Advanced Analytics Within The Supply Chain : Demand Forecasting Process + Inventory Management
The fundamental value of supply chain management is to control the manufacture, storage, transportation and sale of goods-services to meet customer demand.
In most cases the goal is to have what the customer wants, when the customer wants it, and keep nothing else.
Predictive analytics is the practice of utilizing a large amount of data to gain insight into possible future scenarios in order to manipulate a positive outcome.
Customer Demand Forecasting
Demand forecasting is the action of predicting consumer demand for a product or service.
When historical data is available for a product or product line, it’s practical to utilize a time series analysis. A time series analysis can surface key data points such as seasonal fluctuations, consumer trends, and weather-date purchase correlations.
A time series analysis is most effectively used when applied to a well-established business with several years’ of production and purchase data.
When working with an organization that does not host a significant volume of performance data, a quantitative forecast is a much more practical approach. This approach also works for businesses with legacy data but have decided to launch a new line of products.
A qualitative strategy pulls data from social sentiment, expert opinions, market research, and comparative analyses in order to estimate demand.
By properly forecasting market demand, management can eliminate holding costs, lower operational expenses and improve efficiencies during peak periods.
Inventory optimization is the action of reducing inventory distortion, a challenge that stems from out-of-stock and overstock inventory situations.
Businesses such as TJX Companies create profit in excess inventory scenarios. In some cases, this sell-off of high end excess inventory can be damaging to a brand’s overall strategy. Brands who can avoid the dependency of third party discount retailers/e-tailers such as TJX Companies or Amazon will experience an increase in brand value and profit margins both online and off.
Brands who keep discount inventory in-house through a factory outlet owned-asset structure will be the winners of retail 4.0. Brands can leverage technology by building customer satisfaction programs that unlock the ability to gain exclusive access to discount inventory.
Management teams typically strive to avoid excess inventory, which not only is unproductive but also gives a poor return on investment.
Inventory liquidation strategies typically attempt to liquidate stock for max return or at minimal expense.
Products such as TradeGecko help middle market online + brick and mortar sellers optimize inventory. TradeGecko combines all sales channels, locations and local currencies so that every product, order and customer can be managed in one place.
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Advancing Analytics Internally
A proper advanced analytics strategy helps to identify trends, understand your customers’ purchase habits, predict purchase behavior, and drive strategic decision-making.
Management teams can internally utilize advanced analytics strategies by building ecosystems for experimentation and embracing innovation driven by curiousity.
In building out a team of developers and data analyst, management teams can position their organizations to optimize outcomes to leverage third-party machine learning applications and subscription based SaaS platforms.
If you’re not employing predictive analytics in your overall business strategy, it may be time to consider speaking with a professional to identify how your bottom line could benefit from improving customer experience, streamlining operations, and supercharging growth metrics.
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