Carrefour turns to AI for demand forecasting
- Carrefour will use the SAS Viya, an analytics platform that uses artificial intelligence (AI) technology, as a way to gain insight from data generated in its stores, warehouses and online orders, according to a press release.
- Carrefour Group, with more than 12,200 stores in over 30 countries, says AI will help to make waste and out-of-stocks easier to avoid.
- The SAS AI technology will be deployed in stores after an 18-month test period. Once implemented, it will allow Carrefour to create algorithms specifically for its unique demand forecasting needs, the release said.
Demand forecasting is nothing new. It's been done for decades with more traditional methods like regression, but these techniques sometimes struggled to produce the desired result. A Harvard Business Review article from 1988 put it more bluntly: "Some even throw up their hands and assume that business planning must proceed without good demand forecasts."
Now, technology companies like SAS are saying AI will be able to use the large amounts of data created by supply chains to improve the process of demand forecasting.
"The SAS Viya deployment will allow us to take a step forward in our supply chain optimization," Franck Noel-Fontana, Forecasting Director at Carrefour France, said in a statement. "Artificial intelligence will free up time for our teams to focus on developing differentiated forecasting strategies and best meet our customers' expectations while reducing waste."
In the past, retailers have often relied on overstocking to prevent going out-of-stock on an item. But this can cost the company money by buying products that may not be sold, according to Symphony Retail, which also creates AI products for the retail market.
"With traditional demand forecasting systems, data is fed into a computer, and then the computer applies that data to a static, pre-determined set of rules to analyze it and generate a result," Symphony Retail said in a report. "With machine learning, however, the computer becomes adaptive — dynamically responding to changes in the data and updating the forecasts accordingly."
Carrefour is not the only company looking to emerging technology to improve its forecasting. Nike recently pointed out the importance of demand forecasting in an earnings call, with company CFO Andy Campion saying it could increase their margins.
Even the vending machine community is getting in on the trend. A 2018 report from PSFK, a retail intelligence company, and Microsoft highlighted how the Mars Drinks company is using AI to improve its vending machine stock. Mars is using Microsoft technology that allows it to "use remote sensors and predictive computing to better maintain stock levels, understand consumer interactions and account for changes in demand based on contextual factors like holidays and weather," the report said.
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