Understanding Net Requirements in Dynamics 365 Supply Chain Management

Introduction

Net requirements are one of the most important tools for planners in Dynamics 365 Supply Chain Management (D365 SCM). They provide a clear, item‑level view of how supply aligns with demand, helping planners understand shortages, validate planned orders, and troubleshoot planning issues. With Planning Optimization, net requirements are calculated faster and more efficiently, giving organizations real‑time visibility into their supply chain.

This blog explains how net requirements work, how Planning Optimization calculates them, and why they are essential for effective master planning.

What Are Net Requirements?

Net requirements represent the actual quantity needed after considering all supply and demand elements. They are calculated by offsetting:

• Gross requirements (total demand)

• On‑hand inventory

• Supply orders (purchase, production, transfer)

• Reservations and allocations

• Planned orders

Net requirements help planners answer critical questions:

• Do we have enough supply to meet demand?

• Why was a planned order created?

• Which demand is causing a shortage?

• How is supply pegged to demand?

Because of this, the Net Requirements page is often the first place planners go when analyzing planning results.

How Planning Optimization Calculates Net Requirements

Planning Optimization evaluates all supply and demand transactions for an item and applies coverage settings to determine when and how planned orders should be created.

The calculation includes:

1. Reading all demand (sales orders, forecasts, production requirements)

2. Reading all supply (on‑hand, purchase orders, production orders, transfers)

3. Netting supply against demand

4. Applying lead times and coverage rules

5. Generating planned orders when shortages occur

6. Displaying pegging to show which supply covers which demand

This process ensures planners have full visibility into how the system arrived at its planning decisions.

Key Capabilities

• Real‑time visibility into shortages

• Pegging between supply and demand

• Multi‑level BOM netting

• Support for batch‑ and serial‑controlled items

• Full integration with Planning Optimization logic

Step-by-Step Overview of the Net Requirements Process

Step 1: Open the Net Requirements Page

Navigate to Master planning → Net requirements and select the item.

Step 2: Review Supply and Demand Transactions

View all incoming and outgoing transactions affecting the item.

Step 3: Analyze Pegging

Check which supply is linked to which demand.

Step 4: Identify Shortages

Look for negative quantities or unmet demand.

Step 5: Review Planned Orders Generated by Planning Optimization

Confirm that planned orders were created correctly based on shortages.

Common Use Cases

• Troubleshooting shortages and missing supply

• Understanding planned order creation

• Validating BOM explosions for production items

• Analyzing customer‑specific demand

• Reviewing supply chain disruptions

Conclusion

Net requirements are a foundational tool for planners using Dynamics 365 Supply Chain Management. They provide transparency into how supply and demand interact, why planned orders were created, and where shortages exist. With Planning Optimization, net requirements are calculated quickly and accurately, enabling planners to make informed decisions and maintain a stable supply chain.

Net Requirements Process Flowchart

graph TD
    A[Start] --> B[Read Supply and Demand]
    B --> C[Net Supply Against Demand]
    C --> D{Shortage?}
    D -->|Yes| E[Generate Planned Orders]
    D -->|No| F[No Action Needed]
    E --> G[Display Pegging]
    F --> G
    G --> H[End]