CLIENT CASE STUDY


Major US retailer: Forecasting and replenishment planning analytics

Accenture helps US retailer improve forecast and replenishment planning to realize US$11 million in cost savings.

Overview

A major US retailer faced the challenge of accurately forecasting business demand, thereby hampering its ability to enhance productivity, reduce costs, measure performance and deliver a better customer experience by having the right quantity of products at the right place and time. Accenture provided analytics services, created improvisation tools and established processes to help the retailer achieve its desired business outcomes.

Opportunity
The retailer, with more than 150 combination grocery and general merchandise stores, was expanding with new products and store locations while managing a line of highly seasonal products with varying demand patterns. The company needed to address an array of issues before it could improve its ability to measure performance for existing and new product lines. They included:

  • Limited knowledge about advanced forecasting models

  • Challenges in hiring, training and retaining staff with advanced skills to perform the statistical analysis for demand planning

  • Need for forecast excellence to create better in-stocks, lower inventory and gain competitive advantage

The retailer selected Accenture based on our work in this area with other clients, deep analytical and industry expertise, as well as insight into the retail business and track record of innovation.

Solution

Leveraging the Accenture Center of Excellence in Barcelona, Spain, and the Accenture Delivery Centers in India, we helped the retailer:

  • Develop demand and replenishment planning analytics capabilities by deploying the right tools and technology with the help of our outsourced forecast analytics services team.

  • Develop and implement new solutions to engage and interact with business users that seamlessly integrate with existing applications.

  • Make key decisions related to:

  • Employing the correct forecasting algorithm.

  • Using appropriate values for algorithm parameters.

  • Determining the frequency of forecast reviews.

  • Enabling large forecast setup review for huge volumes of data.

  • Conduct periodic review to determine an appropriate order policy.

  • Develop and implement innovative solutions to better manage forecasting and replenishment. These include:

  • A simulation tool to help determine an effective order policy

  • An automated, scalable solution to manage forecast tuning at store level—a capability that enables forecast management of millions of products without human effort.

Results

The retailer has access to the Accenture Global Delivery Network, and leverages our highly skilled and experienced personnel, global assets and scalable solution delivery programs that focus on operational excellence.

The retail company can now measure its performance with advanced statistical modeling, demand classification and segmentation, multilevel forecasting, new product forecasting, and promotional and event data management. The measurable results include:

  • An improved forecast process and capability across all business areas—offering enhanced ability to manage seasonal sales promotion

  • Cost savings of US$11 million with better forecast planning, and an improvement in forecast accuracy by up to 8 percent