SOURCE: ToolsGroup

ToolsGroup

September 29, 2011 09:30 ET

ToolsGroup Harnesses Breakthrough Machine Learning Technology for New Trade Promotion Forecasting Product

Danone Implementation Generates 20% Reduction in Forecast Error, 30% Reduction in Lost Sales and 30% Reduction in Obsolescence

BOSTON, MA--(Marketwire - Sep 29, 2011) - ToolsGroup, the company for demand-driven supply chain planning, today introduced its new Trade Promotion Forecasting product, which harnesses breakthrough machine learning technology, making it possible to recognize the shared characteristics of promotional events and identify their effect on baseline sales.

As reported by several leading analyst firms, most fast moving consumer goods (FMCG) companies spend up to 12-15% of their gross revenue on trade promotions. Despite this enormous investment, these companies generally fail to achieve the desired return on investment (ROI).

Determining the actual impact or "lift" to baseline demand from this cost is a daunting problem. A large number of variables with complex interactions are buried in huge amounts of data with a high degree of noise. Even with substantial expertise, it's usually not possible to understand the correlations among the variables.

"Solving this problem is critical not only to baseline and lift forecasting, but is also the key functionality required for an effective integrated planning process between marketing, sales, account management, supply chain and finance," says ToolsGroup CEO Joe Shamir.

ToolsGroup's new Trade Promotion Forecasting is the first to harness the powerful technology called "machine learning" to solve this problem. Machine learning makes it possible for companies to recognize the shared characteristics of promotional events and identify their effect on baseline sales. It extracts knowledge about the variables that have the greatest impact demand and produces a set of simple intelligible rules that are easily understood by the user.

This breakthrough technique creates a major improvement in demand visibility, forecast quality and level of forecast detail, which are all critical to driving account-level supply chain planning and a cornerstone to the trade promotion planning process. Customer service and obsolescence costs also benefit.

In an early implementation of the product, at the Italy-based business unit of multi-national food-products corporation Danone, ToolsGroup's Trade Promotion Forecasting demonstrated its effectiveness as part of a project called Disc'Over, which covered a wide range of fresh products characterized by dynamic demand, short shelf life and the need for accurate demand forecasting. Results from the project showed:

  • A 20% reduction in forecast error, increasing forecast accuracy to 92%
  • A 30% reduction in lost sales, increasing service levels to 98.6%
  • A 30% reduction in product obsolescence.

In addition, ToolsGroup's Trade Promotion Forecasting successfully connected Danone's sales, sales forecasting, account planning and finance.

Both the new product and the results were announced recently at the ToolsGroup's North American User Forum held in Boston, where executives from the consumer goods, paper products, apparel, computer software/services and other manufacturing, retail and distribution industries were in attendance.

About ToolsGroup
ToolsGroup (www.toolsgroup.com), the company for demand-driven supply chain planning, is a global software provider for companies who want to achieve highly accurate forecasts, outstanding customer-service levels and less global inventory. ToolsGroup software analyzes demand history across multiple dimensions to obtain the best possible forecasts and inventory targets for driving corporate supply chains. ToolsGroup's solutions span key supply chain planning areas such as Demand Planning, S&OP, Demand Sensing, Promotion Forecasting and Inventory Optimization. Its "Powerfully Simple" philosophy means that its software supports highly intelligent decision-making, and yet at the same time is easy to use.

About Danone
One of the fastest-growing food companies in the world, Danone is present in over 120 countries on five continents. Its mission is to bring health through food to as many people as possible. In 2010 Danone had more than 160 production plants and around 100,000 employees, generating sales of EUR 17 billion, of which half were in emerging markets. The group holds top positions in healthy food through four businesses: it ranks no. 1 worldwide in Fresh Dairy Products, no. 2 in Bottled Water and Baby Nutrition, and is Europe's no. 1 Medical Nutrition company. Listed on Euronext Paris, Danone is a component stock of leading social responsibility indexes including the Dow Jones Sustainability Indexes DJSI Stoxx and DJSI World, ASPI Eurozone and the Ethibel Sustainability Index.

Contact Information

  • Media Contact:
    Jeff Bodenstab
    For ToolsGroup
    617-263-0080X209
    Email Contact