Spiderman

Imagine you have the powers of Peter Parker; your Spider Senses start tingling and suddenly, you know what your customers are going to purchase BEFORE they pull the trigger on online orders or burst into your store with their hard earned savings. Your business is now operating in the brave new world of Demand Sensing (DS) in AI models.

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Demand Sensing

The concept of Demand Sensing uses artificial intelligence to improve the accuracy of your short-term demand plans and create better forecasts at a location, item and day level. These accurate demand plans can then be executed into inventory orders that will reduce your aged inventory and overstocks, increase your on-shelf availability, and reduce lost sales.

When V Net has implemented DS models we have seen, on average, 12% MAPE improvements in the first five weeks over statistical models.

Standard forecasts may use time-series or even basic machine learning algorithms to look back at past sales patterns to determine future need. While these may provide guidance for long-term forecasts, they can be inaccurate when it comes to the erratic nature of day to day demand and the kind of forecasts required for short-window ordering.

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Learn more about V Net’s ground breaking demand planning software

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In addition, relying on past sales patterns – even when coupled with seasonal and promotional modifiers – will not always pick up on what “today’s” customer is thinking or looking to buy. At this point, and this is where DS comes in, we need to move from the past into the present and turn on our Spider Senses with real-time data that maps this complex day-to-day landscape. As you know, we now live in a world with a 24-hour news cycle, constant information being streamed to our phones, social media influencing consumers at all levels and ever evolving trends from crowdfunding to “Cancel Culture”. On top of all this, we are now living through a once-in-a-century pandemic and a global recession.

However, while we may have the data, it cannot be harnessed until it is partnered with a model that is capable of making sense of the millions of data points that come with this “big data”. By using machine learning pattern-recognition algorithms the models themselves can start to work out which of these inputs is predictive by understanding the significant factors that influence the demand signal for different items, time horizons and locations. This allows the system to then train itself to become more accurate as the demand signal influencers change importance over time.

It’s also worth noting that the effectiveness of DS is bound to the type of inputs you require. For instance, as weather forecasts are only accurate for around 7 days, the DS forecast is only going to be highly effective in the first week. Whereas, an input such as short-term promotions will extend the effectiveness through several weeks.

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    Of course, being in the present is great, but if we don’t keep an eye on our medium to long-term plans we risk breaking our other parts of our supply chain. This is where V Net can use complex, multivariate and probabilistic AI models to merge and balance this real time data with the planned parts of your business such as promotions, budgets, locked-in demand plans, orders and current inventory and create granular, scalable demand signals that can be used to fulfil inventory needs in an operational demand window.

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    Take a look around the complex environment within which you now have to operate your businesses and harness your Spider Sense with V Net.

    Learn more about V Net’s ground breaking demand planning software

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    REQUEST A DEMO

    V Net is trusted by Australasia’s leading retail brands and product suppliers. We’d like to earn your trust too. Request a free, no-obligation demo today.

    myalt6