In a highly competitive business environment it is suicidal to either hold excess stock or lose customers due to stock out. Accurate demand forecasting leads to accurate Production Planning helping manufacturers address these key issues to remain profitable and competitive.
Market Equations developed a Demand Forecasting and Inventory Management predictive model for a large Textile Manufacturer in the United Kingdom.
The Manufacturer was experiencing a huge challenge with forecasting its demand from retailers globally and therefore, the company felt an urgent need to partner with an Analytics service provider preferably in India, with expertise in Demand Forecasting and Inventory Management to provide a solution at the earliest.
- Frequent Stock Outs
- Large Inventory levels
- Unmanageable lead times
- Considerable time spent in this activity in-house
- Demand for variety of Minimum Quantities
- Very little demand forecasts from its suppliers
- Lead times are affected by supplier "annual holiday" closures e.g. European August shut down and Chinese New Year
- 3 of its largest customers in one business unit provide EPOS (Electronic Point of Sale) data. These are the numbers they have actually sold out of the stores. This is valuable information but the company rarely has time to consider the relevance of these numbers and a host of other issues.
Historical data analysis by product, segments, retailers, distribution centers (by geography), re-order quantities , special orders, extraordinary usages, seasonal trends and new customer purchase pattern and trends, was performed using a Multiplicative Regression model.
The steps included:
- Analyzing the data to ensure data integrity and hygiene
- Product Clustering into segments to study trends and patterns
- Analyzing product categories by sales, seasonality, stock levels etc to uncover irregularities
- Developing and validating the Inventory & Order Management model to optimize Inventory levels
Our Demand forecasting and Inventory management model achieved an accuracy of approximately 90 per cent within the first 4 months with improvements in service levels up by approximately 30% fuelled by an efficient Order Management platform. The platform apart from helping the client save considerable amount of time internally helped them manage demand through accurate stock forecasting, order stock based on forecasted demand and efficiently manage logistics by accurately estimating and managing product lead times.
Market Equations developed a Inventory & Order Management predictive model for an E-Commerce fashion retailer in the United Kingdom by forecasting demand by product, store level and distribution centers (by geography) helping them minimize stock outs, improve fulfillment rates, reduce shipment delays and enhance customer satisfaction and retention.Read More