Order Beyond the Promotion and Reduce Stock Out Losses With AI-Based Halo Forecasting Video Transcription
According to the Institute of Business Forecasting, industry standard forecasts are only 68% accurate. All the traditional and current AI software requires representative historical data. But we know from the pandemic, the massive changes that have occurred in consumer behavior, implies that last year’s data is certainly not representative of today or the future.
What Are Halo Effects
Consumers buy solutions, not items. And forecasting has to take into account these Halo Effects which include those relationships between products, like associated sales, cannibalization and pull forward or pantry loading. Although last year’s aggregate sales data it has changed quite a bit, what hasn’t changed is a recipe for pasta bolognese.
How Halo Forecasting Works
Halo forecasting and ordering uses that granular transaction data where these patterns exist and can increase your forecasting accuracy to unprecedented levels, exceeding and approaching 90%. Using accurate forecasts to set safety stock levels, auto replenishment levels, ordering product for your stores, will reduce lost sales due to stock outs, will reduce excess inventory, will minimize the store labor required to stock empty shelves. Halo thinking needs to be considered in all merchandise planning activities, not just forecasting an ordering. AI done right maximizes Halo Effects.
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