Sales Forecasts Get Sophisticated

Manugistics release helps retailers know what to order

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By Doug Bartholomew
Issue date: March 26, 1996

Even the most impressive product line won't make up for a retailer who doesn't know how much to order, or when. On March 25, Manugistics Inc. in Rockville, Md., is set to release a software module designed to help retailers get a better fix on where sales are headed.

Canadian Tire Co. has been using the software, called Demand Planning Extended Edition (DP/EE), to manage the flow of about 60,000 products-including automotive, sports and leisure, and home improvement goods-to more than 450 stores. The Toronto company is Canada's largest hard-goods retailer, with sales of $2.8 billion (U.S.). "Our goal is to develop a better forecast of consumer demand," says Geoff Frodsham, senior director of logistics at Canadian Tire.

DP/EE's complex sales forecasting model takes into account a host of factors that affect sales, from weath-er and time of year to marketing, promotions, and the effects of competition.

In the past, Canadian Tire forecast sales manually or, at best, with PC-based spreadsheet programs using past sales as the primary guide to the future. But product promotions that change weekly tend to have a major impact on what sells, making historical sales alone a less than accurate predictor.

The company publishes a promotional flyer every week listing sales and discounted items. "A key reason we selected Manugistics was its flexibility; it was capable of forecasting the results of these weekly promotional sales," explains Gregor Stuart, a project leader at Canadian Tire.

The retailer is running the software on a Hewlett-Packard 9000 server. When fully operational later this year, the system will have about 150 users.

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