Quick-commerce businesses need to know which goods will be in high demand in the future so that the inventory can be stocked to optimal levels. This helps to meet consumer demand on time, enhances the business’s revenue, and ensures no instance of lost sales. Businesses can also minimize overstocking and reduce wastage effectively.
But predicting demand with 100% accuracy is never possible. Still, with advanced technology such as artificial intelligence and machine learning, you can get close to the actual demand in the future. Quick-commerce businesses can forecast the right quantities of products to stock with the right demand sensing software.
What Is Demand Sensing?
Consumer demand keeps fluctuating with time, and retail businesses should anticipate demand by considering short-term patterns and trends. Demand sensing is the method of instantly forecasting short-term trends so businesses can stock the right amounts of products in the appropriate location. Instead of operating according to the same forecast, businesses can achieve accuracy with the latest data related to sales and make modifications that can enhance revenue.
Demand sensing leverages artificial intelligence and real-time data to produce granular-level forecasts & advanced analytics, and machine learning to identify complex patterns. It offers real-time visibility into external aspects that influence demand which could not be considered manually. Traditional forecasts leave scope for mistakes, but demand sensing can enhance accuracy by almost 40%.
The main objective of demand sensing is to reduce latency problems by minimizing the time to react to any sudden event. Planners can estimate short-term modifications in demand effectively. Accurate demand sensing helps to plan inventory conveniently, make better business decisions, realize business aims and minimize operational costs.
What is Quick Commerce?
There has been a digital revolution in the past decade in the eCommerce and food-tech industry and technology have altered the way consumers interact with businesses for their daily needs. Modifying consumer dynamics, cultural and social realities and a fast-paced world have resulted in the rise of Quick Commerce.
People now expect their groceries, medicines, and stationeries to be delivered within an hour. The scaling of quick commerce is escalated by the fact that new organizations are constantly entering the market. The Quick Commerce industry is anticipated to grow to $6.4 Tn by 2024 with developed cities generating demand.
Challenges in Quick Commerce
Quick Commerce businesses have started to deliver products within 30 minutes at a minimum to no delivery charge. Such business models require businesses to shift their inventory to multiple warehouses/darkstores. This increases the chances of lost sales due to stockouts or wastage due to excess inventory. Keeping inventory waste low is one of the main goals as some products have a low shelf life and people want fresh products. It is challenging to optimize the inventory across multiple stores and maintain proper inventory levels.
Businesses have multiple stores and fulfillment centres to enable quick deliveries to customers. Thus, there arises the need to maintain optimal inventory across the entire supply chain and that too for every SKU’s. Quick Commerce companies need to also organize their warehouse inventory such that the high-selling products are kept in a place where they can be easily accessed. This helps to fulfill orders faster and they also need to maintain low inventory expenses.
Forecasting the demand for special occasions is also difficult. Quick Commerce businesses are expected to offer quick service and maintain the availability of goods. Therefore inventories should be optimally stocked and businesses should contact reliable suppliers to ensure that replenishment orders can be fulfilled in short cycles.
How Can Demand Sensing Software Aid Quick Commerce Industry?
A Demand sensing software integrated with Artificial Intelligence can aid Quick Commerce businesses in the following ways:
- Accurate Demand Sensing – The software is cost-effective and reliable and utilizes various factors such as seasonal effects, historical trends and cyclicity to offer demand forecasts. Demand forecasting also considers alterations in promotional campaigns, pricing, weather and holidays for accuracy. The software can offer predictions for every store across every channel.
- Determining the Optimal Level of Inventory – Demand sensing software can estimate pileup and stockout situations. Businesses can fix the optimal levels for every SKU with these reports.
- Leveraging PastData for Improved Demand Forecasts – Quick Commerce companies produce a lot of data related to the supply chain. A large number of SKUs and stores makes demand sensing challenging. The demand sensing software utilizes historical waste data to handle issues of pileups and stockouts and offer optimal demand forecasts.
- Simplify Replenishment Planning – Dynamic purchase plans can be generated automatically by considering fill rates, dynamic lead times, current inventory levels, dynamic safety stock levels, and open orders. With the software, purchase planning can be simplified and replenishment orders can be placed in a few clicks. The best vendor can also be chosen for a specific SKU in a particular region depending on sill rate, prices and lead times.
- Effective Promotion Planning – Promotion planning is a difficult task and due to fluctuations in demand, planners face several challenges while forecasting demand. Demand sensing software has the ability to record past promotion data and project future promotion calendars while determining the crossover impact of promotions on a product to other related products. It also establishes a visual connection between the effect of promotions and demand making it a perfect demand planning platform for Quick Commerce businesses.
Benefits of Demand Sensing
Businesses can estimate demand across multiple sales channels and make crucial decisions. It is also essential to keep the demand forecasts accurate and keep them up to date. Demand sensing software can determine the appropriate method of demand sensing based on the product level while integrating them. It removes the requirement for manual calculations and lets you include internal and external data that influence demand, such as promotions, mobility data, price indices, economic data, markdown data, etc.
About the Company
Fountain9 assists companies in estimating demand precisely with their demand sensing software, Kronoscope, which uses nine unique aspects that affect demand. Companies can enhance their customer service levels and meet consumer demand on time by keeping the inventory stocked to optimal levels with demand-sensing insights. It can increase customer satisfaction and ensure brand loyalty.