Photo by Krystian Olszanski, CC license

Great!  Your second biggest customer has agreed to collaborate with you to build the business through collaboration and data sharing, and you’ll be getting access to all of their point-of-sale data through a third party company.  Now what?

Fortunately there are some very good POS analytical capabilities out there, but not all are the same. Here are some tips from my own experience:

  1. Use a data provider who also has an analytical/BI environment to work in – preferably an environment with pre-built reports and analyses, and to which you can add other data sources. Otherwise, you’ll need to build and maintain a database and BI “stack” of software applications and every day you’ll be importing huge data files and spending lots of time checking for accuracy. Too much time spent on mechanics.
  2. Get the data aligned and normalized with your company’s customer and product master data, so that product numbers and descriptions and brands and formats are the same whether you’re looking at the shelf data or data in your internal systems.
  3. Go after the biggest returns, which will be in gauging the effectiveness of merchandising and promotion spending.  For manufacturers selling to retailers this type of spending can amount to 30% or more of revenue.  If turns on the shelf are lackluster for a given promotion, you’re wasting money and it’s time to find out why.
  4. Focus on the largest customers with the largest perceived gaps, on the highest-turning items.  Look for shelf voids — out of stocks — that seem to have a pattern, like day of the week, or within a certain cluster or geography of stores.  These might be fixable with an adjustment in your customer’s store replenishment settings.
  5. Concentrate on shelf issues you can actually do something about.  You probably won’t convince your company to discontinue ten slow-moving SKUs because they’re wasting shelf space – those products could be there for other, more defensive reasons.  You might, however, show your customers how adding more shelf space for some of your products will benefit them.

Related: Demand Signal Applications: The Basics

To learn more about data and analytics provider capabilities, check out Orchestro, Relational Solutions, RSI, JDA, and Mindtree.