Carnac the Great was a skit that Johnny Carson used to perform regularly on the show. He would deliver the punch line first and then open the envelope to reveal the question. In that era, people who could predict the future were limited to carnivals and fortune telling booths. Today, we are inching closer to something like it.
We already see glimpses of this. Google is getting very good at autofill. It's uncanny how often it can "predict" what you are looking for through whatever algorithm they use to sift through the billions of previous searches to find others similar to yours. While it isn't perfect, it does seem to learn quickly. Witness how quickly today's hot topic becomes yesterday's fad (Gangnam style, anyone?). Google seems to be able to keep up rapidly whether you are searching for information on e-books or ebola.
In the same way, retailers are now attempting to duplicate the feat. The sales cycle seems to get shorter and shorter. People's tastes change rapidly. Think of how quickly the markets appear overnight for accessories to the latest hot gadget and then die off just as rapidly as we move to the next favorite. Case designers for smartphones have to come up with new tools and dies every six months just to match the crazy number of designs.
Predictive analytics is one potential way to stay ahead of the curve. From "Apparel" magazine, here is an excerpt from Melanie Nuce at GS1 US on how it works:
Gaining a Glimpse into the Future
Instead of simply analyzing sales, predictive analytics provide retailers with a glimpse into the future and an opportunity to identify patterns that lead to effective and highly personalized customer engagement strategies. Many retail and social commerce experts believe that predictive analytics are what make big data useful in a retail environment. As opposed to descriptive analytics, which measure what has already happened, predictive analytics apply statistical modeling and data mining to study recent and historical data, allowing for more accurate forecasting.
Every day consumers are willingly offering up pools of potential product data from a multitude of sources. Today it is common for consumers to share valuable, individualized opinions and purchasing habits via social media, product reviews, wish lists and online purchase histories; and they look to each other as influencers. Further, according to a 2013 survey from Dimensional Research, 90 percent of respondents claimed that positive online reviews influenced buying decisions, while 86 percent said buying decisions were influenced by negative online reviews. Earlier this year, Amazon revealed its plans for predictive shipping, in which they scan consumer-generated information to synthesize it with a sophisticated algorithm in order to optimize their fulfillment strategies.
She goes on to reveal her opinion on what is needed to capitalize on these trends:
Retailers and brand owners cultivating a predictive analytics strategy need to commit to at least two focus areas. First, they need to attain highly accurate inventory visibility to know which product will move in which channel to anticipate future trend shifts. The second focus should be on achieving industry-agreed upon best practices for sharing consumer data.
For both of these requirements there must be more collaboration and communication between trading partners — which will be more valuable than ever before. Retailers and brand owners using a standards-based framework can enable the real-time visibility needed to tap into rich information sources and effectively leverage more customer-centric strategies.
Our challenge is to try to find some way to adapt these retail-style trends to the healthcare industry. We've got to find some way to replicate these data sources and gain control over our inventory to match this level of performance in the future to meet our ambitious targets.
To learn more, here is the link to the full article: Predictive Analytics and the Agile Supply Chain | News | Apparel Magazine(AM)
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