Planning (APS)

Advanced Planning and Scheduling Systems, APS, Sales & Operation Planning (S&OP), Finite Capacity Scheduling, Planning, S&OM, Business Intelligence.

How to understand the art of forecasting for retail promotions

How retailers can prepare themselves for upcoming promotions through better forecasting

15-Nov-2019
How to understand the art of forecasting for retail promotions
Promotional forecasting is complex. The knock-on challenges it creates along the supply chain - from ordering raw material and packaging, through to managing stock levels at depots and at individual stores - beg the question of why supermarkets run promotions in the first place?

The answer is quite straightforward. A buyer’s objective is to maximise profit through growing sales, reducing costs, and managing the percentage margin mix. Promotions help to increase sales, and can influence the mix of products sold.

Promotional mechanics are varied, and the different types of promotions available - from price cuts, to multi-buys and extra fill packs - can seem complicated. So beyond simply driving sales volume for the short-term, why else might a supplier or retailer decide to promote?

The main reasons are: 
  • To increase retailer market share
  • To increase supplier or brand category share
  • To grow total category sales, such as multi-buy meal deals.
  • To increase consumption 
  • To encourage new product trial.
  • To increase average basket price, by encouraging consumers to trade into premium brands 
  • To manage the margin mix, by trading consumers into higher margin SKUs such as own-label equivalents

Different promotional mechanics can therefore be used to achieve these varied objectives - it is definitely not ‘one size fits all’.

Complex Variables

Promotional volume uplifts can be affected by many factors and calculations with many complex variables, which makes forecasting volumes for retail promotions a complicated undertaking. With anything from the type and position of the promotion; what else is on promotion at the same time; time of year; and external influences (sporting occasions, weather & season; even TV advertising) all playing a role, predicting volumes in advance is a huge challenge.

With many products needing to be produced several weeks or months in advance of a promotion going live, the challenge is less about forecasting the total promotional volume, but more about managing fluctuating sales across the retailer store estate to keep 100% availability, and achieve 0% waste, consistently throughout the promotion period. In theory.

In reality, these fluctuating volumes present huge issues to the supply-chain. Suppliers need to produce more, depots need to hold more, more stock needs to be allocated to stores ahead of a promotion (so that they don’t immediately run out), and stores need to find more space on the shelf to put the stock. For short-life products such as produce, bread, and many others - this issue is compounded as you cannot simply ‘stock-up’.

And this is not just about the start of a promotion when volumes increase. It is also critical to plan the exit. Retailers do not want to be left with extra unsold stock at the end of a promotion, but also do not want to have empty shelves on their power-aisle for the last week.

Managing The End-to-End Process

So, what can be done to improve promotional forecasting?

The solution requires 2 things:

  1. accurate granular forecasts. 
  2. the supplier to manufacture and deliver on time.

In the short-term, retailers and suppliers can make better use of data that already exists. Most large supermarkets provide access to daily sales and supply-chain data. Start by using the information that exists.

Secondly, it is important to look at promotions ‘in-flight’. Use tools that allow you to quickly check promotional performance (is it going to plan?); to check depot stocks daily - before they run out; and to be alerted to potential issues. These all allow you to be proactive in managing stock levels, and make life easier to communicate with your retail supply-chain colleagues. By reviewing data daily you can take action and minimise problems.

In the longer-term, retailers need to take responsibility for improving their forecasting methods. They have a wealth of historic data to use and also have the knowledge of what else is going to be promoted at the same time as your products. Artificial Intelligence and Machine Learning techniques are allowing constant improvements to forecasting methods and algorithms, and improvements in technology are allowing us to work with much larger data sets. This should ultimately help to provide what suppliers really need - accurate, daily, depot forecasts.

Conclusion

If it were easy for retailers to provide accurate daily product-by-depot forecasts then they would. Working out what will happen in the future can only be based on information we have about the past, mixed with known changes (weather, promotions etc.). Even with all of this to hand, there are still extreme cases, such as the CO2 shortage back in 2018, which drastically affect forecasting and are difficult to predict

By using best-practice visual analytics tools and techniques, supply-chain and sales data can be blended to highlight indicators for demand (such as sales spikes, low-depot stocks etc.), and provide an easily understood picture of recent and historic sales patterns. Having a system that is able to visualise daily data at the click of a button will help ensure you see dramatic improvement in forecasting accuracy; meaning that, over the coming few years, forecasting (and promotional forecasting in particular) should be the biggest area of improvement for retail supply-chains.

