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Accurate demand forecasting is crucial for businesses to optimize their inventory levels, reduce costs, and improve customer satisfaction. Nousot, a leading provider of AI-powered demand forecasting solutions, has helped a major retailer achieve significant cost savings and operational efficiency.
The retailer was struggling with inaccurate demand forecasts, leading to excess inventory and increased costs. They needed a solution that could provide more accurate forecasts on a four-week horizon, allowing their demand planners to make informed decisions and take timely actions.
They are challenging to model, difficult to scale, and painful to integrate. Credit https://www.nousot.com/resources/using-genai-to-completely-disrupt-traditional-platform-migrations-to-databricks-2/
Nousot's team worked closely with the retailer to understand their unique requirements and integrated the solution seamlessly into their existing planning system Blue Yonder.
The solution achieved a remarkable 30% improvement in forecast accuracy on a four-week horizon. This improved accuracy allowed the retailer's demand planners to make more confident data-driven decisions, optimize inventory levels, and respond proactively to changes in demand.
Nousot's demand forecasting solution is built on a unique approach that leverages the power of data bucketing and a multi-stage modeling process. The core idea behind their solution is that by grouping demand data into buckets based on common dynamics, individual global models can be trained specifically for each bucket. This approach allows for highly targeted and accurate forecasting, as the models are tailored to the unique characteristics of each demand pattern.
Nousot's demand forecasting solution splits your data into four major buckets in order to model each one separately.
Some of the buckets Nousot's solution identifies include:
Spiky or erratic demand
Intermittent demand
Smooth demand
By categorizing demand data into these buckets, Nousot's solution can apply deep learning approaches that excel in handling large volumes of data. With often millions of series to work with, these deep learning models can capture complex patterns and relationships within each bucket, resulting in highly accurate forecasts that are specific to the dynamics of each demand type.
After the initial bucketing and modeling stage, Nousot's solution employs a second stage to further refine the forecasts. In this stage, the series with the lowest performance are identified and passed on to a genetic algorithm approach. This advanced optimization technique searches for models that are an even better fit for these challenging series, ensuring that the final forecasts are as accurate as possible across the entire range of demand patterns.
By combining the power of data bucketing, deep learning, and genetic algorithms, Nousot's demand forecasting solution delivers exceptional accuracy and robustness. This innovative approach allows the solution to adapt to the unique challenges of each client's demand data, providing tailored insights that drive significant cost savings and operational improvements.
You can learn more about the approach here:
In an insightful post on Nousot's website, Alexandra Haefele describes how AI and advanced analytics are revolutionizing demand forecasting. Traditional human-based forecasting is being phased out in
The implementation of Nousot's demand forecasting solution yielded impressive results for the retailer:
$5.6M reduction in monthly inventory costs
Improved inventory turns and reduced obsolescence
Enhanced collaboration between demand planning and supply chain teams
Increased agility in responding to market changes and customer needs
By leveraging Nousot's expertise in data science and machine learning, the retailer was able to transform their demand planning process and achieve substantial cost savings. The solution provided them with the insights and confidence needed to make informed decisions and drive operational excellence.
Nousot's success in delivering significant value to their clients through demand forecasting underscores the immense potential of AI and machine learning in transforming supply chain operations. As businesses continue to deal with complex and dynamic market conditions, the adoption of advanced demand forecasting solutions will be a key differentiator in driving competitiveness and profitability.
Nousot is pushing the boundaries of what's possible with AI and delivering innovative solutions that help their clients thrive in the face of challenges. Their team of experts is constantly refining their demand forecasting capabilities to stay at the forefront of this rapidly evolving field.
For businesses looking to optimize their demand planning process and unlock significant cost savings, Nousot's demand forecasting solution is a proven choice. Reach out to or and they'll be happy to help you out.
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