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
All posts in this series
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