Demand Forecasting: AI Creates Performance Gains for Retailers

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Demand Forecasting: AI Creates Performance Gains for Retailers

The vast majority of global retailers believe that artificial intelligence and machine learning offer significant added value in demand forecasting. More than half are also convinced of the positive effects of modern technologies on the supply chain.

This was the result of a survey conducted by Retail Systems Research for the supply chain analysis software provider LLamasoft. The benefits of such investments are particularly clear in the face of the current pandemic: Of those retailers who performed above average in terms of sales (“over-performers”), 73 percent had the insight and capacity to adapt to such sudden changes in demand and supply. Of the less efficient retailers, only 35 percent were able to do so.

56 percent of those surveyed struggle to react quickly to changes, which in the event of a malfunction results in a measurable drop in sales for many. More than half also stated that the systems currently in use were causing some or even a major problem in terms of the supply chain capabilities identified in the study. Nevertheless, 13 percent of retailers do not plan to invest in new technologies for this area.

53 percent of the “over-performers” employ data scientists who are familiar with data analysis and modeling tools. By contrast, only 22 percent of the underperformers are data scientists. There is a smaller gap when using macro indicators to model demand forecasts, as 80 percent of successful retailers and 65 percent of less successful retailers rely on them.

Author: Tim Cole
Image Credit: LLamasoft

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