RELEX Solutions’ automated demand forecasting prevents oversupply of goods

RELEX Solutions, a supply chain & retail planning platform, designed an automated demand forecasting tool to help retailers avoid an oversupply of goods, especially during the holidays. Demand forecasting enables businesses to get the right amount of stock-keeping units (SKUs) and ensure a return on investment.

“Similar to retailers globally, Filipino businesses also grapple with the increased supply chain challenges from both the pandemic and the ongoing conflict between Ukraine and Russia,” Kristie Davison, vice president for Sales Asia Pacific at RELEX Solutions. “What’s more, consumers are equally experiencing the brunt of this situation, making the climate harsher for many enterprises. The most efficient way for retailers to navigate these uncertainties would be to plan how to maximize sales while minimizing loss.”

Automating demand forecasting helps businesses improve the on-shelf availability of seasonal products and reduce residual stocks when the season ends. A good forecasting model for seasonal planning includes a reference product that can be specified against seasonal or event-specific indices to calculate data-backed forecasts for new items. Empowering businesses to search the historical assortment for items with similarities to those being introduced and build a forecast can potentially drive significant improvements to availability and inventory values while considerably reducing markdowns.

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“It is important to remember that a model of operations is not necessarily the best one simply because it has been used for years,” said Davison. “Digitizing seasonal inventory management helps retailers make seasonal sales sustainable, achieve better results, and prepare well for such events.”

With Christmas months in the Philippines, smart replenishment also contributes to improving a brand’s responsiveness to consumer demands. A good solution is to deliver only a part of the forecast demand to stores at the beginning of the season to avoid moving goods among shops.

Once holiday shopping starts, SKUs at individual stores can be replenished through pull control that is based on the latest sales, store-specific forecasts, and actual inventory. This enables retailers to effectively respond to local conditions with respect to external factors such as weather or a change in competition for an individual store. When products are bought in advance, push control should be used toward the end of the season to ensure that seasonal products don’t pile up unnoticed in the central warehouse. An ideal management system allows allocations to be directed to the stores with the best chances of selling the products such as those with the highest sales and no excess inventory.