Reverse planning in Business Central lets you take a high-level sales forecast and break it down into the actual purchase items, production items, and transfer items you need to fulfil it. If you forecast that you will sell a certain number of bikes next year, reverse planning calculates every component, sub-assembly, and raw material required to build them, all the way down through your bill of materials.
You run reverse planning one month at a time. To break down a full year, you run it twelve times. The result is a complete picture of what you expect to buy, produce, and transfer, which you can hand to your vendors as a forecast for items with long lead times, or use to predict capacity demand on your machinery.
Reverse planning works on the standard Business Central demand forecast. The Flexible Forecast app makes the forecast easier to read and lets you write the broken-down result back as a purchase or component forecast, but the core functionality works without it.
What reverse planning does
The starting point is a sales forecast. In the example, the salespeople have made a forecast called “next year” covering every month for the items being sold. This is the standard Business Central demand forecast. You can view it per period for a single item across all months, or per item for a single period across many items, for example only March of next year.
Reverse planning takes that top-level forecast and breaks it down through the full product hierarchy. If you know you will sell a certain quantity in March, it calculates how many rims, tubes, and other components you need to have ready, and when you need to start ordering them.
How the planning templates are set up
Reverse planning uses templates. The solution ships with a set of forecast template categories out of the box, and you can build your own by setting the check marks the way you need them. For a monthly breakdown, two templates work together.
The first template transfers the forecast lines into the reverse planning worksheet. It is set up like this:
- The dates use a date formula that automatically resolves to March of next year. You can override this and enter a date manually if you prefer.
- All supplies and demands are deselected, so nothing other than the forecast is pulled in.
- Exclude inventory is checked. If you already have ten bikes in stock, those should not reduce what you plan to buy for next year’s forecast.
- The plan is set to zero with the trigger on ending inventory, and the quantity is set to the exact amount. If the forecast says seven, the suggestion is seven.
- Suggest quantity to order and carry out actions both run automatically, which moves the result into the reverse planning worksheet.
The first template then automatically triggers the second one.
The second template breaks the forecast down through the full hierarchy:
- The end date is the same as the first template, the end of March. The start date is set much earlier, in the example the beginning of the year before.
- The early start date accounts for long lead times. If you have a deep hierarchy, for example twelve levels, and the small components at the bottom have a rolled-up lead time of twelve months, you need to start ordering twelve months before the sales date. You have to work out your longest rolled-up lead time and set the start date accordingly.
- Supplies, demands, and inventory are deselected again.
- Include planning lines is set, so the lines already placed in the worksheet by the first template are included.
- Roll down for all low-level codes is checked, with the exact amount. This starts at level zero, calculating all items except the ones already handled, then moves to level one, level two, and so on through the hierarchy. Each step suggests quantity to order and carries out automatically.
Running the breakdown and reading the result
When you run the first template against your production location, it carries the forecast lines into the reverse planning worksheet, calculates level zero based on those lines, adds the new lines back into the worksheet, then calculates level one, level two, and onward.
When it finishes, the worksheet contains every item by low-level code: the original forecast items for March at the top, and below them the full breakdown of components derived from that March forecast.
Sending the result to your vendors
Once the breakdown is in the reverse planning worksheet, you can export it to Excel and send it straight to your vendor. That is enough on its own.
If you have the Flexible Forecast app, you get an action called Convert to Forecast. You can select the purchase item lines, convert them to a forecast, and choose which forecast to write them into, for example a sales forecast or a component forecast. This writes the result back as the standard Business Central forecast per month. After converting the purchase lines, you can delete the remaining production and transfer lines if you only need the purchase forecast.
After doing this, the broken-down March demand sits in your purchase forecast. If you open one of the purchase items, for example a rim, and look at its purchase forecast, you see the quantity coming from the breakdown, for instance 760, in March.
Running a full year
This works one month at a time. To cover a full year, run it twelve times. You then have the complete year’s forecast broken down to component level, and you can tell each vendor exactly what you expect to buy from them next year.
Reverse planning is a strong tool if you work with long-term forecasts and want to break them down to purchasing, production, and transfer level. If the template setup gets too complicated, give us a call.
Q&A
What does reverse planning do in Business Central?
Reverse planning takes a high-level sales forecast and breaks it down into the purchase items, production items, and transfer items needed to fulfil it. It works through your full product hierarchy, down to individual components and raw materials.
Do I need the Flexible Forecast app to use reverse planning?
No. Reverse planning works on the standard Business Central demand forecast without the app. The Flexible Forecast app makes the forecast easier to read and adds a Convert to Forecast action that writes the broken-down result back as a purchase or component forecast.
How do I handle long lead times when breaking down a forecast?
Set the start date of the breakdown template early enough to cover your longest rolled-up lead time. If components at the bottom of a deep hierarchy have a rolled-up lead time of twelve months, you need to start ordering twelve months before the sales date, so set the start date accordingly.
Why should I exclude inventory in the reverse planning templates?
If you already have stock on hand, including it would reduce the quantity the breakdown suggests. For a clean forecast of what you expect to buy or produce next year, you want only the forecast quantity, not your current inventory, so you check exclude inventory.
How do I break down a full year’s forecast?
Reverse planning runs one month at a time. To cover a full year, run it twelve times. You then have the complete year broken down to component level and can tell each vendor what you expect to buy.
Can I send the broken-down forecast to my vendors?
Yes. You can export the reverse planning worksheet to Excel and send it directly to your vendor. With the Flexible Forecast app, you can also convert the purchase lines to a forecast inside Business Central.