Terra Technology expands demand-sensing capabilities with its Multi-Enterprise Demand Sensing product.
Terra Technology, which makes inventory optimization solutions, is enabling
consumer packaged goods manufacturers to incorporate demand signals from
throughout their supply chains into their forecasting efforts.
Terra Technology on March 25 announced the release of its MDS
(Multi-Enterprise Demand Sensing) product, which accepts streams of daily data
from supply chain points, including POS (point-of-sale),
channel inventory and retailer forecasts. MDS runs on an Oracle database with a
Windows GUI.
"A lot of CPG manufacturers are
collecting POS data from retailers, but aren't
really using it to drive the supply chain," said Robert Byrne, president
and CEO of Terra Technology. "It's not
connected to other systems that make decisions about what to manufacture and
ship."
According to Byrne, MDS can reconcile
demand signals from the POS and other points
on the supply chain to create a more accurate forecast.
"It provides a structured way to leverage channel information to
predict the future," Byrne said. "MDS
can analyze volumes of POS data that there
is no way to do by hand."
Byrne said MDS is a "touchless"
application, meaning, "MDS brings in
information and users don't have to set parameters, set the mathematics or
tweak the model," he said. "It's an automated way to mine demand data
and use it for forecasting."
By applying proprietary mathematical algorithms to the demand data it
collects, Byrne said MDS can reduce
forecasting errors by as much as 50 percent in the short term and 20 percent
overall.
"We're really a math company," he said. "Our goal is to get
manufacturers to understand their orders so they can provide better service to
retailers more efficiently."
Tom Harden, an analyst with retail consultancy Columbus Consulting, said
having access to a broad range of demand signals could have "tremendous
impact" on a variety of forecasting environments.
"Where you have VMI [vendor-managed
inventory] and are moving information upstream, this would allow you to do it
in a timelier manner than you would with traditional VMI,"
Harden said. "It could also give you early recognition of trends,
particularly in relationship to seasonal products."
Harden said demand signals could help manufacturers and retailers recognize
trends in the movement of fad items that become popular in one particular
region and then spread across the country. He also said demand signals could
add value to multichannel retailing efforts.
"You could sense things happening with a catalog or e-commerce site and
send that information back to the retail stores," he said.
Looking ahead, Harden said adding weather-related data to the demand information
collected by MDS could enhance its potential
value. He said maximum accuracy in forecasting is key.
"Days are money," he said. "If you're a week late on a
product, it could have an impact and someone else could beat you to the punch."
Dan Berthiaume covers the retail space for eWEEK. For more industry news,
check out eWEEK.com's Retail Site.
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