In today’s highly customizable manufacturing landscape, forecasting finished goods can be a complex and overwhelming challenge. When products are built from interchangeable components, the number of possible configurations can skyrocket. Traditional MRP systems often force businesses to forecast every single SKU, which is not only impractical but also inefficient in many cases.
To address this, many companies now use a concept known as the "Planning BOM." This allows for forecasting at a higher level—such as the product model—rather than at the individual configured SKU level. In this article, we’ll explore how Epicor Kinetic supports Planning BOMs and how integrating them with Smart Inventory Planning and Optimization (Smart IP&O) can significantly improve demand forecasting accuracy and operational efficiency.
**Why Use a Planning BOM?**
Traditionally, each finished product has a rigid bill of materials (BOM). If you want to plan based on forecasts, you would forecast demand for each SKU and then let MRP break it down into component requirements. However, when products are highly configurable—like smartphones with various screen sizes, storage options, and colors—forecasting at the SKU level becomes nearly impossible.
For example, a smartphone manufacturer might sell thousands of units annually, but each configuration could have very low or sporadic demand. Forecasting for every combination is not feasible, and relying solely on MRP to manage this leads to inefficiencies.
This is where Planning BOMs come into play. Instead of forecasting for each configuration, you forecast at the model level. The Planning BOM then distributes that demand across the various component options based on historical data or business assumptions. For instance, 60% of demand could go to the 128GB version, 30% to 256GB, and 10% to 512GB. This approach makes forecasting more manageable and accurate.
**The Role of Accurate Forecasting**
Even with a well-structured Planning BOM, the success of your system depends heavily on the quality of the initial forecast. Epicor Kinetic can import forecasts, but it doesn’t generate them automatically. Many businesses still rely on manual Excel-based forecasts, which are prone to errors and lack the ability to identify key patterns like seasonality or trends.
That’s where Smart IP&O comes in. It provides a powerful forecasting solution called Smart Demand Planner. This tool generates statistical forecasts, lets planners adjust them, and integrates with sales or customer forecasts. The result is a more accurate and reliable forecast that feeds directly into Epicor Kinetic.
**Smart IP&O: A Comprehensive Solution**
Smart IP&O enhances Epicor Kinetic by offering two core capabilities:
1. **Smart Demand Planner**: This tool helps you forecast demand at the product level. It combines statistical models with human input to create more accurate forecasts. These forecasts are then imported into Epicor Kinetic, where MRP uses them to plan material requirements through the BOM.
2. **Smart Inventory Optimization**: This feature helps set optimal min/max and safety stock levels for both finished goods and raw materials. It considers factors like lead times, job usage, and sales orders to ensure you’re always stocked without excess inventory.
Together, these tools help you make smarter decisions, reduce overstock, and avoid shortages—all while maintaining high service levels.
**Leverage Planning BOMs with Smart IP&O**
Smart IP&O is designed to work seamlessly with Epicor Kinetic, making it easy to forecast at the Planning BOM level. You can incorporate business insights, analyze demand patterns, and optimize inventory across all levels of your BOM. This integration ensures that your planning is not only accurate but also aligned with real-world conditions.
By combining Epicor Kinetic’s Planning BOM functionality with Smart IP&O’s advanced forecasting and inventory optimization features, you can confidently meet customer demand—even with complex product configurations. This powerful synergy improves forecast accuracy, reduces waste, and strengthens your overall supply chain performance.
Whether you're managing a small product line or a large-scale manufacturing operation, Smart IP&O and Epicor Kinetic provide the tools you need to stay ahead in an ever-changing market.
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