ClickSoftware Named a Leader in IDC MarketScape for Worldwide Mobile Field Force Management Solutions

ClickSoftware recognized for its dynamic schedule optimization technology

Kale Aero Chooses Demand Solutions DSX to Optimize Scheduling Processes

Turkish Corporation Aims to Increase Promise-to-Deliver Ratio

Michelin Accelerates Integrated Business Planning using JDA

Leading global tire manufacturer and longtime JDA customer deploys JDA Sales & Operations Planning to support organization-wide transformation

JDA Introduces JDA Express for Enterprise Planning Enabling Retailers to Achieve Rapid ROI

New pre-configured implementations enable rapid nine-week deployment so retailers can quickly accelerate merchandise planning and achieve rapid ROI

Gartner Positions Kinaxis Furthest on Completeness of Vision Axis in Magic Quadrant for Supply Chain Planning

Kinaxis achieves third consecutive ranking in Leaders quadrant by delivering unified processes across S&OP, supply and demand on a single platform

Seagate Technology and Adexa to be honored at upcoming 2018 Manufacturing Leadership Awards

Both companies individually recognized for supply chain partnership

Apliqo launches two new software solutions

Apliqo AG is launching two innovative extensions of its product range onto the market.

Heineken Toasts Production Success with Infor

International Brewing Leader Chooses Infor Advanced Scheduling for Global Programme

Epicor Launches Newest Version of Epicor ERP to Support Global Growth, Innovation, and Competitive Advantage

New release features powerful new capabilities for winning execution on the factory floor and beyond

Dubai Airports selects Quintiq for automated planning solution to deliver world-class passenger experience

Quintiq selected by Dubai Airports to plan and schedule its fixed resources at Dubai International and Dubai World Central

River Logic Pioneers Cloud-based Scenario Visualization Leveraging Prescriptive Analytics

First ever cloud-based solution designed for scenario analysis of prescriptive analytics (optimization) models

Quintiq unveils vision for planning and optimization in the digital age

Supply chain complexity remains the biggest challenge to businesses, says CEO Rob van Egmond

MND Gas Storage Digitizes Maintenance Management with Infor

Infor EAM Helps Oil & Gas Company to Digitalize Maintenance Processes, Streamline Planning and Achieve Control of Maintenance Costs

Infineum Selects Logility to Optimize Supply Chain Performance

Leading Global Manufacturer Set to Boost Supply Chain Performance with Logility’s Multi-Echelon Inventory Optimization

Laying the Foundation for Advanced Supply Chain Planning Capabilities in the Food and Beverage Industry

As a former Director of Supply Chain Management for a large multi-channel food manufacturer I experienced first-hand the variety of challenging problems

Carl Kühne KG and inconso Start “SAPplus”

Logistics optimization with SAP partner inconso

Rules and controls to achieve permanent perfection

DISKOVER gives ERP systems a lasting boost

Software Solution Beefs Up Business Processes

An IT solution from CSB-System is managing all the business processes at Belgian beef specialist Veviba.

Specialist Digital Tech Support Project To Use War Room Techniques

Ex-servicemen and an entrepreneur have launched the War Room, a specialist digital technology support room for monitoring and assessment for businesses, alongside intense leadership training.

Quintiq and the World Food Programme: Working together towards a world with zero hunger

Quintiq, a Dassault Systèmes company and global leader in supply chain planning and optimization (SCP&O), and the United Nations World Food Programme (WFP) announced today a partnership with the objective of optimizing WFP’s humanitarian supply chain worldwide.

Worldwide IT Spending “Flat in 2016”, Says Gartner

Worldwide IT spending is forecast to be flat in 2016, totalling $3.41 trillion, according to Gartner, Inc. (see Table 1). This is up from last quarter's forecast of negative 0.5 per cent growth. The change in the forecast is mainly due to currency fluctuations.

Best Practice: From Manual to Automatic Scheduling

Field service companies of all sizes will be at different stages in their scheduling journey.

UASC Expands CargoSphere Cloud Rate Distribution with Dachser

Cargo Sphere has said that UASC, a leading global ocean carrier, has quickly implemented its second CargoSphere Rate-Mesh connection with Dachser Logistics, a global third party logistics service provider (LSP).

