diwo’s cognitive solutions platform is based on a data analytics system for processing big data, with built-in modules to handle data streaming, machine learning and graph processing. diwo® is able to integrate with the retailer’s enterprise data solutions/ERP, data warehouse and other downstream applications to glean from the underlying data insights that can be acted upon. It can integrate with third-party applications on weather, sentiment analysis and syndicated data from industry.

diwo is a cognitive solutions platform that uses an opportunity-driven business optimization methodology, known as SEAL, to solve today’s business problems and aid smart decision making. SEAL stands for:

diwo® Introduction

diwo senses opportunities even before they arise, and presents them to the business team with details about the opportunity, the impact to revenue and the recommended strategy to address it.

SENSE

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For most retailers and wholesalers, inventory is the largest continuous investment you make, so getting the most out of this investment is vital for success. Yet optimizing inventory in an omni-channel world presents a whole new set of challenges. Companies often resort to high-overhead marketing promotions, rebates, or complete inventory write-offs to unload their excess inventory. Excess stock products which are not trending can lead to lower customer interest and hence lower sales. Having an excess stock situation ultimately impacts a business's bottom line.

Introduction to Inventory Distortion case

Today’s retailer expects information systems to be Cognitive-smart, intelligent and self-learning. For optimized decision making, applications need a systems thinking mindset. Systems must have the ability to look at the holistic picture and ensure a decision that is a result of evaluating tens of thousands of business validated possibilities and coming up with the best strategy for the given business situation. Industry requires an opportunity-driven model to ensure timely action and to optimize business processes on a continuous basis. Category Management teams or the Store Operations Management team need to sense opportunities well in advance and understand their potential impact to their business if these situations were

Industry Expectations

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Inventory DistortionExcess Stock Prevention

to happen. Also If a firm’s information system could provide a business-validated strategy to preempt virtually any adverse situation, the benefits would be enormous: saving potential revenue loss, creating sales uplift and acquiring new clients. At the very least, information systems need to be able to notify users of the business situations which require their immediate intervention, in real time.

It is said that the health of a retailer is reflected in the inventory levels that the retailer carries. It is essential that the retailer maintains an optimum level of inventory to ensure there is neither an understock situation or an overstock situation. A retailer's overall aim is to strike the perfect balance of lowering their overall inventory investment while maintaining or improving service levels. Excess inventory leads to lower profit margins, increased operating expenses, non-profitable occupancy of shelf space, cash tied up in non-moving products, high advertising and selling expenses in liquidating excess stock. Optimizing inventory in an omni-channel world presents a whole new set of challenges.

diwo’s opportunity-driven model succeeds at solving the Excess Inventory challenge using diwo SENSE. diwo continuously monitors for the most susceptible categories of SKUs which have historically shown an Excess Stock tendency. It also monitors trends by analyzing the customer’s baskets in real time and identifies its impact on the products with low sell-through. diwo’s ability to have a holistic view of enterprise-wide inventory data in real time helps in evaluating the true store inventory requirement based on true customer demand.

For products with low sell-through compared with planned sell-through, diwo monitors the Forward Weeks Of Supply (FWOS). If the FWOS is high, diwo is able to

How diwo helps prevent excess stock

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EXPLORE

ACT

LEARN

diwo makes recommendations for the business opportunity it senses and allows the business user to optimize the strategy based on diwo’s deep insights and analytics.

diwo provides a targeted action list to guide business teams as they implement the recommendations.

diwo assimilates learning from decisions and actions.

EXPLORE

diwo EXPLORE has already run tens of thousands of business strategy possibilities and is ready with the optimum strategy that the business user can implement to save revenue losses. Strategies have been evaluated on the basis of short term and long term aspects of the business situation.

