How did Perch's inventory forecasting accuracy decline from 95% to 80% for its top-selling products in Q2?

Introduction

Perch's inventory forecasting accuracy decline from 95% to 80% for top-selling products in Q2 represents a significant challenge that could impact various aspects of the business. I'll approach this issue systematically, focusing on identifying the root cause, validating hypotheses, and developing both short-term and long-term solutions.

Step 1

Clarifying Questions (3 minutes)

• Looking at the timing, I'm thinking there might be a seasonal component. Has this decline coincided with any particular seasonal trends or events?

Why it matters: Seasonal fluctuations could explain temporary accuracy drops. Expected answer: No significant seasonal trends identified. Impact on approach: If seasonal, we'd focus on adjusting forecasting models for seasonality.

• Considering the specificity of "top-selling products," I'm wondering about the scope. What percentage of total inventory do these top-selling products represent?

Why it matters: Understanding the impact on overall inventory management. Expected answer: Top-selling products account for 30-40% of total inventory. Impact on approach: High percentage would prioritize immediate action on these specific products.

• Noticing the substantial drop, I'm curious about recent changes. Have there been any significant updates to the forecasting algorithm or data sources in the past quarter?

Why it matters: Recent changes could directly correlate with the accuracy decline. Expected answer: A new machine learning model was implemented at the start of Q2. Impact on approach: Focus on validating and potentially rolling back recent changes.

• Thinking about external factors, I'm considering market dynamics. Have there been any major shifts in supplier relationships or market conditions for these top-selling products?

Why it matters: External changes could affect the predictability of inventory needs. Expected answer: No significant external changes noted. Impact on approach: If external factors are stable, we'd focus more on internal processes and systems.