A Case Study in Demand Forecasting – Clicks
Clicks, a South African-based health and beauty retailer with over 440 stores, is the leading retailer of its kind in the country. Its customers rely on the large selection of products to meet their health and beauty needs and continue to return for the value.
Clicks had been utilizing two different demand forecasting and replenishment systems: one within their warehouse management system that replenished stock from vendors to their distribution centers (DCs) and one within their merchandising system that replenished stock from the DCs to the stores. The problem with this approach is that they didn’t have one end-to-end forecasting and replenishment system. The two disparate systems were not demand-driven and were backward looking. In addition there was a lot of user intervention taking place to override the deficiencies of the systems.
Meeting business objectives and driving more efficiency within the business meant that Clicks needed to revamp their processes and systems. They were confident finding the right solution would help them to improve their competitive advantage and ultimately increase sales and customer loyalty.
“We did look at some of the other large vendors in the marketplace, but for the most part they were very expensive and difficult to implement and use. Ultimately we selected JustEnough due to the fact that it was financially reasonable and quite easy to implement and use. The JustEnough Demand Forecasting and Replenishment solutions are part of JustEnough’s end-to-end retail planning solution, so there is a lot of potential to quickly and easily add additional functionality at a later time,” explained Simon Wills, Supply Chain Business Process Manager, Clicks.
By implementing the JustEnough Demand Forecasting and Replenishment solutions, Clicks now has modern, automated, accurate, demand-driven planning systems. Clicks also now has the ability to forecast promotions into the future with the system automatically ordering stock from the vendors to the DCs and then moving the stock from the DCs into the stores to meet customer demand.
“We were expected to maintain target service levels and availability in our stores, but following deployment of the JustEnough solutions we actually showed an improvement between 1.5 and 3 percent. In some cases, we increased availability levels from 93 to 97 percent. It’s incredibly positive for us to see these results in such a short timeframe,” Wills concludes.
JustEnough Demand Forecasting Software
JustEnough Demand Forecasting helps you to be more responsive to customer demand through the use of sophisticated forecast modeling algorithms which create a forecast based on actual demand history. This automated demand forecasting tool uses forecast algorithms that create a baseline forecast by running a series of forecasting methods to drive the most accurate forecast for each SKU. JustEnough Demand Forecasting uses a tournament of best fit in which 14 best-in-class forecasting methods compete against each other to determine which one should be assigned to each SKU. These models are then compared to actual demand, finding the most accurate model and taking the guesswork out of the process.
Keeping up with seasonality and trends, JustEnough demand forecasting software incorporates seasonality and the year-over-year repeating patterns that are visible by weekly or monthly periods. The trends are captured by eliminating recurrent and periodic variations so that you won’t confuse seasonal variations as decay or growth. The system also takes into consideration promotional uplift. The history is normalized so that a future forecast will not include the results of a promotion that may not be run in the future.
In addition, lost sales due to stock-outs are accounted for to make sure similar lost sales will not occur in the future. Through management by exception, users can increase productivity, and manual overrides allow them to apply their unique business knowledge to the forecasts. The result of JustEnough Demand Forecasting is accurate, easy-to-use forecasts based on true customer demand.