Efficient inventory management is essential for businesses aiming to balance operational efficiency and customer satisfaction. d.light, a global leader in solar-powered consumer products, sought to enhance its supply chain with AI-driven forecasting models. This initiative aimed to minimize costs while ensuring product availability for their dealer network worldwide.
Key Challenges
The customer needs to address the following inventory optimization challenges:
- Accurate daily forecasts: Accurate daily demand forecasts were needed to avoid stock-outs and overstocking, particularly for products with low or zero demand across some dealers.
- Inventory carrying cost reduction: Reducing inventory carrying costs and freeing up cash flow
- Dynamic product replacement: Ensure the model can adapt to frequent product retirements and new product introductions. The forecasting model should dynamically incorporate product replacements, allowing for continuous updates and adjustments based on new product availability.
The Solution
Partnering with SquareShift Technologies Inc., d.light implemented a robust solution leveraging Google Cloud Platform (GCP) and AI/ML technologies. The approach included:
- Automated Model Management: Developing native forecasting models with automated refitting mechanisms to ensure optimal performance.
- Advanced Pipelines: Utilizing Vertex AI pipelines for model development, forecasting, refitting, and tracking with the help of algorithms like LightGBM and Linear Regression.
- Segmentation-Based Forecasting: Dealer segmentation by sales volume allowed tailored model development and dynamic routing for precise daily forecasting.
- Dynamic Adaptation: Monthly evaluation of refitted models ensured consistently high-performing algorithms were applied.
The Impact
The project delivered significant results for d.light:
- 15% Reduction in Inventory Costs: Optimized stock levels reduced overhead expenses.
- 10% Decrease in Stock-Out Incidents: Enhanced demand forecasting ensured better product availability.
- 12% WMAPE Accuracy: Precise forecasting supported improved inventory and procurement decisions.