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e: smutchler@quebit.com
P: 540-524-8380
Outstanding Reputation for Analytics ROI
• Data driven
– Assortment changes are driven by predictive models trained on your data
– Models are validated using historical hold-out data
– Not biased by vendor goals
– Merchants/vendors have input into what goes into the model
• Scalable
– The solution can process [score] billions of records in a few hours
• Highly accurate
– Typical [first year] sell-through for predictive models on new inventory is 65-85%
(varies by part category) compared to 40-60% standard approaches
• Space efficient / availability maximizing
– Maximizes part availability for key categories based on demand elasticity
– Ensures all the parts required to complete the job are in the assortment
– Optionally: Maximizes market availability by splitting long-tail demand across stores
• Low risk
– Simulate changes before deploying – pilot in select stores
Benefits
• All
– 10-30% increase in assortment accuracy
• US Retailer
– 400 bp improvement in inventory turn
– 7% reduction in inventory levels
– 11% increase in sales
– Highest customer satisfaction scores in part availability in company history
• Scores increased every month
– 3,000+ hours of merchant time was re-allocated to vendor management, etc.
What will sell? - Propensity Modeling
• Train models to predict which parts will sell in the next 12 months using parts
stocked for the past 12 months (and if they sold or not)
Rotors
How many vehicles will need the part?
1. Construct a trade area using radius (based on population)
2. Aggregate store/part VIO (using fitment)
3. Weight VIO by lifecycle
– 800 VIO -> 73 vehicles that will need the part next year at this store
Simple rules automate assortment changes
Expected gross revenue for assortment changes = probability of sale * gross margin
Completing the job – having all the parts
• We mine millions of transactions to find parts that are required to complete
the job (e.g. complete brake jobs, water pumps/timing belts, tune-ups etc.)
• High lift associations between parts are then forced into new assortments (if
having an oil pump screen drives more sales (lifts) pump sales significantly
then we add the screen along with the pump)
SKU 372 is
purchased 534x
more often if SKUs
540 and 705 are
also stocked.
Forward positioning parts based on elasticity
• Customers will wait longer for certain part categories (in-elastic demand)
• Forward position (store stock) elastic part categories (e.g. brakes)
• Re-locate in-elastic part categories (e.g. radiators) to DC or hubs, etc.
Organizational integration
• Modeling process: We work closely with Merchandising to
– Identify potential sales predictors
– Validate model outputs (do ADDs/REMOVEs make sense?)
– Tweak assortment rationalization rules to meet market/company-wide objectives
• Modeling lead
– Preferably an internal FMP analyst that QueBIT will help train/mentor to
build/tune/evaluate models
– Analytical leaning
– Good communication skills (will work closely with Merchandising, etc.)
• Data lead
– Strong knowledge of corporate data
– Strong SQL skills
– Reporting skills