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Demand Sensing is crucial for managing on-shelf availability of short shelf life products.
Food companies selling breads and other perishable products, with shelf life of just a few days, face a unique challenge in servicing the retail stores. If they supply more, some of it would perish and get returned. If they supply less, the stores will go out of stock. How should they balance the delivery quantity?
Demand Sensing at sku-store level provides a useful solution. It deciphers the emerging demand pattern at that granularity and estimates the demand between two replenishment cycles, basis several causal factors. These include weather, promotions, festivals, day-of-the-week, school closures, vacation timings.
Once these causal factors are included in the demand sensing engine, we have seen returns as well as stockouts reduce significantly.