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CLIENT CASE STUDY


Auto-Parts Firm: Inventory savings through better forecasting

Accenture helped this client reengineer inadequate sales forecasting and created a new approach for predicting the impact of marketing promotions.

Overview

The client is one of the service parts division of one of the top US-based automobile makers. The company has a network of 20 distribution centers across North America serving 2,500 dealerships.

Opportunity
Facing an unimpressive sales forecasting accuracy of 60 percent over the past two years, this major supplier of auto parts sought help anticipating demand.

One challenge lay in a legacy system with pre-set parameters that required frequent updating for seasonal and economic factors. The other challenge involved a limited tool for demand forecasting. That tool could not account for demand spikes caused by marketing promotions, resulting in misalignment between demand-planning and marketing teams, and ultimately, insufficient inventories of in-demand parts.

Solution

Accenture’s project team optimized algorithm selection with two tests: one focused on seasonal factors, and the other on trends. Existing forecasting algorithms were tweaked for greater accuracy.

With marketing and promotions, Accenture’s team developed a new plan using advanced algorithms, while separating demand into base and promotional segments—helping improve agility necessary to anticipate sales shifts.

Results
The project garnered dual payoffs in more accurate forecasting and leaner inventories. The client can now satisfy client demand and capitalize on sales boosts from marketing promotions. Additionally, better parts management lead to one-time savings of $5.6 million and recurring cash-flow benefits of $8.7 million from lowered sales losses.

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