FuturMaster, which provides supply chain planning software for clients including L’Oreal, Heineken and LVMH, is launching a new forecasting solution that uses artificial intelligence (AI) to help companies more successfully launch new products. A recent trial with a Chinese textiles firm found that the new tool, powered by AI, was more accurate in over three-quarters of forecasting scenarios and twice as fast at unravelling data when compared to using teams of trained forecasters and manual methods.
According to Harvard Business School research, each year more than 30,000 new consumer products are launched and 80 percent fail, so the software developer has honed its sights on using AI to increase success rates in new product introductions. Its automated forecasting solution was found to be much better at predicting how sales of new products will typically evolve from the moment they hit the shelves. Trials showed that rival solutions were often too quick to replenish products and that the resulting, spiralling costs of unsold stock could be reduced using AI-assisted tools.
The machine learning software works by using algorithms to group products based on the sales history and behaviour of products with similar characteristics (a laborious process, known as clustering). The autonomous system then applies a set of rules to automatically calculate volume requirements over a variable period, adjusting and constantly adapting over time.
Gilles Lefebvre, product manager at FuturMaster, believes that the new software is likely to be of most benefit to those companies that typically launch a lot of new products – for instance, apparel brands and retailers that introduce several new lines every season in multiple size and style combinations; but also cosmetics brands and food manufacturers with shorter product lifecycles.
“Launching new products is a complicated process that involves numerous teams collaborating together and requires close monitoring of sales and demand, not to mention harvesting accurate, clean data,” says Lefebvre. “Decisions - which can make or break a company - have to be taken early on and it’s an area ripe for the benefits of AI technology.”
The latest release of FuturMaster’s version 8.3, which features automated clustering for new product launches, may next be developed for helping retailers plan which stores to open in future.