Blue Yonder in practice

Manufacturers and retailers planning hand in hand Predictive analytics in the consumer goods industry

Enterprises in the consumer goods industry generally supply large

retail chains, but today they also are increasingly selling directly and

are looking for more contact with the end customer. Timely and high-

ly accurate demand planning is a big challenge for manufacturers,

and it’s one that affects their entire production and delivery pro-

cesses. They depend on retailers’ information and instructions, and

ideally the retailer’s and the manufacturer’s planning will work hand

in hand. If production is too high, warehouse costs are high, capital

is tied up and there are write-offs for perishable goods. On the other

hand, if the supplier has too few goods available, customers will be

dissatisfied, there is a risk of loss of shelf space and in the worst case,

there are penalties for late delivery. What’s more, incorrect assump-

tions about future demand have a huge influence on production

planning, leading to higher labor costs and/or expensive downtimes

as a result of vital raw materials not being ordered on time.

These problems can be avoided using accurate planning based

on valid demand predictions. Classical forecasting models are not

enough; optimal interaction between retailer and manufacturer as

well as automating processes require novel and highly reliable analy-

sis and forecasting solutions.

With demand forecasts based on Forward Demand Enterprise, manufacturers can optimize their demand planning and use accurate predictions to coordinate inventory to reflect customer demand.

Optimal demand planning with Blue Yonder

Accurate demand forecasts

Retailers

E-Business

Production

Demand Planning

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Marketing

Demand

Raw Materials Orders

Promotions Social Media

Production

Cap

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es

Precise forecasts set new standards

Forward Demand provides accurate demand forecasts, allowing

consumer goods enterprises to avoid under- and overstock situ-

ations. The right products in the right place at the right time

ensures satisfied customers and higher sales. The solution really

comes into its own with products whose sales are strongly depen-

dent on seasonal influences and/or price changes.

Forward Demand can do more than just analyze past sales figures:

The software also includes external factors such as sales, holidays,

and the latest regional weather forecasts in its demand predictions.

Where manual forecasts and traditional BI solutions prove to be in-

sufficient, the self-learning Blue Yonder software provides accurate

prognoses.

Forward Demand − the SaaS solution for accurate demand planning in the consumer goods industry

Reliable strategic planning The SaaS solution allows precise demand calculations to be made on a weekly basis. Seven

days ahead of time and taking into account predicted weather developments, it deter-

mines which inventories an enterprise must have on hand to meet its customers’ needs. The

user can even define additional events, such as holidays and special occasions, and integrate

them into the sales forecast.

Based on accurate and solid predictions, companies have the potential to improve their sales planning considerably by:

Reducing inventory by 10%

Increasing sales by more than 1% thanks to fewer out-of-stock situations

Avoiding more than 10% of write-offs

Simple to integrate, easy to operate

The solution can be integrated into any existing IT system landscape without

additional investments

User-friendly interface

Cloud-based and thereby ideal for medium-sized enterprises

Simple integration into your ERP system and/or data warehouse

Immediate use of existing data through standard interfaces

Comprehensive service

Demand forecasts are considerably more accurate with Forward Demand. The quality of the results improves by 20 to 40%.

Uwe Weiss, CEO Blue Yonder

RetailerManufacturer

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Stock up!

Blue Yonder demand forecasts successfully in use in the consumer goods industryMany commercial trading enterprises could significantly improve their

sales forecasts using Blue Yonder’s unique technology – technology that

is already being used with impressive results.

Sushi manufacturer Natsu reduces its unsold inventoryThe German Sushi manufacturer Natsu directly supplies around 1,700 retail stores and is respon-

sible for the smooth delivery of its goods as well as for disposing of its surplus goods. The high

perishability of fresh fish and Natsu’s quality demands meant that product write-offs at the com-

pany were over 20%. Blue Yonder sales forecasts are being used to obtain accurate order and

demand proposals based on sales data. The goal is to reduce write-offs due to unsold products

to an absolute minimum. The company also expects that the solution will reduce logistics costs

and increase customer satisfaction.

A beverage bottler optimizes its delivery times

At a German bottler of a large drink brand, the order numbers no longer matched the demand

forecast for the end consumer. Bottlenecks and the wrong inventory had become common-

place. Blue Yonder put the end-consumer transaction data into its analysis with impressive

results: More accurate forecasts far ahead of time and more frequent adjustments to current

conditions mean less capital is bound up in holding inventory and the production plan can be

adapted more quickly.

An international CPG enterprise wants to improve its decision-making in purchasing

In a pilot project, a large manufacturer of health, beauty, and home products is testing the use of Blue Yonder Predictive Analytics to optimize its purchasing decisions regarding the quantity and price of raw materials and components with long lead times. One goal is to provide sound forecasts to support buyers in their daily decisions.

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Reducing costs through automated decision-makingThe tough competitive environment of the consumer goods industry makes auto-

mating processes and decisions vital in order to lower costs and ensure products

can be delivered. Precise demand planning based on accurate forecasts is the

first step. In addition, with Blue Yonder your procurement processes will be opti-

mized and efficiently managed, so you can guarantee your customers almost 100%

product availability.

