Forecasting Sushi Demand: How QuantSpark Identified a $25M Opportunity for a Supermarket Sushi Retailer

Case studyLLMs

5 Mar

QuantSpark was asked by a Private Equity fund to provide an in-depth assessment of sushi retailer’s forecasting process. In doing so, we identified value-creation opportunities of up to $25M in yearly profit achievable through a 12-month roadmap.

Executive Summary

For fast moving consumer goods (FMGC), accurate production forecasting is essential: short shelf life can lead to high waste levels and stockout of in-demand products must be avoided.
A Private Equity-backed sushi retailer wanted to understand where there were areas for improvement and optimisation through data (particularly in the production forecasting process) and feed these into a roadmap for value-creating analytics.
QuantSpark conducted a thorough assessment of the existing process and provided an opportunity assessment for value-creating analytics, identifying a $25M-a-year profit opportunity with a clear roadmap for execution.

The Business Problem

Forecasting production had historically been a heavily manual process and relied on simplistic first-order assumptions, without considering key demand drivers.
As a concession within a supermarket, accurate and timely point-of-sales data was not readily available, leading to a over-reliance on wastage as a performance indicator.
Predictive analytics initiatives had had limited success to date: a lack of an over-arching analytics strategy had stifled previous attempts to make production forecasting more data-driven.

The QuantSpark Solution

Combining exploration of proprietary and open-source data with retail industry expertise, QuantSpark in-depth assessment uncovered specific areas where there was an opportunity for value creation through undertaking targeted analytics initiatives.

Understanding the Forecasting Process

QuantSpark worked closely with SMEs in the client’s retail teams, delving into the intricacies of fresh sushi production. Available data on sales, waste and forecast production was collated and analysed to understand regional variations and identify early opportunity areas.

In-flight initiatives were also reviewed, such as the recent addition of a third-party predictive analytics tool intended to increase the accuracy of production forecasts, or recent drives to acquire more regular point-of-sale data from the host supermarket. QuantSpark applied their Data Science experience to expertly assess the implementation of these tools and identify benefits and gaps.

Following this, QuantSpark engaged in a meticulous Business Process Mapping exercise, visualising the end-to-end value chain of sushi production and aligning this to relevant datasets. Both existing proprietary data and available third-party data (such as census and other demographic data) was considered.

This established a view of what analytical avenues could be explored with sufficient investment into data acquisition. QuantSpark’s detailed mapping unearthed inefficiencies and redundancies, becoming the foundation for subsequent Opportunity Identification.

Strategic Analytics

Having understood and mapped out the existing process in depth, QuantSpark ideated and triaged a set of analytics initiatives which would unlock value creation. Projects were categorised by feasibility and impact, with estimated timelines and resource requirements provided alongside.

Some of the proposals include:

Development of a customer demand model based on a combination of existing and new datasets;
A programme of A/B testing to investigate the effects of price elasticity on demand;
Acquisition of point-of-sale data to accurately track availability throughout the day and optimise markdowns; and
Streamlining production to minimise waste through a novel AI-driven waste target-setting model.

Projects were artfully incorporated into a 12-month roadmap, sequencing short-term quick wins with longer-term, complex initiatives. QuantSpark also provided an overview of the capabilities required for implementation, empowering the organisation to make informed resourcing decisions.

Sizing the Prize

Every initiative QuantSpark proposed is designed to generate value for a business and its investors. In the case of this retailer, value creation was delivered through driving sales, reducing waste, and, ultimately, increasing profitability.

QuantSpark leveraged existing data on production, waste and sales to provide the business with a transparent view of the potential financial benefits initiatives could bring in both the short- and longer-term.

Quick wins, focusing on optimising waste levels and increasing production forecasting accuracy, were estimated to bring up to $7M a year in profit within six months. In the longer-term, initiatives to optimise markdown strategies, pricing and supply chain considerations would enable the business to focus not just on reducing waste, but driving sales, delivering a further boost to profitability $18M a year.

Impact

QuantSpark's work has uncovered an $25M-a-year profit uplift opportunity through a combination of increased sales and reduced cost-to-serve. Regular collaboration with SMEs, business leads and investors alike enabled QuantSpark to provide an actionable plan towards achieving value creation - essential in catering to their varying needs.

The clear vision for sustained value creation provided by QuantSpark now serves as a practical guide for investors and business leads navigating implementation. This showcased QuantSpark’s expertise in retail analytics and demonstrated the value QuantSpark can bring as a strategic partner.