NIX Solutions: AI Optimizes Promotions for Henkel

Henkel has implemented an AI solution from the Russian IT company Rubbles, which improves planning accuracy and increases sales of brand-name detergents. The system developed with the use of artificial intelligence technologies began working in July 2020, and has led to an increase in the accuracy of planning promotional activities by 10% in 9 months, notes NIX Solutions. The model also increases the speed of forecasting and avoids human errors.

NIX Solutions

A solution based on artificial intelligence allows company employees to evaluate the effectiveness of various promotional scenarios and choose the optimal one in terms of their goals, says Retail-Loyalty. An employee of the manufacturing company determines the list of products, start time, duration, mechanics and type of support for the future promotion. For example, laundry detergent will be sold at a 20% discount for three weeks, while the campaign will be advertised on TV in parallel. The resulting data goes into an AI-based forecasting system, which calculates the demand forecast and evaluates the effectiveness of the promo for each product. The implementation of AI-based solutions is part of Henkel’s digital technology development, which is one of the company’s key strategic priorities.

The Rubbles model contains features with a description of a product, a retail network in whose stores a promo is planned (matrix width, number of outlets, regional representation, width of an assortment matrix, etc.), promotion mechanics. Also, it contains features describing sales behavior, and customer price perception (price elasticity, frequency of promotions, historical depth of discounts, etc.). For the effective operation of the system, it is necessary to accumulate historical data on the effectiveness of promotions carried out for a period of 1.5 years.

Alexander Zarakovsky, Head of Product Analytics Rubbles:

“For companies in the FMCG segment, where the share of promotional sales is growing every year, artificial intelligence allows them to achieve a competitive advantage by increasing planning accuracy and choosing the most effective promotional scenarios. AI-powered decision support enables companies to improve customer service, balance production plans, optimize storage capacity, and free up frozen budgets. ”

Petr Nodel, Head of Henkel Sales Information Support, Laundry & Home Care:

“The implemented solution allows us to improve the level of service for the execution of orders for our partners. The solution also allows us to estimate the amount of investment in the achieved turnover. An additional advantage for us is the ability to plan production and logistics in such a way as to receive the required volumes of goods at the right time, which significantly reduces the cost of storage and transportation. “