forecasting, or planning. Dynamics 365 and Exchange Online data are analyzed to look for patterns, particularly in sales and interaction data.

How do you do it to find out which solution offers the greatest return on investment for your specific requirements? What is the best way to approach this? First, we’ll take a seat and have a Starbucks (or, if you’re like me, a Kombucha). Then, we’ll zoom in on the solutions that provide the most considerable benefits before exploring the approaches. Here’s a short explanation of the topics we’ll be covering:

  1. What is Demand Planning?
  2. Trends
  3. Advantages

What is Demand Planning?

According to some experts, demand planning is a “critical step in supply chain planning” since it generates accurate forecasts of company use. On the other side, demand planning goes beyond statistics, which distinguishes it from demand forecasting software. The phases of the process are as follows:

  1. Assemble a team comprised of sales, operations, and technical experts.
  2. When new data, such as sales for a competing product, becomes available, update the model and predictions.

Carry out further computations using new data, such as sales data comparing a particular product to rival sales of the same product.

While demand planning and demand management are both techniques for managing supply, they are more closely related to one another than their peers. Short-term supply and demand problems are addressed by using demand management software. Demand planning has a long-term perspective, while supply planning focuses on the immediate future. Predictive analytics helps decision-makers anticipate future scenarios instead of being limited to the current state. Your business can better plan for future market needs by maintaining an appropriate inventory level with this information. What is the conclusion? Increased sales as a consequence of demand fulfillment capabilities.

Demand planning is often included with a more comprehensive supply chain management software package (SCM). To get updates on D365 SCM functionalities, please visit our Microsoft Dynamics 365 blog or website.

What is SCM’s Purpose?

Because raw materials are stored at company locations to produce the products that will be supplied to customers in response to the consumer demand.

Demand planning may help improve the supply chain process by providing insight into what will be bought in the future.

Your company may significantly profit from this business data by using demand forecasting and planning to optimize product life cycles and return on investment. We would love to help you grow your business.

For a minute, let’s take a deeper look at planning and forecasting software. Let us begin first off with Trends.


  1. Real-Time Monitoring

    The supply chain is a complex and interconnected network of technology, processes, and individuals. A never-ending flow of data acts as the engine at its core. Operating a business without data insight is like piloting a Boeing 747 through a storm without instruments – you’re flying blind. This is why over 80% of manufacturers consider real-time analytics to be essential to their operations. It contextualizes the data and provides insight into variables such as quality control and process capability and problem spots. Your business will be able to reach new heights as a result of this exposure.

  2. Networks for Sharing Knowledge

    Connections between BI, analytics, track-and-trace applications, and performance measurement, a jargon-heavy phrase, result in knowledge-sharing networks. When on-premise legacy systems are integrated with 3rd-party and cloud applications, a framework is established to improve speed, scalability, and supplier connection.

  3. Cooperation

    It is essential to work together throughout the supply chain because of the vast data we have at our fingertips. Companies depend on data that presents a single version of the truth, and they may save money and avoid errors by sharing it widely while also enhancing outcomes. Collaboration should include all departments within a company and merchants and suppliers to be most successful.


Data represents one view of the reality, and if companies share it broadly, they will save costs and increase productivity. For most effective results, collaboration must involve every department inside a business and other market participants, such as retailers and suppliers.

Advantages of Demand Forecasting

  1. Increased Efficiency

    If you use demand planning and forecasting, you’ll likely have the appropriate inventory and effectively optimize your resources. You can also better predict future demand to build a strategy based on previous data insights. Hello, efficiency in the supply chain!

  2. Smooth Collaboration

    Communication and cooperation are also aided by supply planning software, with solutions that facilitate information flow across the supply chain network. For teams and stakeholders, this means more visibility and real-time information. Portals provide access to critical information such as supply timetables, stocks levels, personalized orders, and more.

  3. Data Analysis

    • Data aggregation: You must first find the data and combine it into a report-based summary before you can start putting it to work for you, so start synchronizing your data throughout your business.
    • Evaluation of the Trends: These characteristics provide predictions based on previous data that accommodate for data fluctuations. Consider the lack of demand for winter coats in the summer or promotions that possibly exaggerated results for a certain period; there are several reasons why statistics may not accurately reflect typical demand.

    Predictive analysis is a modern-day form of fortune-telling (except that it is based on data). It makes predictions based on current data using machine learning and statistical techniques.

