Case Study-Demand Forecasting
Inventory & Order Management Services

Demand forecasting is used by organizations globally to build in efficiencies in Inventory and Order Management helping them maximize profitability by minimizing stock outs, increase order fulfillment rates and inventory turns, optimize holding costs and improve customer satisfaction, retention and wallet share.

Market Equations India helps organizations apply extensive analytics on customer, product, transactional, account, service and social data to accurately forecast demand by geography, product (SKU) and store level to optimize their Inventory and Order Management systems internally to maximize profitability.

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Deman-Forecasting-Inventory-Management

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.

Objective:

Inventory & Order Management services - To build a forecasting model to accurately forecast demand from numerous distribution centers globally thereby, building efficiencies in inventory and order management systems and processes internally.

inventory-stock

Challenges

  • Frequent Stock Outs - Demand-Supply gap
  • Large Inventory and Stock levels - Unsold, Out fashioned etc
  • Shipment delays - Unmanageable Lead times

Approach

Historical data analysis by product segments, store level and distribution centers (by geography) 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

Some of the techniques applied to test model efficacy

  • Model Validation: EWS - Holt and Winter, Additive Decomposition, Multiplicative Decomposition, Auto
  • Regressive Moving Average, etc
  • Model Performance: Mean Absolute Percentage errors (MAPE)

Outcome

Our Inventory and Order Management model achieved an accuracy of approximately 85 per cent within the first quarter with improvements in service levels up by approximately 42%. Our analysts have been working with this retailer for the last 5 years, regularly updating and revalidating the models to ensure maximum returns on their investment through optimum and efficient inventory and order management.

Explore how the Market Equations Inventory & Order Management services from India helps organizations achieve efficiencies in order fulfilment, optimize inventory levels, enhance customer satisfaction, retain customers and maximizing profitability.