Gentle introduction of Lokad: the slidecast
Lokad is a bit a one-of-a-kind company with a complete focus on forecasting. Want a big picture? Check out our new slidecast that aims to be a gentle introduction of what we do.
Hello, in this slidecast, I am going to give you a small overview of Lokad.
Lokad is an online statistical forecasting provider.
In short, companies are sending their data to us, and we give them forecasts back.
But let’s start with the pig picture.
Achieving good forecasts is a cornerstone of profitability for many industries such as retail, manufacturing and services.
If you happen to be a retailer, optimizing inventory levels is critical. Too few inventory and you end up with nothing to sale.
But in the other hand, too much inventory and your costs explode.
Then again, if you happen to be a service company, such as a bank or an insurance company, optimizing your staff levels is also critical.
Too much staff and you end-up wasting money on idle employees. Too few staff and your customers get mad because the long waiting queues.
In summary, forecasting can to used to achieve substantial savings in many industries.
Yet, to achieve those savings, you need good forecasts, and in our experience truly good forecasts are truly hard to obtain.
And this is the reason why Lokad exists in the first place: we take care of the forecasts so that you don’t have to do it yourself.
I believe that there are 2 key benefits of using Lokad: first, it’s way easier and second it’s more accurate.
Easier because you don’t have to deal with statistical forecasting yourself.
We handle the process entirely for you, and once the setup is done; you can forecast in one click, or even fully automate the forecasting process if you need to.
Then, it’s also more accurate because of the Lokad forecasting technology that I believe to be pretty unique.
Sales, call volumes, cash flows, market prices can be represented as time-series.
Traditionally, when people are trying to forecast a time-series, they build a statistical model for this particular time-series, one time-series at a time. But what happens if there is not enough data to reflect the future in this time-series? Well, the answer is simple: the forecasts produced by the statistical model are not accurate.
So, what Lokad is doing instead is that we are not looking only at this particular time-series, but we are also taking into account the other time-series of the company. You can think of it that way: instead of looking at the sales of a single product, Lokad is looking at the sales of all the products of the company.
If the sales of a single product are going up, it might a trend, but it might be also a random effect of the market that does not indicate anything in particular. Yet, if the sales of 100 similar products are going up, the probability of those sales to be just a random effect of the market is very low. It’s clearly a trend, and that’s exactly the type of correlation that Lokad is analyzing.
But Lokad goes further. We are not only using data from your company, we are using all the data from all the companies that are also using Lokad to improve every single forecast that we deliver.
Basically, if you are looking at a single company that does not happen to be a super-large retailer, the amount of data available is usually quite limited. As a result, it is usually very hard to tell whether the company history reflects true patterns such as trend, seasonality, or if it’s not patterns but noise and randomness.
In short, the more business data you have, the more accuracy you can get on your forecasts. And Lokad is taking this simple principle to the next stage by taking into account the data from many companies instead of a single one.
Then there is another subtle issue in forecasting: your historical sales data or your call volume data might not accurately represent the real historical demand of your customers.
For example, if a supplier is encountering a shortage, your sales are going down. Yet, it doesn’t mean that your customers are not wanting your products any more, it just reflects that there are fewer products to buy. Following the same idea, a promotion giving a product away with a large discount is likely to increase the sales. But this increase should not be considered as a trend.
The Lokad framework is capable of handling such situations. Basically, with Lokad, you can decorate your time-series with tags and events. Tags and events are just keywords that can be used to tell Lokad that two products are similar or that a past marketing event is impacting your historical data.
Yet, note that you just have to tell Lokad that a promotion took place. It’s Lokad that will figure out the actual impact of the promotion and how it will influence future customer demand.
We provide forecasts as a service so that you don’t need any actual knowledge about forecasting to use Lokad.
At this point, you might be wondering: how do I get started with Lokad?
Well, it’s quite simple actually.
First you need to go on our website at lokad.com and open your Lokad account. You give us an email address, you choose a password, and that’s pretty much it.
Then, you need to install a Lokad add-on. This client application will be used to send your data toward Lokad, and to retrieve the corresponding forecasts. For example, you can use “Lokad Excel Sales Forecasting” to perform forecasts directly from within Microsoft Excel.
Then once the add-on is installed, enter some data, click refresh and you’re done.
Microsoft Excel is not always the most appropriate way to manage your data. Thus, Lokad also provides to specialized applications.
“Lokad Safety Stock Calculator” is designed for retailers and manufacturers. This application lets you optimize your inventory levels with sales forecasts.
“Lokad Call Center Calculator” is designed for call centers or contact centers. This application lets you optimize your staff levels with call volume forecasts.
Then, if those applications do not fit your needs, Lokad offers a web API, an Application Programming Interface that can be used to access our forecasting technology from any 3rd party application as a long as you have some internet connection available.
This concludes this short presentation of Lokad. Do not hesitate to drop questions on our forums, the Lokad team, including myself, is doing its best to address them all.