New System “To Help Companies Meet Data Breach Regulations”

The EU General Data Protection Regulation (GDPR) has officially become law, giving organisations two years to become compliant or risk fines of up to 4% of global turnover if they suffer from a data breach

UASC Selects IT Partner For SOLAS Amendment Compliance

With implementation of a new global container weight requirement less than a month away, United Arab Shipping Company has extended its partnership with INTTRA

PTV and IRU join forces on new international route planning standards and services

A new strategic partnership between global road transport organisation IRU and German software developer PTV Group will develop new standards and services for route planning across Europe and beyond.

Kaleido Launches Acceleration Programme For Logistics Tech Startups

Kaleido Logistics, together with RocketSpace, has launched the first acceleration programme for startups in logistics, named Logistics Tech Accelerator.

New Service to Help Small Businesses in Tech Growth Sectors

A Guildford, Surrey (UK) accountancy firm has launched a new cost-effective service to support start-up businesses in the digital, games and apps market which Guildford is becoming increasingly renowned for.

E2open Acquires Terra Technology

E2open, the supply chain operating network, has acquired Terra Technology, a provider of innovative supply chain solutions that help the world’s largest consumer product companies manage market volatility to make better business decisions.

Terra Technology Chooses Dell As Premier Cloud Platform Provider

Terra Technology has selected Dell Inc. to deliver cloud-based supply chain planning and optimization solutions.

Quintiq Planning Software Selected by Van den Bosch

Van den Bosch Transporten has selected the Quintiq planning and optimization software platform to optimize its logistics operations.

Managing The ECM Generation Change

Poor support, a lack of scalability, security gaps – there are many reasons to do away with outdated enterprise content management (ECM) systems.

Prognostics Plan To Beat Unplanned Outages

Unplanned equipment outage drains time and resource at every company – now one solution provider is suggesting that one reason for such an outage can be a maintenance schedule not best adapted to the equipment.

Risk and Fatigue Management Solution Launched

Imperago has announced new Risk and Fatigue management functionality within its Workforce Design software.

Furla to Expand Globally with TXT Retail

Furla, the Italian fashion company of high-quality bags, shoes and accessories, has selected the TXTPlanning solution as its corporate planning platform.

ANSYS Reveals “Most Feature-Rich Release Yet”

Engineering simulator ANSYS has revealed what it calls the most feature-rich release in the company’s 45-year history, which it says delivers 10x improvements to product development productivity, insight and performance.

Portal Upgrade For Ship Agency Customers

A new add-on to GAC’s GACtrack portal claims to offer more job transparency and greater job control to ship agency customers.

Digital Threats: What to Look Out For in 2016

Colin Tankard, Managing Director of digital security company Digital Pathways, outlines his personal predictions for 2016.

Kerry Logistics Opens New IT Development Centre In Penang

Leading logistics service provider Kerry Logistics Network Limited opened its first IT Development Centre in Penang, Malaysia today, to harness internet technology in support of its international operations.

Infor Advanced Planning Optimises Supply Chains

New Optimization Model Solves Bigger Problems Faster

Dassault Systèmes and National Research Foundation Collaborate to Develop the Virtual Singapore Platform

Pioneering Virtual Singapore Project to Solve Emerging and Complex Challenges Faced by Singapore

Infor Announces Major Enhancements to Supply Chain Management

Enhancements to Infor Advanced Scheduling optimise schedule collaboration and drive intelligent scheduling

Lectra announces Lectra Fashion PLM V4

Lectra Fashion PLM streamlines product development from planning to sourcing

NEW NET PRESENCE HELPS LOBSTER CATCH UK MARKET

Software specialist, Lobster, is launching a new website to make it easier for UK companies to find out more about its alternative approach to electronic data interchange (EDI).

AEB continues international expansion with new offices in the Netherlands and Sweden

AEB offers local service and software solutions for Benelux countries and Scandinavia

Logility Issued Patent for Advanced Supply Chain Planning Functionality

Advanced Composite Curves Deliver Enhanced Sales and Operations Planning, Multi-Tier Vendor Minimum and Constrained Production Planning Capabilities

French supermarket chain boasts merchandise and assortment planning accuracy across multiple channels

Monoprix, the French supermarket chain, part of the Casino Group, has implemented the TXTPlanning solution to support merchandise and assortment planning on an international scale and across channels.

Logility Voyager Solutions Provides Foundation for Sandvik’s Supply Chain Transformation

Mining and Construction Equipment Manufacturer Turns to Advanced Supply Chain Software to Drive Sales and Operations Planning Success