Point of Sale Data – Basic Analytics

You've got access to Point of Sale Data…now, what are you going to do with it?

For the purpose of this blog entry, I’m assuming that we have daily aggregated data by product and by store.  We will certainly get measures of sales (both units sold and currency received).  We may also get other useful measures like inventory on-hand, inventory in-transit, store-receipts, mark-downs taken at the store and perhaps some data around warehouse activity too.

[Note: Aggregated data is not as potentially useful to us as individual transaction records but it’s more readily available so we’ll start with that.]

Now, this can be a lot of data (2 years of daily data for 10 measures, 100 products and 2000 stores is almost 1.5 billion data points) - you are not going to handle this in Excel or Access J .  If you forget about daily data and pull weekly aggregations and forget about wanting data by store you can reduce this a lot to a little more than 100,000 data points, BUT,  you have thrown away the opportunity to do much of the more value-added activities I will get to later.

Check out my blog post [Data Handling - the right tool for the job] and then set up your own Demand Signal Repository (DSR).    The DSR is designed to handle these data quantities and should enable standard reporting (as outlined above) straight out of the box. 

Now, you can figure out what you sold last week… or the last 4 weeks, or last 13 weeks, or Year to Date or the same periods for the prior year and I’m sure you will.  Aggregate this data with product hierarchies defined by the Retailer or with your own corporate hierarchies for discussion with your head-office.  You can calculate growth (or decline) and perhaps pricing and distribution.  You can even integrate some of your own corporate data (like shipment details) or externally audited data to combine into reporting.  

All very necessary, but rather basic and a long, long way from the value you could drive from the same data.  If you are looking to POS data to provide you with some real competitive advantage you will have to try a little harder.  The DSR is your cost of entry into this space and provides a solid foundation for deeper analysis, but ownership of a DSR does not, by itself, provide any competitive advantage.   What you do with this tool defines your competitive advantage.  Use it to automate a few reports that you used to pull manually and you saved a few hours a week and nobody, other than you, is going to notice.  You do need to do this but it’s not an end-point it just frees up enough time for you to consider taking bigger steps.

Use your DSR to find opportunities to: reduce off-shelf situations; or drive incremental sales; or reduce cost to supply and you are talking real money.  What is an incremental 1% of sales worth to you?  A lot more than the labor saved in report automation I bet.

In the following series of blog entries, I’ll suggest a few thoughts on more value-added activities.  Now, this will need incremental investment and additional skills but then you didn’t think competitive advantage would be free did you?

All posts in this series

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