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Deploying Multi-tier Causal Forecasting Systems

The Opportunity

  • Four consumer product companies we have worked with have recognized the value of linking “demand signals” at different stages in the supply chain to improve shipments forecasting accuracy.  Through “demand shaping” and causal modeling, they can understand how their marketing and promotions impact demand, thus improving forecasting.

Our Approach

  • We use our proprietary system for mass producing scientifically tuned statistical forecasting models.  We do this for two, and sometimes three tiers in the supply chain, forecasting, in a cascading fashion, promotions, consumer sales, and retail customer orders.

The Impact

  • Clients generally realize accuracy gains of 2% to 7%, with occasional double-digit improvements.  However, these benefits are not automatic.  The cascading methodology is not universally beneficial, and there are some important caveats and challenges in implementing it.
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