Driving Stronger Retail Profits with Intelligent On-demand Forecasting from PlanIQ and Amazon Forecast
In just a few years, the global retail industry was uprooted. Evolving customer demand, unprecedented supply chain delays, and staffing disruptions have fundamentally altered the retail landscape—likely for good. As companies adjust to these major shifts, one thing is abundantly clear: accurate business planning can make a tremendous difference.
But building precise forecasts can be a complex process for many retailers. That’s why Anaplan, an Amazon Web Services (AWS) Partner and maker of cloud-based business-planning software, created PlanIQ powered by Amazon Forecast.
Introducing Plan IQ with Amazon Forecast
As a purpose-built solution for retail, PlanIQ helps companies leverage the power of machine learning (ML) and deep learning algorithms to better prepare for future demand and adapt to new market dynamics. This approach of using ML or statistical-based forecasts instead of expert predictions has shown to be as accurate or more accurate 70% of the time. The ML capabilities of PlanIQ are powered by Amazon Forecast, which leverages algorithms informed by over 20 years of forecasting experience at Amazon.
By combining demand data for retail items and related data such as consumer purchase behavior, price sensitivity, macro indicators, promotional response and more, retailers can find patterns and create forecasting models that drive optimal sales and profit while best matching consumer needs. And while the solution is powerful, the execution is easy to implement. Retailers don’t need data scientists to configure, deploy, or operate PlanIQ. The tool helps teams across finance, supply chain, sales, and marketing make more informed demand predictions for improved business planning.
Supercharging demand planning with ML
High-value use cases for PlanIQ include demand forecasting, workforce planning, revenue planning, sales forecasting, and operational expense forecasting. Demand forecasting is one of the most critical capabilities for retailers, and PlanIQ is ideally suited to recognize the complex relationships among data that help predict the demand for a particular product in a particular store at a particular time.
PlanIQ continuously trains models and generates forecasts as new data comes in, allowing users to create new forecasts with recent data, eliminating the need to retrain new models each time. This is a formidable capability, as it provides targeted guidance on merchandising and distribution decisions that otherwise would be made with far less accurate insight.
How teams can leverage PlanIQ
Let’s take a look at how PlanIQ can help a CFO, a director of merchandising, and a merchandise planner work together to create a strategy for anticipated inflationary pressures:
The CFO asks: How do I predict future revenue across channels with historical data that doesn’t reflect the current market reality?
- She loads historical sales figures into PlanIQ then layers in the latest projections for inflation and unemployment.
- She employs PlanIQ to run this group of data through Amazon Forecast models.
- Anaplan uses the results to suggest the best-fit baseline model, which she then uses to create an accurate picture of expected revenue by channel and product.
The CFO passes this revenue forecast along to the director of merchandising, who asks: How do I drive my optimized forecast down to the right channels, locations, and stores to best meet my customer needs and shopping behavior?
- With aims to achieve the right level of granularity, he works within PlanIQ to cluster stores along various parameters, searching out the most effective way to group them to help him allocate merchandise based on the revenue forecast, such as average customer income, location, and number of customers.
- He then runs each store’s sales history and the sales history of the total cluster through PlanIQ, bringing back an accurate allocation of merchandise, including revenue, margin, and inventory turns.
He passes this plan to the merchandise planner, who is asking: How do I quickly pivot my marketing and trade spending plans across markets, products, and channels based on fluctuating consumer behavior?
- To map out a trade promotion schedule that will ensure she’ll meet the forecast, the merchandise planner brings historical promotion performance and the new demand forecast into PlanIQ.
- She runs this promotion schedule along with historical promotion calendars and holiday schedules to produce an accurate forecast of anticipated volume, revenue, and margin.
Precision forecasting = better ROI
The ability to forecast the effects of internal and external changes on retail operations provides immense value and results in considerable return on investment. Take Carter’s, a major U.S. children’s apparel brand, for example. The company used forecasting models to actualize a business model that ultimately accelerated inventory turnover by four to six days. Carter’s removed eight days of inventory from its supply chain and saved $25 million annually in inventory carrying costs with Anaplan. Carter’s obsolete and excess inventory dropped 10–15% and product visibility improved.
“We’ve seen an improvement in our ability to forecast capacity that should help lead to improved service levels and reduction of expediting expenses,” says Wade Latham, senior director of operations for Carter’s.
PlanIQ enables companies to not only navigate tumultuous times filled with supply chain failures, demand surges, and shipping delays with agility and confidence. The tool also helps them proactively shape business operations in ways that result in greater efficiencies and cost savings.
Watch Anaplan’s demo video to see a play-by-play of how the CFO, director of merchandising, and merchandise planner use PlanIQ to do just that, and to learn more about how this powerful tool enables forecasting that can take your retail operation to the next level.
AWS Partner Spotlight
Anaplan is a cloud-native enterprise SaaS company helping global enterprises orchestrate business performance. Anaplan’s purpose-built solution for retail PlanIQ is an intelligence framework that delivers advanced Artificial Intelligence (AI) and Machine Learning (ML) capabilities for predictive forecasting and continuous, agile scenario modeling. Designed to make advanced analytics more accessible, Plan IQ produces insights that are explainable and predictions that can improve the accuracy of plans and drive confident decision-making. With PlanIQ, Anaplan customers have flexible access to multiple intelligence techniques such as native predictive capabilities and seamless integrations with third-party ML-based systems, including a new integration with Amazon Forecast.