Bol.com is a retail platform with over 12 million prospects within the Netherlands and Belgium. To serve the wants of those prospects, it’s important that our workforce gives correct forecasts to empower enterprise selections on a daily foundation. With the outbreak of the COVID-19 pandemic, on-line purchasing behaviour went by means of a significant shift and demand for important and non-essential merchandise swiftly elevated (see cbs).
After months of fighting producing any cheap forecasts, we managed to design a characteristic which is ready to describe the dynamic adjustments related to the COVID-19 pandemic. The addition of this characteristic permits us to supply dependable forecasts within the quick time period and roll-out state of affairs forecasting for the long run, supporting completely different domains throughout the enterprise. Our method is well interpretable and explainable to stakeholders, main to raised information pushed selections.
In our forecasting panorama, we offer various kinds of gross sales forecasting, each on whole degree and likewise on product degree. These forecasts are then used on their very own for various functions throughout the organisation but additionally utilized by our workforce as the principle drivers for operational planning forecasting. The completely different forecasts depend on completely different time-series modelling strategies, from linear fashions to gradient boosting algorithms. As such, it was necessary for us to have an one-size-fits-all answer which might scale throughout the completely different modelling approaches.
We began with an intensive information evaluation and studying on the knowledge relating to COVID-19 restrictions to include the unfold of the virus. With this info we developed a severity index that translated the impression of the pandemic on our gross sales patterns. Our severity index ranges between 0 and 12, the place a 0 represents no COVID-19 associated restrictions and a 12 represents the tightest restrictions we encountered throughout the pandemic. Determine 1. reveals a illustration of the COVID-19 severity index.
This COVID-19 severity index is just like the publicly obtainable COVID-19 stringency index (obtainable right here). The primary distinction is that our severity index is tailor-made to the actual dynamics of the affect of the pandemic on our gross sales information, which isn’t simply depending on the kind of restrictions in place. For instance, the implementation of obligatory mouth masks in public transport, or the momentary closing of bodily retailers has a better impact on our gross sales sample than what the already obtainable stringency index would recommend. Creating our severity index additionally permits us to extra simply translate the brand new info on restrictions from press-conferences right into a future trying index, which is key for forecasting. As well as, we’re capable of create higher and decrease bounds for the severity index primarily based on the earlier months information and with this allow state of affairs forecasting.
Because the COVID-19 severity index is only a time-series characteristic, it’s easy to implement it throughout the completely different modelling approaches in our panorama. The outcomes of including the severity index to our fashions had been spectacular, the place we noticed as much as 40% relative enchancment on the imply absolute error of the validation interval (from March 2020 to Jan 2021). On prime of that, the ahead trying forecasts additionally started to be far more according to expectations, which gave our stakeholders a significant forecast accounting for the most recent pandemic dynamics and in consequence additionally elevated their belief in our predictions.
For long run planning, we additionally aided our stakeholders by offering completely different state of affairs forecasts, every one primarily based on a unique potential consequence of the pandemic. On this course of, stakeholders might request a state of affairs primarily based on a reference interval for which we’d then lengthen the severity index utilizing the identical values of that interval and forecast the gross sales accordingly, see Determine 2.
Throughout this era, we labored in even nearer collaboration with our stakeholders than earlier than, ensuring to take their knowledgeable data into consideration to determine on the longer term values for the severity index. The truth that the severity index is well comprehensible makes this method very clear which resulted in a swift adoption of the improved forecasts.
From provide chain to logistics operations and customer support planning, our answer to forecasting demand throughout a pandemic has allowed us to supply dependable forecasts to empower enterprise selections within the quick time period, and roll-out state of affairs forecasting for the long run. We might not know but what the way forward for the pandemic appears to be like like, however we are actually a lot better ready.
*This work was developed as a joint effort from Staff Forecasting at bol.com by Asparuh Hristov, Bjarnthor Egilsson, Cátia Silva, Erik Mulder , Eryk Lewinson, Roberto Carcangiu, Susanne Tak, Tavis Gravatt, Thijs Roukens and Wander Wadman.