AI, Assortment Planning and Supply Chain Issues: What to Know

AI, Assortment Planning, and Supply Chain: What to Know

May 16, 2022 | By Jason Ingargiola

Supply chain disruptions continue to impact retailers, and they keep coming. From the Omicron variant to worker shortages, each disruption stacks up. Container shipping costs have even risen as much as 212%!

With unpredictable markets, keeping inventory stocked has become harder than ever. The pandemic has highlighted how traditional retail planning is not good enough. Retailers need a method to achieve success in such a market.

Store-level data analysis using AI or specifically new methods in Machine Learning algorithm design powers today's advanced analytics providing comprehensive analyses of store-specific shopper behavior at the push of a button. Stop reading here and play the video below if you do not believe me.

This provides precision in demand forecasting, assortment planning, and store-specific SKU selection. Better yet, with new AI modeling approaches, you can now rapidly simulate the impact of supply chain issues and inform the next-best action to take. Breaking free from supply chain disruptions is possible with these tools. Continue reading to learn more about the new paradigm in retail planning!

Product Availability

When growing a customer base, availability is critical. If a store doesn't have consumers' desired product, they'll shop elsewhere. When a lack of a product becomes a trend, those customers will leave for a store with the needed availability. 

In the US, grocery stores struggle to keep food items in stock. Many retailers hope for a light at the end of the tunnel but continue to face setback after setback. Common issues include: 

  • COVID and its variants causing sickness and worker call-outs
  • Transportation issues due to logistical issues
  • Heightened demand for truckers but not enough workers
  • Weather constraints
  • Changed shopping habits

Despite hopeful projections from economists and analysts, the current issues affecting retailers remain. And as more stores lean into omnichannel distribution, the supply chain stretches thinner.


Omnichannel Experience Pressures

The globalization of the world economy brought about new opportunities for retailers. So too did the concepts of multichannel retailing with the advent of the internet. Businesses could move their inventory through online channels, no longer limited to brick-and-mortar.

Multichannel distribution focuses on casting a wide net to reach more customers. Omnichannel focuses on creating consistent customer experiences for existing customers.

Seamless experiences aren't about social media interaction or web services alone. It's also about the shopping experience. Stark inconsistencies with products and availability harm a retailer's reputation. Maintaining a consistent experience is necessary for today's market. 

The pressure has never been more significant to provide customers with satisfactory experiences. Keeping the right mix of products on the shelf with holding power and supply has never been easy. And the disruptions in the supply chain have made that even more difficult. 

Demand Planning and impact on Supply Chain

Issues from the bullwhip effect to overstuffed ports continue to hamper the market. Some of these issues have begun to clear up. Yet the pandemic has only highlighted how fragile the supply chain is.

Demand planning and its impact on the supply chain are among the biggest concerns for suppliers and retailers alike. Businesses need to insulate themselves from these adverse conditions.

Yet most retailers still use 'gold standard' plans and procedures. These old demand forecasting methods don't consider the changing consumer trends. Such reactive operating principles only exacerbate the existing supply chain disruptions. The next negative event could worsen these ongoing issues.

Retailers need to adopt new platforms and tools to succeed and be proactive. Agile planning and flexibility are crucial to transcend the supply chain. Enter the new paradigm in retail planning: Artificial intelligence (AI) simulation.  Before I continue, check out this video to set the context of what I'm saying:

AI Simulation 

AI isn't a meaningless buzzword. It represents a new frontier in capability and flexibility. Training AI models on diverse datasets enable new forecasting, planning, and visualization forms. These potent tools allow for proactive ordering and stocking of any retail business.   

At HIVERY, we have gone one step further, we are fundamentally changing the way consumer packaged goods (CPG) companies and retailers collaborate about assortment and space decisions with HIVERY Curate. As the video explained, you can add your category goals, merchandising constraints, and assortment rules to discover assortment strategies and revenue growth in ways not possible with human approaches.   

At one major CPG brand that we have been working with, using a bottom-up approach with their data, we were able to rapidly demonstrate what would happen if they way fully go to store-specific planograms using their existing clusters.

Quantify the assortment optimization opportunity using bottom up (store-specific) to re-optimize existing clusters discover new cluster strategies

Assortment Planning

Improving items in-stock begins with bottom-up (ie store-level) assortments and data analysis. Ensuring efficient shelf space use to maximize sales is crucial at every store. This is what we do with AI. Our AI engine is literally learning from the universe of stores.


Speed and Agility

One key feature of AI modeling is its speed and agility. While traditional planning and forecasting often is “moment in time” analysis and static, AI modeling is fast, consistently learning over time as new data is entered.  The result: you can answer complex strategy questions at warp speed and simulate any market (eg, COVID) or product (e.g., new innovation) event. 


Omnichannel pressures to create that seamless experience are only growing. HIVERY Curate removes that headache, identifying the best assortment strategies to take by quantifying them and comparing outcomes.  Your job is to ask the question, enter your goals and constraints, and let HIVERY Curate show you the impact of that decision.

Reactive planning leaves you behind the curve, not even catching up. With Curate, you can plan across various possibilities and scenarios with unlimited strategy simulation. Running predictive scenarios allows you to be proactive instead of reactive. Tuning your processes and creating stocking plans will mitigate supply chain disruptions.

The New Paradigm

As mentioned above, we are fundamentally changing how consumer packaged goods (CPG) companies and retailers collaborate about assortment and space decisions. Your business needs that competitive edge to rise above. 

Contact me today for more information on Curate! From live demos to answered questions, we're here to help!

Related resources you might be interested in:

Webinar: Leveraging AI towards locally relevant shelves: Why data has a better idea about your store clusters

Guide: Retail Store Cluster Strategies: Leveraging AI Towards Locally Relevant Shelves

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