Retailers rely on purchasing, acquiring, storing, and selling hundreds of items every day to serve their customers. Retailers also have real limitations in storage space capacity for items with a short shelf life, but running out of any one item can impair the customer buying process and experience. The same problem exists on a much larger scale for distribution centers (DCs) that those stores rely on. Elder Research engaged with one of our trusted clients that wanted to design an effective and efficient supply chain model to ensure that its network (i.e., the client’s ability to impact and manage capacity across many processes, locations, and people across the end-to-end supply chain) could efficiently meet store demand without overburdening any DC.
Supply chain networks are planned years in advance and must be robust enough to handle growth (and attrition) at existing stores while balancing the future openings of new stores. To facilitate this planning, our client needed accurate long-term demand forecasts for inventory across each of its thousands of locations, totaling more than a million individual forecasts. They also needed to aggregate the item/store forecasts up to item/DC forecasts with robust confidence intervals. This type of analysis required innovative approaches while balancing the nuances and dynamics of this organization’s supply chain network.