Integrate sales forecasts into business processes

Automated replenishment doesn‘t just determine the quantity of goods

required at a specific time. The predictive analytics solution goes one step

further and automatically includes the following factors in your planning:

} Current inventory and inventory at any given time

} The quantity of the required raw materials at a set time

} Delivery times of the raw materials

} Expiration date, minimum order size, and possibly even pricing conditions

The advantages of automated replenishment

} You reduce your inventory costs

} You guarantee availability and help avoid sales losses

} You automate your purchasing processes and boost efficiency

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Grocery retailer is increasing its revenue thanks to automationA European grocery trader stocks a very high proportion of perishable

products, some of which are prepared at the company’s own production

facilities.

The challengeThe company already used forecasting software. But the software didn‘t

meet the enterprise‘s specific requirements, and a huge team of planners

was needed to adjust the system to the expected demand. This resulted

in high operating costs as well as low margins in the in-house production.

The solutionThe enterprise introduced the Blue Yonder solution for automated replen-

ishment, initially in a test phase and only for a limited number of products.

The software provides precise order proposals with a time horizon of 28

days. In addition, the demand forecasts were integrated into the existing

SAP software in order to ensure an automated forecasting and procure-

ment process.

The result, in figures

Blue Yonder Predictive Analytics contributed to an increase in sales of approximately 40 million euros (EBIT)

€20.2 millionAvoidance of write-offs in the perishable product range: 14%

€2.5 millionTied-up capital reduced by the reduction in inventory: 9.5%

€4.6 millionImprovement in efficiency due to optimized procurement processes: 68%

€16.1 millionIncrease in sales due to improved deliverability: 1.3%

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There is a reason for every priceThe Blue Yonder software uses all the available data to determine the optimal price for a

certain product at a certain time – in real time. The solution considers both the strategic

enterprise focus and the current market situation, which means that inventory can be

drawn down on time. For specific products, the margins and sales figures can be opti-

mized and/or the market share can be increased.

In addition, partner solutions allow additional factors, such as competitors’ prices, to be

integrated. Customer ratings and evaluations from test portals and social media are also

included, as are price rankings in online price portals and the “reach” of the online shop.

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€29.95€59.90

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The optimal price, in real-timeBlue Yonder Dynamic Pricing for the consumer goods industry

Dynamic pricing is particularly interesting for consumer goods enterprises with their

own online shop because the need for intelligent price management is particularly high

in e-commerce. For brand-name products, price transparency is almost 100%.

There is a reason for every priceThe optimal price for a product depends on many factors that can vary on a daily basis.

With Blue Yonder’s dynamic pricing, you have a highly effective tool for the highly com-

petitive pressures of online commerce. Those who automatically adapt their prices to

the conditions in real-time gain a decisive competitive advantage.

€4.99

€4.49

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Platform as a serviceWith the Blue Yonder solutions for the consumer goods industry, you receive accurate fore-

casts without having to invest extra in your IT infrastructure. This is because we make our

predictive applications available in the form of platform as a service (PaaS) in the cloud. The

machine learning approach ensures that changing conditions are constantly identified and

included in the analyses, so we can continuously deliver precise forecasts.

We assure you the highest degree of data security together with maximum flexibility. Our

certified datacenter provides highly available forecasts across all security levels, as well as

professional customer support.

Blue YonderBlue Yonder is the leading SaaS provider for predictive applications in the

European market. The company’s platform automates mass decisions in real

time, resulting in accurate forecasts. Founded in 2008 and based in Karlsruhe,

Germany, Blue Yonder provides industry-specific forecasting software that

enables customers like OTTO, E.ON and Next to optimize the key business

processes and to become “predictive enterprises.”

Founded by the former CERN researcher Prof. Michael Feindt, Blue Yonder has

the largest team of world-class data scientists in Europe. Using scientifically-

based and innovative technologies such as predictive modeling and ma-

chine learning approaches, Blue Yonder helps companies to increase their

profit. With its scalable and cloud-based platform, Blue Yonder delivers pre-

cise predictions for demand planning and replenishment. It is also being

used for dynamic pricing and customer analytics.

In January 2014, Blue Yonder launched the Data Science Academy to provide

relevant expertise to businesses and to train management as well as busi-

ness users and IT. Blue Yonder’s work has been recognized by many industry

awards such as the 2013 FOCUS Digital Star Award and most recently, the

Deutscher Innovationspreis 2014, the BT Retail Week Technology Award 2014

and the Retail Week Supply Chain Award 2014.

www.blue-yonder.com

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PaaS

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0201

4Blue Yonder GmbH

Ohiostraße 8

76149 Karlsruhe

Tel +49 (0)721 383 117 77

Fax +49 (0)721 383 117 69

E-Mail info@blue-yonder.com

www.blue-yonder.com

Blue Yonder UK Limited

6-9 The Square

Stockley Park

Uxbridge UB11 1FW

United Kingdom

Phone +44 (0)203 008 717 0

Fax +44 (0)208 610 606 0

E-mail infouk@blue-yonder.com

www.blue-yonder.com

Do you want to optimize your demand planning, too? Then schedule a demo meeting for our SaaS solution Forward Demand today.