Solving the general MOQ problem

Minimal Order Quantities (MOQs) are ubiquitous in supply chain. At a fundamental level, MOQs represent a simple way for the supplier to indicate that there are savings to be made when products are ordered in batches rather than being ordered unit by unit. From the buyer’s perspective, however, dealing with MOQs is far from being a trivial matter. The goal is not merely to satisfy the MOQs - which is easy, just order more - but to satisfy the MOQs while maximizing the ROI.

The Stock Reward Function

The classic way of thinking about replenishment consists of establishing one target quantity per SKU. This target quantity typically takes the form of a reorder point which is dynamically adjusted based on the demand forecast for the SKU. However, over the years at Lokad, we have realized that this approach was very weak in practice, no matter how good the (classic) forecasts. Savvy supply chain practitioners usually tend to outperform this (classic) approach with a simple trick: instead at looking at SKUs in isolation, they would step back and look at the bigger picture, while taking into consideration the fact that all SKUs compete for the same budget.

Hiring a software engineer with taste for compilers and big data

Lokad is growing, we are hiring again. At Lokad we use Envision, our in-house programming language, to write data analysis scripts and adapt our forecasts to the business constraints of our customers, processing hundreds of gigabytes of data each day. Envision is a modern, strongly typed, high-performance relational language with inspiration from SQL, Python, R and the Excel approach to column data. Its state-of-the-art compiler performs type and table inference to minimize the need for annotations and uses static analysis to optimize the execution plan and reuse cached data from previous runs, generating scripts in an intermediate language that is compiled down to CIL and allows the injection of custom C# code.

Optimizing container shipments

Supply chain management has long gone global: even small businesses are now importing goods from overseas whenever they identify the right business opportunities. However, while supply chain data can flow back and forth across the globe at a fraction of the speed of light, physical goods are still mostly freighted via containers with lead times counted in weeks, if not months. On top of that, containers further complicate the task of supply chain practitioners by imposing both volume and weight constraints.

Retail pricing strategies

Pricing strategies are an essential part of demand forecasting as prices directly influence demand. All too often companies settle for benchmarking prices, when they actually should benchmark pricing strategies. Therefore, we have extended our knowledge base with a new collection of articles about the most popular pricing methods used in retail. Pricing concepts At Lokad we believe in optimizing pricing strategies instead of raw prices. By ‘pricing strategies’, we are referring here to the method of computing optimized prices given the available data and the market conditions.

Price elasticity is a poor angle for looking at demand planning

Lokad regularly gets asked to leverage an approach based on the price elasticity of demand for demand planning purposes; most notably to handle promotions. Unfortunately, statistical forecasting is counter-intuitive, and while leveraging demand elasticity might feel like a “good” approach, our extensive experience with promotions indicates that this approach is misguided and nearly always does more harm than good. Let’s briefly review what goes wrong with price elasticity. A local indicator Price elasticity is fundamentally a local indicator - in a mathematical sense.

Streetlight effect and forecasting

A policeman sees a drunk man searching for something under a streetlight and asks what the drunk has lost. He says he lost his keys and they both look under the streetlight together. After a few minutes the policeman asks if he is sure he lost them here, and the drunk replies, no, and that he lost them in the park. The policeman asks why he is searching here, and the drunk replies, “this is where the light is.

Magento in beta at Lokad

Just a few days ago we announced Lokad’s integration with Shopify. Today, it’s the turn of another vastly popular content management system for e-commerce to become natively supported by Lokad as the native integration of Magento is now live in beta at Lokad. This integration relies on Magento’s REST API which has been supported since the version 1.7 which was released back in April 2012. The authentication relies on OAuth. The set-up requires a bit of configuration on the admin panel within Magento to grant access to a third-party app like Lokad.

Shopify integrated by Lokad

The retail platform Shopify is our latest integration. Now, Shopify-powered merchants can get advance inventory forecasts and powerfull commerce analytics in just a few clicks. Check-out the Lokad app in the Shopify appstore. Through the Shopify API, Lokad retrieves all the product and sales data that contribute to your inventory optimization and your pricing optimization. Don’t let the competition outservice your business. As usual, the Lokad team is here to help.

Forecasting the series of future orders to suppliers

Collaborative supply chain management makes a lot of sense. In today’s day and age of ubiquitous internet connection, why should your suppliers be kept in the dark concerning your upcoming purchase orders? After all, if your company is capable of producing accurate forecasts about your upcoming orders, sharing these forecasts with your suppliers would certainly be of great help to them, which, in turn, would yield better service and/or better prices.

