Summary
Forecast consumption helps to avoid duplication of demand between the forecasted demand and the sales orders received from customers.
When it is time to configure StockIQ replenishment planning one needs to decide what demand will be used to calculate forward looking projected available inventory. In cases where order policy permits, the Replenishment Forecast will be consumed by Independent Demand which is typically just firm open and closed sales orders. The method and rules for how consumption is calculated are configured in the Replenishment Forecast Series Settings screen.
The notion of consumption in inventory management refers to the process of one time series having open quantities that are reduced as values appear in another time series.
In practice, this most commonly refers to Replenishment Forecast being consumed by Independent Demands from your sales. Dependent Demand, such as expected consumption of a component due to a Work Order or Transfer Order, is not included.
Applies To
- Replenishment Forecast in the Order Schedule [Product or feature name]
- Supply Planner Role or Buyer Role[User roles: Admin, End user]
Prerequisites
- Applies Only to Order Policies that are impacted be forecasted demand (Order Point, Lot-for-Lot)
- Applies to Independent Demand forecast series only (no such thing as Dependent Demand Consumption)
- Standard Conversion bucket method of auto will spread the replenishment forecast out evenly across the time period. ie: monthly forecast broken out into a month's worth of daily buckets
Steps/Process
1. Decide on a Replenishment Forecast Series and a Demand Series to consume that forecast
2. Decide on a Conversion Bucket Method
The Demand Forecast Series coming from the forecast side of StockIQ is always calculated and saved in weekly or monthly buckets. Typically, this is then converted to a daily replenishment forecast according to the monthly or weekly Demand Pattern. The "Auto" method will convert a monthly forecast into a month's worth of daily buckets, a Weekly forecast into a week's worth of daily buckets etc.
In certain rare cases, you may want the monthly forecast placed on a single day, e.g. the entire monthly forecast represented as occurring at the beginning of the month, or the week, but this is very uncommon. This can be done in Global Replenishment Forecast settings or by Item-Site in the Replenishment Forecast Series Overrides.
example:
3. Decide on a Conversion Rounding Method
When converting from the monthly demand forecast to the replenishment forecast, when you have very small numbers, e.g. a demand forecast of < 1 per month, this can result in extremely small daily quantities, which in turn can lead to unnecessary replenishment suggestions, such as when StockIQ predicts you might go *fractionally* below zero, and therefore need to purchase more.
To prevent this, when converting from the demand forecast to the replenishment forecast, StockIQ can either:
- None - Do not modify the demand forecast, allow fractions to flow through.
- Drop - Drop all fractional quantity (e.g. 0.9 becomes 0, 1.8 becomes 1, etc),
- Round - Apply traditional rounding
- Front Load - Fractional portions are accumulated and then grouped into the earliest available bucket, so monthly forecasts of 0.4, 0.4, 0.2 would turn into 1, 0, 0, and then split into the replenishment buckets.
- Back Load - Fractional portions are accumulated and then grouped into the earliest available bucket, so monthly forecasts of 0.4, 0.4, 0.2 would turn into 0, 0, 1, and then split into the replenishment buckets.
4. Decide on a Consumption Level
Defines the level at which forecast consumption is done. For most organizations, you will want to set this to Item-Site level consumption.
If your hierarchy includes customer-facing attributes, such as specific Customer-Ship-To, or a category such as the Customer Category 1 to make forecast groups, then you may wish to also make your replenishment forecast consumption happen at a level consistent with your customer groupings, such as a forecast group. In this case, if you have a large customer, such as Walmart, who can possibly consume your entire forecast with a large order, the effect of that large order on consumption is shielded from your other forecast groups. This can be useful, since even if Walmart places a large order that consumes all of the Walmart expected forecast (or more), your remaining customers are independent of this, and can still be expected to consume their forecasted quantity, and StockIQ can make sure you are still planning for this with the customer or category level consumption.
5. Decide on a Consumption Order
When doing consumption, either monthly, weekly, or daily, this defines how StockIQ runs the consumption logic. For example, if you are set to monthly consumption and receive an order for 100 units on the 15th of the month, should it begin consuming from the first of the month forward, or should it consume from the 15th and walk outward in increasing number of days?
- Middle-Out - this is generally the most sensible approach. Middle-out means that we consume from the point of the sale outwards to do the consumption, much like ripples on a pond. If a sale lands on the 17th, then we look for forecast to consume on the 17th, then 18th, then 16th, then 19th, and so on, much like ripples radiate from the center of a rock thrown into calm water. Consumption stops when we reach the limits on consumption, such as -10 / +10 days as in daily consumption, or at the week or monthly borders as in weekly or monthly consumption.
- Early To Late - The early-to-late method starts by finding the very earliest period that it is allowed to consume given a demand that must be consumed. Similar to the middle-out example above, if a sale lands on the 17th, and consumption is allowed up to 10 days before, then consumption will start from (17-10 = 7th), and then proceed forward until the demand has been completely applied to the forecast.
6. Decide on a Consumption Option
- Ask the client how far in advance do your customers order?
- Do you ship out most orders in a day or two?
- Auto Linear setting
- Default setting where forecast is reduced by a day each day of the month
- A good setting to start when orders are shipped withing 1-5 days or ordering and customer orders daily
- Monthly Consumption
- A good choice when client has a monthly forecast, clients customers order ahead of time and clients order pattern is monthly or weekly
- Orders consume the forecast in the same month first
- recommend mid-month forecast review
- Weekly Consumption
- A good choice when forecasting in weekly buckets and customers order weekly
- Daily Consumption
- Most complex to explain in the order schedule
- Added complexity is revealed to decide on forward and backward daily consumption
Troubleshooting
- Configuration in Replenishment Forecast Series Setting Screen
- consumption can be difficult to explain in the order schedule with daily consumption being the most complex
- consumption will not consume prior time buckets in the past but can consume current time bucket and future time buckets forecasts
- best to consider consumption as forward looking
Last updated: 2025-07-01