What does a machine-learning (ML) algorithm have to do with the Super Bowl? When it comes to forecasting and demand management, a lot. Consider this: According to the National Retail Federation, approximately 189 million people watched Super Bowl LI, and viewers spent an average of $82.19 on electronics, apparel and food specifically for the game, up from $77.88 compared to the previous year. For events like the Super Bowl, retail demand planners create forecasts using data from a variety of sources to adjust product demand profiles in anticipation of which product, or group of products might be in demand the most. This is a daunting task when one considers the variety of products available to football fans – from cheeseheads to cheezies and everything in between. In the past, only about one brand in 50 was able to precisely adjust their football-frenzy driven supply chain to meet demand during the short two-week window between the conference championship games and the Super Bowl. The ability to forecast the uplift in demand reliably to guarantee consumer product availability and to evaluate the economic returns on the promotions has largely been a dark art. Without improved technology, very few companies can plan effectively in a promotion-heavy environment to help people jump on the Tom Brady bandwagon with an authentic Patriots jersey. That’s where ML comes in. In recent years, the ML algorithms have become more sophisticated, using data visualization to help subject matter experts determine the meaning of the results. Previously, when left without interpretation, ML algorithms produced data without context, providing no clear conclusion. However, ML is advancing, refining models to determine correlations between data without human interaction. As more data enters the system, the system becomes more intelligent and the data becomes more manageable and subsequently, easier to interpret. This type of analysis has applications beyond the football field, easily extending to science and engineering, and to fraud detection, genetic analysis and finance, just to name a few. But back to football. Unleashing a machine-learning algorithm on the Super Bowl assists planners by helping them adjust to unpredictable product demand just by digging through historical data. To find the right correlation, the ML algorithm classifies products by similar event type, helping retailers strike the right balance with suppliers to ensure that giant foam finger gets to its destination on time. By integrating ML algorithms with a decision support system, prescriptive analytics gives decision makers timely recommendations of which product or product types to focus on for the event, reducing "what-if" analysis. For the supply chain practitioner, leveraging ML to help with demand planning and forecasting, and take advantage of opportunities like the Super Bowl, this is their “I’m going to Disneyland!” moment.
Forecasting and demand management for new events using machine-learning algorithm
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