Inventory forecasting for commerce


INVENTORY FORECASTING
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What is Lokad?

Lokad is a web application that delivers demand forecasting and inventory optimization. The app helps answer two essential inventory forecasting questions: “when to reorder?” and “how much to reorder?” Comprehensive Excel reports are delivered by default, and flat file exports can be produced if you require an end-to-end automation of your reordering process.

The app is best suited for commerce companies of any size seeking to optimize their inventory performance. Lokad is not another inventory management system; Lokad is an optimization layer that is intended to be used “on top” of an existing inventory management system.

The statistical analysis performed by Lokad relies on our advanced demand forecasting technology. In particular, Lokad has developed a unique “quantile” forecasting application capable of dealing with the intermittent demand patterns frequently observed in commerce. However, while our forecasting technology is highly advanced, no statistical skills are required to use the system.

Import your historical data

Lokad offers built-in support for several apps, typically MOMs - multichannel order management software systems. Through these connectors, Lokad retrieves all your sales, all your purchase orders and your entire product catalog. This data is imported into your Lokad account and is directly formatted as flat files in order to be natively compatible with Lokad.

When there is a connector available, the process is (almost) a 1-click setup. You enter your credentials, and you are done. We favor data retrieval at the MOM level – sometimes ERP level – because all the sales from the various channels are already consolidated, and this consolidation is a necessary ingredient in order to provide meaningful reordering suggestions.

If Lokad does not support your business app, you still have the option of pushing flat files into your Lokad account through the web interface or through FTP. You will have to take care of formatting the files to match Lokad’s expectations. Also, don’t hesitate to contact us to request the implementation of an additional connector by Lokad.

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Get your inventory forecasts

In order to provide reorder suggestions, Lokad needs two settings that are typically not found in your inventory management system: the target “service level”, that is, the desired probability of not having a stock-out, and the “lead time”, that is, the duration in days which needs to be covered by the next reorder.

While Lokad can also provide traditional daily, weekly or monthly forecasts, we have observed that such classic forecasting methods tend to perform rather poorly for commerce. Instead, we suggest to leverage the “quantile” forecasting capabilities of Lokad. Quantile forecasts leverage the service level and lead time parameters to directly calculate the reorder quantities.

Lokad tries to keep all the relevant data inputs into your existing system. Service levels and lead times can typically be managed as “custom fields” – this term varies from one software to the next – within your inventory management system. Similarly, we provide mechanisms to include or exclude products from being reordered.