As a part of this module diwo assists the user by analyzing any strategy and presenting multiple insights and 'what if' analyses to understand the situation better. diwo looks at multiple strategy combinations of Inter Store or DC transfer of excess stock, slowing down the DC and Supplier orders, canceling pending Purchase Orders and setting up of promotional events. For each option diwo calculates the opportunity cost as well as the direct revenue impact of the action. The optimum strategy is identified and recommended. In arriving at the decision, diwo has already considered historical trend analysis, current store trend, current store and DC stock holding, In-transit and Open Orders, future receivings, customer product interest based on the social media sentiment analysis and other industry syndicated data. The business user can visualize powerful and intuitive graphical analysis

analyze the possible reasons for the high stocks by comparing customer orders or by analyzing if there are any impending events for which higher stocking is required. Based on advanced Machine Learning techniques, diwo SENSE is able to cognitively analyze the optimum level of the Sell Through and FWOS by Category.

diwo SENSE monitors real-time data feeds and streams from a multitude of data sources, analyzing inconsistencies andidentifying aberrations in inventory receiving patterns and identifies if this can lead to an excess stock situation for critical products.

diwo SENSE also monitors customer buying ttrends, understanding external factors like weather, current fashion trends, competition and demographic data that can influence the customer’s buying pattern and directly impact inventory levels. diwo considers the factors of product life cycle stage and retail metric thresholds for Sell Through, Sales and FWOS to decide whether to present the opportunity to the business user or whether to disregard the opportunity. It is important for the business user to understand the time frame when the opportunity would have a landfall and the actual financial impact for the opportunity presented. diwo’s advanced analytical engine determines the potential revenue loss as well as revenue recovery possibility based on the diwo recommended strategy.

diwo ACT provides a concise, practical and actionable list of steps to be followed to achieve the recommended strategy, and creates a monitored and tracked plan of action.

diwo LEARN is the cognitive strength of the system to assimilate the learnings from the opportunity and the actionable steps taken. At each step of the SEAL process, based on Machine Learning, diwo is learning from the recommendation and the subsequent actions taken. This 360 degree feedback is considered when a similar situation arises for Excess Stock in the future. As a result, over a period of time, diwo’s cognitive engine keeps improving decision-making ability and is able to accurately predict and provide recommendations which are practical and tested in the business domain.

diwo ACT

diwo LEARN

KnowledgeBase Growth

SenseSpeed

PredictionAccuracy

You’ve just made a $63 K di erence

Today’s Impact$25 K $350 K

Current Month

Keep up the good work!

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Opportunities taken

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diwo ASK offers goal-oriented guided conversation, and is able to interact with users in natural language. Business users can simply ask questions related to Retail KPI Metrics of Sales, planned Sales, Forecasted Sales, Stock On Hand, In Transit Orders, Open Orders, Sell Through %, Stock to Sales Ratio, Gross Margin, GMROI, FWOS etc. Users can have a conversation with diwo in a question and answer mode and dig deeper into areas they want to explore. diwo’s ASK persona learns from the conversational style of the business user and is able to relate the user role context while framing the answers.

diwo ASK

and if required can easily tweak retail parameter values and customize the diwo recommended strategy. Users can create multiple such strategies and can compare these strategies with each other to decide the optimum strategy.

Propensity of a new color introduction in the price point range of $28-$35 is High.

Suggest stock allocation changes in Store 342 for top trending colors in week 28.

Context: Sales Trends by Colors

Cognac color shows the highest increases in Sales of 18% in Q2 of 2017 leading to decrease inSOH by 12% against Planned SOH.

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Black ApricotCognac

X - Weeks Y - Sales ($K)

Actual SOH Planned SOH Forecasted SOH

All Colors

Related Questions

What is the Gross Margin in Q2 of 2017 for Donovan pump?

Which products are most likely to sell with Donovan pump?

I recommend increasing stock allocation for Black (8%) and decreasing for Apricot (3.7%) between Week 28 to Week 32 for Store 342.

$18K

Segment Size

Opp #137 Store #137Cross-Sell / Up-Sell

High Income Athletic

Trendsetter Social

$12K

Revenue ImpactShirt 2285Fall: Weeks 30 - 37

Opportunity #1 Store #15Excess Stock