CASE STUDY

Minimizing Inventory Costs and Optimizing Cash Flow for a Retail Industry Client – Quantzig’s Demand Forecasting Engagement

Dec 20, 2018

Demand Forecasting Techniques – Why is it Important?

Demand forecasting refers to the scientific and systematic estimation of the demand for a particular product in the future. Customer demand is highly dynamic and unless companies correctly chart out the demand patterns and determine the number of goods to be delivered, the chances of overstocking or understocking of goods are likely to occur. This is where demand forecasting methods come into play. With the aid of demand forecasting techniques, businesses can recognize what customers are buying and improvise on products that are not faring well in the market. Adopting demand forecasting methods also helps companies to cope with seasonality, sudden changes in demand levels, price-cutting maneuvers of the competition, strikes, and other major swings of the economy.

Retail Industry Analysis

The retail industry is one of the most profitable industries in the world. The rise of new players in the market has resulted in a radical shift in the mindset of companies operating in this sector. Today, retail industry enterprises have come to terms with the fact that their survival solely depends on their capability to provide innovative offerings to customers and differentiate themselves from the other competitors in the market. Although the past few years have witnessed the advent of several retail industry trends that have redefined the shopping experience, the battle for survival is fierce in the retail industry. Amidst such challenges, the retail industry is still flourishing and is expected to continue doing so in the coming years.

About the Client 

Headquartered in California, the client is a leading retail services provider.

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Predicaments Faced

The client, a leading retail industry company, operated through multiple channels, with warehouses spread across numerous locations. As a result, they were finding it difficult to meet customers’ demands quickly and deliver goods through the customers’ choice of channel. Also, the inaccurate demand forecasting methods adopted by them resulted in recurring cycles of overproduction and underproduction. Such factors along with their inability to meet the needs of their customers were challenging the client’s position as a global market leader, leading to millions in revenue loss. Thus, by leveraging Quantzig’s demand forecasting techniques, the client was looking to increase sales and lower markdowns.

Solutions Delivered 

With the help of Quantzig’s demand forecasting methods, the retail industry client was able to accurately forecast future demands. Accurate demand forecasting techniques offered insights on how much, when, and which products should be stocked in the inventory. This subsequently helped the client to better align sales and marketing efforts and reduce the risk of stock-outs, resulting in lower holding costs and increased turnover rates.

The devised demand forecasting techniques also helped the retail industry client:

  • Effectively optimize inventory, increase turnover rates, and reduce holding costs
  • Foresee changing market trends and keep up with the competition
  • Predict customer demands
  • Save on warehouse and transportation costs

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