Teradata

Snow shovels and sun tan lotion may have just one retailing similarity: they’re both seasonal products, each with its own consumer demand pattern – its own Seasonal Profile.

But that seasonal difference plays a critical role in your ability to obtain accurate forecasts for specific merchandise. In fact, seasonal profiles are the most significant driver of the accuracy of a product’s forecasted demand. When a forecast is not 100% on target, three things can happen – none of them positive for your business: over-stocks increase on slow moving items, out-of-stocks increase for fast moving merchandise during peak demand times, and inventory turns are reduced for categories and stores.

Even traditional non-seasonal items exhibit rising and falling patterns when sales traffic varies. And since sales rates can vary significantly for the same items at different locations – or even between similar items at the same location – the task of forecasting demand for individual SKUs becomes even more challenging.

That's where the Teradata® Seasonal Profile for Demand Chain Management (DCM) can help.

Teradata Seasonal Profile for DCM is a fully integrated system that maps current and future sales patterns for regular and promotional sales, a map that can help lead you and your business to a better understanding of the seasonality of products – and to increased sales and inventories matched to demand.

Using historical sales data, Teradata Seasonal Profile for DCM automatically creates seasonal models for groups of items with similar seasonal patterns. Each week of a model has an Average Rate of Sale (ARS) index called a Seasonal Factor. A Seasonal Factor is calculated relative to an average week weight (1.).

For example, a Seasonal Factor of 2.0 means that sales for the measured period are expected to be twice that of an average period. The Teradata Seasonal Profile for DCM module also provides smoothing, de-trending, and sales season definition.

The Demand Chain Management application also includes Intelligent Profile Clustering that was developed through a co-development project at a large hard goods retailer. This feature automatically identifies products and locations that demonstrate similar seasonal selling patterns without any hierarchical dependency, relieving you of the daunting task of trying to manage millions of SKU/Store profiles. Teradata DCM used historical point-of-sale (POS) data to automatically cleanse and identify seasonal patterns across hierarchical constraints, reducing the once daunting tasks of manually managing millions of seasonal profile combinations. This enhancement has the potential to tremendously reduce the number of profiles, significantly improving user productivity and at the same time driving the improved forecast accuracy. Finally, with Teradata DCM many retailers can begin forecasting and replenishing at the SKU/Store level using the benefit of demand rather than the age old methods of orders based on shipments or requests.

Accurate models are the primary building blocks of your Inventory Management system. Teradata Demand Forecasting and Automated Replenishment modules use seasonal factors created by the Teradata Seasonal Profile for DCM module to generate recommended order quantities and forecasts. The modeling process is an automatic process after the initial analysis has been made. To generate a realistic Profile, a minimum of one full year of demand data is required. If true demand is not available, then other information (e.g., shipments) can be substituted. Up to four years of data can be used. The more data that is available, the more accurate Profiles will be.

Teradata DCM seasonal profiling and clustering features and benefits include:

• Automated clustering capabilities, improving forecast accuracy drives service and inventory productivity
• Automatic event shift accounts for holiday periods that do not occur on the same date year after year
• No location or SKU hierarchy constraints
• Session monitor and copy capabilities
• Automated and manual session tuning capabilities
• Dashboard of SKU and model fit to enhance decision making
• Short season start/end and first/last order date enhancements

To find out more about how the Teradata Demand Chain Management solution and its Seasonal Profile module can help you grow a better, more productive business, contact your Teradata representative or visit Teradata.com/dcm.