NetSuite integrated by Lokad

NetSuite was one of the first ERP systems operating fully in SaaS mode. Over the years, the NetSuite solution has steadily expanded, and NetSuite now features an extensive business suite which includes financials, CRM and more. Today, we are proud to announce that NetSuite is now natively supported by Lokad. Thanks to the SuiteTalk integration (web service), Lokad can import the integrality of NetSuite data and deliver advanced inventory forecasts and/or pricing optimization solutions.

Supply Chain Antipatterns, a Lokad initiative

Most of the supply chain initiatives fail. Yet, over the years at Lokad, we started to realize that those failures are far from random: there are recurrent patterns that invariably lead to failure. Thus, we decided to start a side initiative to survey the most frequent misguided responses to supply chain challenges through our new blog Supply Chain Antipatterns. The blog comes with real comic strips produced in-house by the Lokad team.

Beyond software: inventory optimization as a service

SaaS is the promise of no software. However, as far inventory optimization is concerned, no matter how good the service, software alone can’t address the full challenge. Delivering inventory performance take significant efforts: Quantitative performance metrics must be carefully aligned with business goals; otherwise the “system” is just going to let your business accelerate in the wrong direction. Historical data must be thoroughly qualified ; otherwise, the “system” will fall for the too common garbage in, garbage out problems.

Data qualification is critical

Wikipedia lists seven steps for a data analysis process: data requirements, data collection, data processing, data cleaning, exploratory data analysis, data modeling, and finally the generation of production results. When Lokad forecasts inventory, optimizes prices, or anytime we tackle some kind of commerce optimization, our process is very similar to the one described above. However, there is another one vital step that typically accounts for more than half of all the effort typically applied by Lokad’s team and that is not even part of the list above.

Hiring our Chief Marketing Officer!

We are hiring a lead generation wizard! Lokad is a software company that specializes in quantitative optimization for commerce. We help merchants, and a few other verticals, to forecast their inventory and to optimize their prices. We are profitable; we are still small but growing fast. We are closing deals North America, Europe and Asia. The vast majority of our clients are not in France. Lokad is sold through the web, almost exclusively relying on inbound marketing.

SkuVault natively integrated

SkuVault is a warehouse management software tailored for eCommerce. We are pleased to announce that SkuVault is now natively supported by Lokad. Importing the SkuVault historical data into Lokad can now be done with a single click - or no clicks at all using our scheduling feature. Now SkuVault-powered businesses can get advance inventory forecasts as well as powerfull commerce analytics within minutes.

Competitive intelligence with Competera

Starting from today, Lokad-powered merchants can obtain the prices of their competitors by using their own Lokad account, thanks to our new partner Competera. The app benefits from a native integration within Lokad. Competera is a competitive price monitoring app. Give them the domain names of your competitors, the domain name of your own store, and Competera will begin extracting prices right from the web. Competera takes care of generating a price matrix where each one of your products gets matched with the prices of your competitors.

Currency exchange rates with Envision

Merchants frequently buy with one currency and sell using another. As online commerce is becoming more and more a global commerce, it’s not unusual to encounter merchants who are buying in multiple currencies, and selling in multiple currencies as well. From a business analytics viewpoint, it soon becomes rather complicated to figure out where the margins stand exactly. In particular, margins depend not only on the present currency conversion rates, but also on those that have been in place 6 months ago.

In the end, there can be only one

When it comes to the optimization of stock levels, or prices, or assortments … merchants need to look at many business performance indicators to be able to make the correct operational decisions. However, numerical optimization, much like statistical forecasting, is deeply counter-intuitive. In particular, there is a deep and subtle catch when using indicators to optimize an aspect of your business: in the end, there can be only one. Maintaining multiple indicators to drive the final decision that results from an optimization process is a recipe for picking a posteriori the metric that makes the management looks good, while damaging the business in the process.

Document your folders with MarkDown

Whenever Lokad produces a dashboard or a forecasting report, under the hood, the input data is stored as tabular files within your Lokad account. Those files are accessible through the Files tab of the top navbar. However, when you’re account grow large, with many files and many folders, it might also become a bit messy too. Keeping the data well organized and well documented is a critical part of a good data-driven commerce optimization initiative.