  4. Trusted Forecasts

    Your forecasts are only as accurate as the data you have access to. Demand planning methods eliminate the need to keep shooting in the dark and hoping to hit your target. With the capacity to collect and analyze an infinite quantity of data, you may anticipate more precise predictions.This results in:

  5. Fewer shortages of Stock

    You can manage inventory properly when you have an accurate picture of future demand. By looking at the broad picture, you can avoid the traps of short-term planning. Demand planning systems may help inventory managers ensure that future orders are made based on expected demand. As a result, you won’t have to worry about your warehouse accumulating extra inventory or, more importantly, running out of resources when a customer’s needs surpass your existing inventory.

  6. Cost Savings

    Everything comes down to those all-powerful words: cost-cutting. Sleep better at night knowing that your bottom line won’t suffer due to products gathering dust on shelves or paying much money to expedite an order because you’re unexpectedly short 300 units and the customer is beating on your door (figuratively, of course).


Demand planning is a modern-day type of fortune-telling (the only difference is that it is based on data). It uses machine learning and statistical methods to create predictions on the current market based on the data. This implies you can sidestep the dangers of short-term planning by examining the big picture rather than making an impulsive decision.

Making Sense of Demand Signals

To thrive in the consumer products industry, you must have a thorough understanding of demand, not only of what is going on within your company but also market trends and the competitive landscape. You must be able to predict demand fluctuations, assess purchase patterns, and respond swiftly and profitably. However, to do so, you’ll need to compile vast volumes of data from both internal and external sources. A demand-driven supply chain’s ability to effectively manage demand signals is critical. It enables you to capture real-time market and retailer data, integrate it with internal business data and cutting-edge analytics, and perceive, analyze, and respond to demand signals faster than ever before. You can better connect the supply chain, marketing, and sales with external conditions if you better understand what motivates consumers and what’s happening in the market.

Demand Signal Repositories (DSR)

Companies in a wide range of industries recognize the value of becoming demand-driven. The problem is gathering, cleansing, and gaining access to the massive volume of downstream demand data. Without a unified approach across the organization, mastering and governing downstream data can be challenging. In today’s business world, inadequate data management has substantial financial consequences. Non-optimized inventory, inadequate demand planning, strained product releases, and more out-of-stocks can result in higher costs and reduced revenue. As a result, the Demand Signal Repositories (DSR) concept has arisen. A demand signal repository (DSR) is a data warehouse that integrates and cleanses demand data for usage by consumer goods, automotive, and electronics manufacturers, among others, to better serve retailers and customers.

It has several advantages as stated below:

  • Enhancing demand sensing and shaping efforts to improve demand prediction accuracy.
  • Cutting down on out-of-stocks.
  • More effectively detecting changes in product categories.
  • Improving the quality of new product information evaluation.
  • Sentiment analysis intergradation.
  • Improving the efficiency of trade promotion.
  • Inventory and safety stock levels are being reduced.


A demand signal repository (DSR) is a data warehouse that integrates and cleanses demand data for usage by consumer goods, automotive, and electronics manufacturers, among others, to better serve retailers and customers. It enables you to capture real-time market and retailer data, integrate it with internal business data and cutting-edge analytics, and perceive, analyze, and respond to demand signals faster than ever before.

A New Trend in Demand Forecasting: Demand Signal Analytics

Companies today desire simple solutions with predictive analytics capabilities to discover market opportunities by better coordinating demand and supply to take advantage of the data in their DSRs. Demand signal analytics combines visual and predictive analytics to access data in DSRs and unearth insights with the shortest possible latency. Companies are racing to build the capabilities needed to translate increasingly enormous, complex, and varied sets of downstream data into retail customers, shoppers, and consumer insights that may help them make better decisions and execute better across the board.


Demand signal analytics combines visual and predictive analytics to access data in DSRs. Companies are racing to build the capabilities to translate downstream data into the retail customer, shopper, and consumer insights. Demand signal analytics can help them make better decisions and execute better across the board.

At Instructor Brandon | Dynatuners, we always seek innovative methods to improve your competitiveness and suit your Microsoft Dynamics 365 requirements. Our offerings are founded on defined procedures, industry experience, and product understanding. If you’re interested to consult with our specialists on how we may help you improve your supply chain forecast accuracy, please don’t hesitate to Contact Us.

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