Every company ultimately sells products or services. But deciding which products or services to offer at which locations is a complex supply chain challenge. Very few businesses provide their full range everywhere: the economic costs are too high.
Lokad’s Assortment & Capability Optimization module enables companies to make financially driven, data-backed decisions about assortment design. With AI-driven statistical analysis, we balance the gains of offering products or services against the costs of carrying them — at the most granular level.
Key concepts to success
Why traditional assortment planning falls short
Most assortment strategies rely on broad rules of thumb:
- Offering a cluster of ranges → ignores local demand variations and wastes resources.
- Relying on gut feel → leads to missed opportunities and excess costs.
- Neglecting cannibalization → fails to account for substitution effects within the assortment.
Assortment and capability choices are economic bets. Each product or service added to a location drives incremental sales potential — but also incremental costs. The challenge is to make these decisions systematically and profitably.
The Lokad approach: Financially optimized assortments
Lokad transforms assortment and capability planning into a quantitative optimization problem:
- Probabilistic latent demand estimation → Anticipates the incremental impact of including each product or service at each location.
- Cannibalization and substitution modeling → Measures how one product’s presence affects the sales of others.
- Cost-benefit balancing → Weighs incremental sales gains against inventory, storage, presentation, and equipment costs.
- Granular, location-specific optimization → Identifies the optimal set of products and services for each part of your network.
Tailored to your industry
Lokad tailors assortment optimization to industry realities:
- Fast-Moving Consumer Goods (FMCG) → Customers switch easily between similar items. Lokad optimizes breadth vs depth to minimize costs while ensuring high availability.
- Omnichannel & E-commerce → Physical assortment complements online availability. Lokad balances store assortment with online fulfillment and click-and-collect options.
- High-End Retail & Luxury → Presence drives demand. A product must be displayed to sell — even if only occasionally. Lokad maximizes sales opportunities through carefully curated assortments.
What Lokad Delivers
- Optimal SKU/service assortments at each location, recalculated dynamically.
- Financial justification for each inclusion/exclusion decision.
- AI-powered analysis of demand impact and cannibalization.
- Actionable dashboards to track assortment performance and guide continuous improvement.
From static ranges to dynamic assortments
With Lokad, assortment and capability decisions are no longer static, top-down rules. They become dynamic, financially optimized choices — ensuring every product or service in your offer earns its place and contributes to overall performance. Ready to make every assortment decision a profit driver? Let’s talk.
