AI is transforming the technology landscape across almost every business vertical, and retail is no different. The benefits of AI-powered forecasting across short-, medium--, and long-term horizons are enormous, as a well-trained AI will consistently deliver more accurate forecasts where any degree of scale is involved.
However, there’s a big difference between talking about AI and doing something with it. Typically, the path of least resistance for most retailers has been to adopt the native planning solution offered by their ERP vendor. However, these have been found wanting. To unlock the real benefits of AI, retailers have discovered they need to partner with retail demand planning specialists - like Quantiful.
Jaycar is a successful Australasian electronics retailer with over 120 retail outlets in Australia alone. Over the last few years, Jaycar has moved up the value chain from specialising in electronics componentry targeting home enthusiasts to selling higher-value finished goods such as drones and security cameras, which puts it in competition with mainstream electronics retailers.
Like any transformation, entering new product categories presents new challenges. To succeed, Jaycar needed to create space for new high-value goods while continuing to support its existing loyal customer base of enthusiasts.
By adding new SKUs, Jaycar inevitably had to manage stock availability issues and pressure on working capital.
Graeme Faulkner, Jaycar's CTO, said, “At the heart of our evolving product offering is our ability to maintain what we are famous for: the availability of core products for our loyal customer base. However, as our portfolio grows and, with it, customer demand, this adds complexity and strain on our tools and processes. So, really, the question became, how do we make the best use of our existing infrastructure without entering into a long-winded and expensive transformation project?”
To address the challenges, the spotlight focused on replenishment planning and the existing inventory management capability. Every organisation has complexity and legacy in its tech stack, and Jaycar is no different. However, Quantiful’s open standards made it easy for them to collaborate.
Jaycar selected Quantiful as their planning partner for three key reasons:
- Specialism and experience solving the specific problem Jaycar had identified
- The ability to avoid having to enter into a multi-million dollar ERP transformation project to take advantage of modern planning tools
- Quantiful can deliver improvements in forecast accuracy quickly without impacting planning team productivity.
In just 10 weeks, Quantiful supplied Jaycar with nearly a million bottom-up forecasts every week. Dynamic setting of min/max levels was then achieved by adding some intelligent but straightforward middleware. The remarkable speed to value is a function of Quantiful’s flexible cloud architecture and its use of configurable data imports and exports, which get data into Quantiful and back out again into Jaycar’s custom inventory management system.
Graeme Faulkner, Jaycar's CTO, said,” Quantiful’s point of difference was their ability to work quickly and efficiently with our IT and Operations people to deploy their technology seamlessly with our existing ERP systems. Quantiful achieved this thanks mainly to their open and flexible approach to data management .”
Quantiful generates dynamic replenishment actions that meet Jaycar's predefined “guard rails” and facilitate unsupervised stock requisitions to store, where there are exceptions to these rules, Quantiful software and Jaycar's middleware surface exception reports, which are sent to operational staff for remediation.
The new technology stack has significantly impacted the way the three different operational teams inside Jaycar operate—both in terms of the time it takes them to do their jobs, what their jobs entail, and how accurately they can do them.
- Demand Planners sit at the core of the planning function and historically used custom spreadsheets to generate forecasts. These spreadsheets used historical sales data as the foundation and grouped stores to cope with the scale.
With the introduction of Quantiful, demand planners can operate more agilely. Bottom-up forecasts are generated automatically for them, which allows them to focus on exceptions and spend more time on higher-value business tasks. They no longer operate in a ‘set and forget’ world but can get in front and stay in front of problems before they turn into obsolescence or out of stock.
- Supply Chain Managers are responsible for the overall performance of the supply chain and implementing business improvement initiatives. In a world built on Quantiful, managers have a single-page rule book to use.
As a result of Quantiful, Managers no longer have to reconcile top-down spreadsheet targets with bottom-up forecasts, as Quantiful does that for them. They can easily see the changes Demand Planners have made, helping them deliver non-repudiated product lifecycles, and can seamlessly toggle through a range of different business performance parameters.
- Assortment Planners (or merchandisers) figure out what goes where in the store and play a critical role in maximising sales volumes across Jaycar’s retail footprint.
Historically, merchandisers relied on blanket rules on store size and transaction velocity to decide what to range, which is becoming increasingly problematic as stores are hyper-local in their stock requirements.
With Quantiful, merchandisers get a bottom-up forecast for every SKU in every location, which enables them to optimize their assortment by store and remove the need for store and product categorization.
Within ten weeks, Quantiful was providing SKU/Location forecasts to Jaycar operational management, who are now in the process of rolling out the technology on a store-by-store basis, working closely with each store manager to ensure success. Over time, as stores become assortment and inventory optimised, Jaycar is considering extending the forecast horizon to help resolve other product lifecycles challenges such as supply and new product introduction.
Graeme Faulkner, CTO at Jaycar, said,” We are seeing some promising early results and are excited about the opportunity as a result of adopting Quantiful. Although we’re still relatively early in our rollout, the forecast accuracy is outstanding down to a SKU location level. The fact that we have reached this point quickly and with minimum risk to the business is a powerful aspect of Quantiful proposition. It has enabled us to quickly assess a contemporary AI planning tool and its impact on our business.
