Every company, no matter the size, wishes they could deliver 100% of what their customers want with 0% waste. And while that goal is virtually impossible to achieve, business forecasting groups are constantly trying to get as close as they can to that number. A company with refined methodologies can generally forecast within 6-10% of their actual needs using historical trends data, internal sales information and a general understanding of consumer patterns. Unfortunately, this takes time and cannot possibly account for all the external variables that throw off internal forecasts. And, according to the Harvard Business Review, nearly 85% of a company’s performance is dependent upon external factors, so even the best internal predictions are likely to be thrown off.
Recent advances in machine learning and AI have made it possible for business to do what used to be impossible – analyze thousands of external variables and find exactly which ones have an impact on their forecasting. Since improving forecasts by even 1% can be the difference between a surplus or deficit of millions of dollars a year, this is big news, and business leaders should look to take advantage as soon as possible.
Prevedere, a Microsoft Cloud partner, has developed a demand forecasting tool that gives businesses the manpower and expertise needed to forecast more accurately than ever by leveraging both internal and external data. At the heart of this solution is the External Real-time Insights Engine (ERIN) that monitors the world’s data and enables Prevedere to deliver a 360-degree view of demand by product, category, region, or line of business.
ERIN augments existing systems and processes to deliver accurate foresight
ERIN is a cognitive computing engine that intelligently monitors the world for future business risks and opportunities. The first analysis engine of its kind, ERIN augments a company’s existing demand forecasting processes with insights derived from external data sources – economic trends, consumer behavior, social media traffic, and more. The Engine consists of over two million “model-ready” data sets that have been normalized, tagged, categorized, and adjusted for seasonality. ERIN constantly monitors this proprietary data collection in real-time and notifies business leaders of any future impact on performance that is identified.
ERIN leverages Azure Machine Learning and advanced analytics to model internal company metrics against these data sets and identify a unique set of external leading indicators specific to the industry and line of business. Prevedere’s team of industry experts, economists, and data scientists then leverage the results to develop a fact-based economic analysis that business leaders can use to make decisions with confidence – and even reduce forecast errors by up to 50%.
ERIN has already proven fruitful
ERIN is already delivering exciting results to leading brands across the globe, enabling business leaders to make decisions with more certainty. On average, the engine enables: 6% price appreciation, 3% gross margin improvement, 10% EPS improvement, 15% decrease in excess inventory, and 2% improvement in order fill rates.
Masonite, a leading manufacturer of residential and commercial doors, wanted to account for the unseen factors that were making regions consistently miss sales forecasts. In the end, Masonite’s forecast accuracy improved by over 10%, and enabled drastic improvements in when and where key inventory decisions needed to be made.
RaceTrac Petroleum is another example of success. RaceTrac operates over 300 gas stations and convenience stores in the Southern United States. The company was able to develop models to account for seasonal foot traffic across their locations. Prevedere enabled RaceTrac to forecast with over 90% accuracy as well, which enabled significant savings in overstock charge-offs.
Whether your organization is looking for ways to improve forecast accuracy, gain a more holistic view of customer behavior, or identify other areas for improvement, Prevedere’s ERIN engine is ready to help.
The Prevedere solution, built using the power and scalability of Microsoft Cloud technology, combines internal and company metrics with real-time, actionable insights to give businesses an understanding of what will happen next. The solution is designed to enhance existing financial planning software and processes, and can be used as a stand-alone web-based solution or seamlessly integrated with many leading ERP, S&OP, or Corporate Performance Management solutions.
The Prevedere ERIN engine enables companies to validate their business strategies, discover hidden performance drivers, gain a holistic view of demand, and maximize ROI on capital and operational spend. If you’re interested in learning more, try the demo on Microsoft AppSource today.