An ongoing challenge for modern-day demand planners and inventory managers is improving the accuracy of demand forecasts. Besides the algorithmic challenge of minimising the forecast error, there is also the challenge of understanding and optimising the trade-off between working capital costs and service levels to customers. In complex operating environments where many variables impact on the actual demand realised for specific products in specific geographies, demand forecast accuracy can quickly degrade, resulting in:

  • Expedited shipping costs due to the wrong inventory being at the wrong place at the wrong time
  • Stock-outs and compromised services levels to customers, especially on measures such as DIFOT and fill rates
  • Low inventory stock turns
  • Stock obsolescence
  • High forecast error

About Complexica

Employing almost 100 staff across 4 offices, Complexica is a leading provider of Artificial Intelligence software applications that can optimise sales, marketing, and supply chain decisions. Our investors include MA Financial Group (ASX:MAF), Flinders Ports, and Microequities Asset Management (ASX: MAM). We were founded upon the research of several world-renowned computer scientists, and have commercialised a modularised software platform called Decision Cloud® that empowers staff across multiple business functions to make better decisions. Decision Cloud® is powered by our award-winning Artificial Intelligence engine Larry, the Digital Analyst®:

Research Partnerships

We maintain research partnerships with the Polish-Japanese Academy of Information Technology, the University of Adelaide, and RMIT University, and also have a Scientific Advisory Board that includes international thought leaders in the area of Artificial Intelligence. Our enterprise software employs techniques from a range of fields, including deep learning, predictive analytics, machine learning, Artificial Intelligence, simulation and big data analytics to solve complex business problems and deliver value.

Supply Chain

Complexica can help you address these commonplace challenges through our Demand Planner module of Decision Cloud®, which provides robust and easy-to-use demand planning, forecasting, and analysis capabilities.

Supply Chain

Supply Chain Management

Demand planning is a supply chain management process that allows a company to project future demand and successfully customize the company's production, whether products or services, according to. demand planning is the supply chain management process for forecasting demand, so that products can be delivered reliably and.

Forecasting and Demand Management

Demand forecasting provides insight into your next cash flow so companies can more accurately budget supplier payments and other operating costs, while continuing to invest in company growth. Demand forecasting is the process of making estimates of future customer demand over a defined period, using historical data and other information. Demand forecasting is especially useful for products that have an expiration date, such as in the food or chemical industry. Without adequate demand forecasting, you risk losing money if you produce too many items and have to sell them at a discounted price as their expiration date approaches.

In addition, unnecessary storage costs are incurred when too many products are produced. Demand forecasting is known as the process of making future estimates in relation to customer demand for a specific period of time. In general, demand forecasting will take into account historical data and other analytical information to produce the most accurate predictions. More specifically, demand forecasting methods involve the use of predictive analysis of historical data to understand and predict customer demand to understand key economic conditions and help make supply decisions crucial to optimizing business profitability.

Forecasting and Demand Management

Demand Management

Demand management can also be used to reduce demand. This encourages customers to talk on the weekends rather than during the week to reduce service demand. Demand management is a planning methodology. Companies use it to forecast and plan how to meet demand for services and products.

Demand Management Improves Connections Between Operations and Marketing. The result is closer coordination of customer strategy, capacity and needs. Demand management involves forecasting and planning to meet customer demand. An example of an activity that illustrates demand management is sales forecasting, customer evaluation, and modeling.

Predictive Demand Planning

Rather than using a pre-defined set of rigid models that are based solely on statistical methods, Complexica’s Demand Planner relies on a wide variety of predictive algorithms and techniques that are tuned to your internal sales data as well as external sources and available overlays to improve accuracy.

Based on advanced statistical models and Artificial Intelligence methods such as Deep Learning, Demand Planner can help your organisation move demand planning away from an anecdotal and “gut feel” approach, to a data-driven and market intelligence capability. In particular, we can help you:

  • Reduce the forecast error associated with demand planning
  • Increase DIFOT and service levels to customers
  • Improve stock turns and decrease overall inventory levels
  • Improve reaction time and response to unexpected events (e.g. sudden change in demand requiring additional inventory)
  • Automate manual processes to eliminate human error and key man risk
  • Understand the impact of changes in business rules and constraints (such as lead times, capacity constraints, required inventory levels, etc.)
  • Replace home-grown spreadsheets, which are often opaque and convoluted
  • Optimise and automate the replenishment process across various time periods, product categories, lines, and individual SKUs
  • Understand customer sales trends and patterns

Frequently Asked Questions

The ability of Larry, the Digital Analyst® to learn and improve is directly tied to the variables that were initially considered in the underlying models. As long as the number of variables doesn't change within these models, then the process of re-training and learning is automated. However, sometimes the models may require extensions to the original number of variables to factor in new channels, product categories, competitors, or even force majeure events that alter economic and market conditions (such as the recent COVID pandemic). These additional variables require retraining of the original models so that Larry's self-learning process can retain integrity and continue to generate meaningful predictions and recommendations.

Yes, Larry, the Digital Analyst® can generate decision recommendations based upon the automatic analysis of the data carried out by its underlying algorithms, rather than just providing insights or analytic reports. Hence, Larry is "forward-focused" on what the next best decision should be, rather than "rearward focused" on what happened in the past and why.

As a simple example, it's possible to define two classes of entities within Larry: Customers and Products, where customers have preferences for certain products and these preferences must be extracted from the data. The utility matrix gives (for each customer-product pair) a value that represents what is known about the degree of preference of that customer for that product (the matrix is often sparse, as most entries are unknown). Larry, the Digital Analyst® then examines the properties of products recommended to customers: For example, customer A “likes” products with characteristics X, so that Larry would recommend products with characteristic X, and analyse the similarity measures between customers and/or products (the products that are recommended to a customer are those preferred by “similar” customers, which is often referred to as collaborative filtering).

In an ideal world, each customer would provide Complexica with a clean and complete data set, which is well documented and highly structured. In reality, however, this is rarely (if ever) the case. Our experience with data is that most organisations suffer from missing, incomplete, and inaccurate data (i.e. "dirty data") which needs to be evaluated during the scoping phase and addressed during the software deployment phase. Because today's data comes from increasingly disparate sources and in an ever-growing variety of forms, it usually needs to be prepared to become usable. During the data cleaning process, corrupt or inaccurate records are corrected or removed from a record set, table, or database, and incomplete, incorrect, or irrelevant parts of the data are replaced, modified, or deleted. Unsurprisingly, this process (often referred to as “data cleansing”) can be demanding, but pays dividends during the software go-live phase and during usage thereafter.

Click here to learn more about data as part of the problem-to-decision pyramid.