You can break down a top level sales forecast into a purchase forecast using the Simple MRP and reverse planning functionality in Business Central. The reverse planning worksheet takes your sales forecast and calculates the dependent demand all the way down through the bill of materials, so you can tell your purchasers what to expect to buy.
If you have the Flexible Forecast app installed, you get an extra action called Convert to Forecast. This writes the calculated purchase quantities directly back as a component forecast. Without the app, you can export the worksheet to Excel and handle it from there.
You run the calculation period by period, for example one month at a time. Each period uses two templates: the first one calculates the top level forecast items, and the second one runs through all low level codes to break down the dependent demand.
You must account for lead times. If your forecast starts in January, you may need to start buying components in June of the previous year because of long lead times.
Breaking down a sales forecast into a purchase forecast
Reverse planning, or simple MRP, lets you take a sales forecast for next year and turn it into a purchase forecast. If you have a sales forecast and want to know the consequences for the purchaser, this tool breaks it down for you.
In the example, the sales team made a forecast for next year, Forecast 26. They likely started from this year’s forecast, Forecast 25, and modified it. You can see the forecast quantity per period for each item, for instance item 1000 and item 1010. At this point there are no actual sales or purchases because the period is more than a year out. It is purely the expectation.
Somebody made a top level sales forecast, and the goal is to break it down so the purchasers know what the company expects to buy next year.
Using the Flexible Forecast app for component forecasts
With the Flexible Forecast app installed, you can create a separate forecast for components, for example Forecast 2026 for components. You can view it from the start of June this year, because a forecast that begins in January next year may require buying components already in June when lead times are long.
The forecast type can be either a component forecast or a sales forecast. If you have not checked the option to include items without forecast, you will only see lines for items that actually have a forecast.
Running Simple MRP period by period
You calculate the Simple MRP one period at a time. Start with January next year, calculate it on location Production, then move on to February, and so on.
The process uses two templates that are fed into the simple MRP line and then carried over into the reverse planning worksheet line. The result shows the top level forecast items at the start of January, plus the dependent demand broken down through the full hierarchy.
In the worksheet you can filter on replenishment system. Filter on Purchase to isolate the items you want to forecast on. Then select all the lines and run the action Convert to Forecast. This action is only available with the Flexible Forecast app. You hand the components over to your component forecast as a component type.
After converting, clear the filter and delete the remaining lines, the production orders, transport, and anything else left over. The worksheet is now clean and ready for the next period.
How the two templates work
The templates for January, February, March, and so on each consist of two templates that are identical except for the dates.
The first template is called Forecast Next Year. It has no check mark in Run for All Low Level Codes. It uses a date formula that comes out of the box, so you can run it directly and only change the forecast name if needed. Otherwise it simply calculates for the relevant month next year.
In the demands and supply setup for the first template, everything is deselected except the demand forecast for the relevant month. Inventory is excluded and planning lines are not included. The only thing the template includes is the forecast. It triggers on zero and on end inventory, meaning the actual demand at the end of the date. It then suggests the quantity to order up to the exact forecast demand and carries out the actions into the reverse planning worksheet.
The second template runs after the first. It covers the same period and the same setup: no demands and supply, no inventory. The difference is that it does not look at an existing demand forecast. Instead it includes planning lines, so it takes all the lines already in the reverse planning worksheet, the dependent demand. It has Run for All Low Level Codes selected, so it runs through everything.
The second template also has Skip Already Planned checked. This means the forecast lines already created remain in place and are not planned again. It plans all items that are not already forecasted, runs down the full low level code, suggests the quantity to order, and carries out the actions into the journal with the exact amount.
Converting the result to a purchase forecast
Once you have run both templates, open the reverse planning worksheet, filter on purchase orders, mark all of them, and convert them to forecast. You can see the dates differ between periods, because a February run sits a month later than a January run.
When you go back to the item and look at the flexible forecast items per period, or at a normal demand forecast, you can see the forecast quantity on all the lines. This is the top level sales forecast broken down purely as a consequence of that forecast, including nothing else. That is how you break down a purchase forecast from a sales forecast.
Q&A
What does reverse planning do in Business Central?
Reverse planning, also called simple MRP, takes a sales forecast and breaks it down into a purchase forecast. It calculates the dependent demand through the full bill of materials so you can tell purchasers what the company expects to buy.
Do I need the Flexible Forecast app to break down a sales forecast?
No. The reverse planning worksheet works without it. But the Flexible Forecast app adds the Convert to Forecast action, which writes the calculated purchase quantities directly back as a component forecast. Without the app, you can export the worksheet to Excel and handle it from there.
Why does the calculation use two templates per period?
The first template calculates the top level forecast items with no low level breakdown. The second template runs through all low level codes to break down the dependent demand. The second template uses Skip Already Planned so it does not re-plan the forecast lines already created.
How do I handle long lead times when breaking down a forecast?
Start the calculation early enough to cover the lead time. If your forecast begins in January next year, you may need to view and buy components from June of this year, because long lead times mean the purchase has to happen well before the demand date.
Can I run the calculation for the whole year at once?
You run it period by period, for example one month at a time. Start with January, then February, and continue, cleaning the worksheet between each period before moving to the next.