B U S IN E S S DE C I S I O N -M A K I NG
More accurate forecasting,
supported by collaborative
silo-penetrating processes,
can reduce working capital
up to 20 percent and
reduce out-of-stock events
by up to 6 percent.
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many companies still use the wrong tools, including spreadsheets and black-box enterprise
resource planning (ERP) algorithms, which
are not necessarily fine-tuned for individual
SKUs and may be especially ill-suited for slowmoving items with no sales in some periods.
Forecasting is also often ignored at the pointof-sale level, which is harder to do but can be
used to improve distribution-center forecasts
and cross-department collaboration.
Choosing right-time series models, tightening modeling parameters using mathematical
optimization and adjusting processes to become
demand-driven can result in substantial operational improvements. More accurate forecasting, supported by collaborative silo-penetrating
processes, can reduce working capital up to 20
percent and reduce out-of-stock events by up to
6 percent.
Marketing optimization. Demand can be
stimulated by driving up sales with brand-recognition campaigns or by promoting individual
goods and services. Sometimes, these promotional campaigns are either too broad or poorly timed and very often offer higher discounts
than necessary to achieve extra sales volumes.
Marketing optimization approaches maximize
the effectiveness of these campaigns within
marketing budget constraints. Alternatively,
they can inform decision-makers about the right
budget level to achieve a certain sales volume.
These techniques routinely improve the marketing budget by 10 percent while allowing for
achiev ing the business objectives.
A N A LY T I C S - M A G A Z I N E . O R G
W W W. I N F O R M S . O R G