Role of FORECAST Squared in CPG

The Challenge

CPG companies frequently face the problem of not maintaining the optimal stock across the supply chain. This can lead to loss of sales that amounts to 100s of millions annually

Why sub-optimal stock levels?

CPG’s are distributed via many channels, from traditional brick & mortar retailers to online markets and the distribution network typically has multiple layers. To add to this complexity, CPG companies have to rely on their primary or secondary sales data to derive the actual customer demand.

The replenishment model adopted by many companies assumes stable demand across the entire distribution network and the entire product portfolio. As a result, the supply chain is not geared to react to a sudden surge or a drop in consumer demand.

It needs to be noted that some companies have started moving towards make to order process and supply chain synchronization. However, it is extremely important to have an accurate forecasting mechanism for all SKUs across multiple channels and distribution layers to implement this framework.

What is FORECAST Squared?

FORECAST Squared is a forecasting system that can build 1000s of highly accurate forecasts within a few minutes!  Moreover, it does not assume any forecasting or data science background for users. Developing 1000s of highly accurate forecasts can be a matter of just a few clicks.

FORECAST Squared can generate monthly, weekly or daily forecasts for long time horizons.  It also continuously updates forecasts based on the latest data.

How does FORECAST Squared work?

It considers many factors that can influence forecast. For an example, it considers factors such as advertising spend, price and promotions, weather and inflation. Next it automatically considers many derivatives of these factors, which is called feature engineering in machine learning. Then the algorithm sweeps through 1000s of model classes and distinct parameter values and selects the best. This entire custom model building process is carried out without any human intervention.

What are the industry-specific parameters it considers?

FORECAST Squared considers many industry-specific parameters such as;

  • Marketing and Promotional activities
  • Price related parameters
  • Macroeconomic indicators such as Inflation & GDP
  • Weather-related factors such as rainfall and temperature

The Outcome?

  • Highly accurate daily forecasts for perishable categories can help grocery retailers reduce wastage significantly whilst maintaining the correct level of inventory.
  • For FMCG products, weekly forecasts can lead to significant improvements in supply chain synchronization

Sign up for our 30-day free trial to try out the all-new FORECAST2 3.0! 

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