Business Situation :

US-based manufacturer of personalized gift items; with presence across North America, Australia, Europe and Middle East. They have over
3,000 skus on offer; across 8 product platforms and 13 countries. SKUs are supplied from Far East suppliers, with a 3-month lead time. And
almost 60% of Customers purchase gift items for immediate consumption; with the remaining having a deferred shipment date through out
the year. In addition, the manufacturer runs SKU-level promotions through-out the year, which result in SKU-specific demand. Critical to have
accurate sku-level demand forecast so that all orders are met; while maintaining optimal inventories.
The Task :
- Develop a framework and relevant forecasting models for improving the forecast process and accuracy.
- Obtain a robust and accurate SKU-level forecasting for each week over a year.
- Implement the predictive models so that forecasting is improved, inventory levels are optimal and customer satisfaction is improved.
Analytical Framework :
The solution was aimed at simplifying the process and improving the timeliness and accuracy of demand forecast:
1. Simplify and automate some of the current processes that were cumbersome and susceptible to human error.
2. Use statistical analysis to learn from historical trends, project future demand, and create an Early Warning System to predict weekly excess
and stock-outs at SKU level.
3. Improved the existing process of predicting repeat business using cannibalization models and also provided shipment profiles with insights
on patterns of how products shipped out to customers. This helped in placing timely and appropriate Purchase Orders with suppliers.
4. Provided dashboards for measuring forecast accuracy and also performance of shipments.
5. Adhoc analytics to support current forecasting, customer care and marketing decisions e.g. quantifying financial impact of late shipments
The Result :
Better sku-level forecasts and ability to react faster to products becoming hits.
Less obsolete inventory at the end of the year meant freeing up working capital and reducing waste. Lower stock-out rates also meant
better customer satisfaction in addition to revenue. Since repeat customers are their main focus, this factor is critical in preventing
unnecessary attrition.
More scientific approach to forecasting, thereby eliminating any bias in subjective forecasting logic.
Analytics in Action
Improve Demand Forecasts. Sales up by $ 3MM, stock-outs down
Client : A US-based Manufacturer of Customized Gifting Products
Forecast Variance
S
a
l e
s
g
r
o
w
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h
(
P
Y
)
Over- forecasted
Growing
Under-forecasted
Growing
Under-forecasted
Declining
Over-forecasted
Declining
WC57001A, +, +
TD72601B, -, -
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WC57001B, -, -
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WA38001A, -, -
WC62545B, -, -
WC58802A, +, +
WC59004A, -, -
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WC30146A, -, -
WD25646A, +, +
WC74903B, +, +
WD06001A, -, -
WC74903A, +, +
WC59401B, -, -
WC59004B, -, -
WC83504A, +, +
WD31503B, -, -
WC80446A, -, -
WC28801A, +, +
WC81001A, -, -
WC83945A, +, +
WC28301A, -, -
WC87901B, +, +
WA85401A, -, -
WC58802B, +, +
WC88102A, -, -
WD11202A, -, -
WC89803A, +, +
WC83945B, -, -
WD01993A, +, +
WC30146B, -, -
WD18006A, +, +
-5000
0
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25000
30000
-40000
-30000
-20000
-10000
0
10000
20000
30000
40000
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43
MAPE - 23.47%
2UCL
3UCL
2LCL
3LCL
Variance
235386
359051
198157
211658.2184
196496.3737
0
50000
100000
150000
200000
250000
300000
350000
400000
1 2 3 4 5 6 7 8 9 10111213141516171819202122232425262728293031323334353637383940414243444546474849505152
Plan C
FY_2009
YTD_2010
Regression 1
Regression 2
forecast
YOUR PARTNER FOR
DATA ANALYTI CS SERVI CES
MANAGEMENT TEAM
GLOBAL EXPERIENCE.
PROVEN RESULTS.
Roy K. Cherian
CEO
Roy has over 20 years of rich experience in marketing, advertising and media
in organizations like Nestle India, United Breweries, FCB and Feedback
Ventures. He holds an MBA fromIIMAhmedabad.
Anunay Gupta, PhD
COO &Head of Analytics
Anunay has over 15 years of experience, with a significant portion focused
on Analytics in Consumer Finance. In his last assignment at Citigroup, he was
responsible for all Decision Management functions for the US Cards
portfolio of Citigroup, covering approx $150B in assets. Anunay holds an
MBA in Finance fromNYU Stern School of Business.
Buck Chintamani
EVP, Strategic Initiatives &Business Development
Buck has extensive experience working with global clients across sectors.
He was an early employee at Infosys, a founding team member at supply-
chain software startup - Yantra, and part of the management team at RFID
sector startup - Reva. Most recently, he was the Vice-President for Service
Partner Strategy and Programs at product lifecycle management software
company, PTC. Buck has an MBA fromIIMAhmedabad.
Kakul Paul
Business Head, CPG
Kakul has over 6 years of experience within the CPG industry. She was
previously part of the Analytics practice as WNS, leading analytic initiatives
for top Fortune 50 clients globally. She has extensive experience in what
drives Consumer purchase behavior, market mix modeling, pricing &
promotion analytics, etc. Kakul has an MBA fromIIMAhmedabad.
ADVANCED ANALYTICAL SOLUTIONS
MARKETELLIGENT, INC.
80 Broad Street, 5th Floor, New York, NY 10004
1.212.837.7827 (o) 1.208.439.5551 (fax) info@marketelligent.com
CONTACT
www.marketelligent.com
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