Demand Forecasting

Better Forecasting – Reduced Out of Stocks: AMP2 captures and uses all of the customer touch points that affect demand - including price, offers, promotion, advertising, media, promotion display, events, competitors & related products etc. – to build smart elasticity demand models driving forecasts and optimization; AMP2 provides the tools to use those smart forecasts and insight and intelligence to manage prices, promotions and advertising; and a forecast driven simulation to provide a category and merchandise P&L. The forecast has the ability to upgrade the performance of your Supply Chain with smart SKU/Store daily or weekly forecasts taking into account impacts of promotions (uplifts and cannibalization).

AMP2 produces smart forecasts the business can trust – improve your price, promotions and supply chain performance.

Business Rationale

Retailers and manufacturers need forecasting in all facets of their organization to support decisions being made by merchandisers and category managers, ad planners and marketers, but also by buyers, replenishment and vendors in collaboration situations - for their planning and operational processes. AMP2’s rich data sources ensure the elasticity demand models encapsulate real insight into the drivers behind consumer behaviour and demand. AMP2 creates a non-linear forecast using dynamic models and advanced algorithms to understand and predict future sales in fast, medium, slow and very slow moving retail environments taking account of the step changes in demand that occur due to price changes and promotions etc.

The AMP2 tool set provides data cleaning, model building, model update and forecast accuracy facilities as well as new item/SKU introduction and item deletion without models having to be rebuilt from scratch. The AMP2 models are constantly updated and refreshed and do not degrade as new sales and customer demand is updated each day or week. The majority of forecasting solutions used by retailers are based on linear algorithms which break down when price, promotions, ads etc. occur and cannot track the change in the demand uplift or revert-back phase of the promotion period: AMP2 can and does. AMP2 also tracks the impact on related products which are affected by a price change or promotion, cannibalization-halo effects etc., Accurate forecasts will provide benefits all round in better promotion planning, fewer out-of-stocks, improved service levels and reduced safety stocks throughout the whole supply chain infrastructure.

AMP2 forecasts can be relied upon and used with confidence to make important business decisions

Module Capabilities

At the heart of the solution is a demand model calibrating engine capable of calculating price and demand elasticity from past sales data. Using weekly or daily sales information it uses extensive data cleaning techniques to calculate missing or unstable values. The solution automatically determines the best mathematical forecasting algorithm to use for each item based on goodness-of-fit and other advanced statistical performance metrics.

The major components of the Forecasting module are:

• Data cleaning
• Creation of Elasticity Demand Models
• Use of dynamic as opposed to static models
• Non-linear mathematics
• Multiple self selecting algorithms
• Accuracy tracking and statistical reporting
• Auto EDM tuning, maintenance and updating
• Forecast takes into account:
  • Offers and promotions
  • Ad/ flyer, page/section
  • Events and promotional displays
  • Uplift and cannibalization
  • New item introduction and delisting
• Calculation of smart forecasts for:
  • Regular priced base item sales units
  • Offers and promotional sales units
  • Daily, weekly, periodically
  • Store, store group/ format, company
  • User-definable time horizon