Author: Helen Thomas

Improving Buyer Relationships Using POS Data

Posted on November 8, 2010 by - Blog

Time and time again, when setting up new vendors with Accelerated Analytics®, the same dilemma is expressed in some form or other: “We know that this product sells well here, but our buyer won’t listen to us.”  To determine why, the return question is invariably, “What evidence are you giving the buyer to back up your assertions?”
 
Almost as often as the initial question is expressed, the rejoining comment is met with frustration at the inability to provide the evidence the buyer wants to see.  This can be due to a vast array of issues, not the least of which is simply a lack of time to collect and analyze the available POS data and provide the buyer with real concrete evidence.  Conversely, it is rarely the case that vendors have insufficient data to make these conclusions.  As such, it is frequently a third party data analysis company that can provide the additional tools necessary to turn the POS data into actionable information for the buyer. Here are some tips:

  1. Buyers fall into roughly two categories—those that are helpful and those that aren’t.  If you have a helpful buyer, you’re already a step ahead.  Work with the buyer to determine key performance indicators (KPIs) like target weeks of supply and preferred sales velocity for given items.  (Since these KPIs need to be managed at an item by store level, it may be necessary to use a third party analyst partner to assist you in building your database and reporting solutions.)  Then, track these KPIs for your products and show your results to your buyer—often you have better insight into your product activity in their stores than they do.  Since your buyer is friendly, work with him or her, using the information you’ve tracked and presented, to improve sales, limit out of stock, and prevent overstock.
  2. The unhelpful buyer is more difficult, but by no means a lost cause.  For example, Wal-Mart buyers will almost always refuse to accept a push order of products from you, the vendor. But our experience with Wal-Mart is that this is usually because they have better insight into your product activity than you do.  However, if you can consistently demonstrate that your use of the POS data readily available to you would have rendered a more accurate result or better yield, then the buyer will gradually begin to trust your numbers instead of theirs.  This can be done, for example, by tracking your inventory, computing your weeks of supply, and showing your buyer, by item by store by week, which items you would have shipped to them and when.  If you can cross reference this at the same grain with a report showing out of stock stores, you can easily compute lost sales.   When, over time, the buyer sees the evidence presented consistently and the potential for increased sales, by simply doing nothing on his or her part except accepting an order file from you, you can begin to change your relationship with your buyer, and as he or she becomes more amicable, you can develop the type of relationship that allows you to discuss other KPIs as indicated in tip #1.

Managing POS data at an item by store level can be difficult and time consuming, especially when trying to build detailed, insightful reports like discussed in #2.  Accelerated Analytics® can give you one-click access to reports that will answer dozens of these kinds of questions and more.  

Belk EDI 852 Reporting

Posted on October 30, 2010 by - Blog, EDI 852

If you are a vendor supplying to Belk, you are eligible to receive product sales activity and inventory data via EDI 852. Preparing to setup and receive the EDI 852 files can be confusing, and creating usable reports for your team can be very time consuming. Fortunately, Accelerated Analytics® provides a simple, outsourced service for all your Belk EDI 852 reporting needs.

Using Accelerated Analytics® makes all your reporting headaches go away. With Accelerated Analytics®, we handle all the data conversion, database hosting and reporting. We even provide training and the end user reporting tools.

Accelerated Analytics® benefits:

  • We do the EDI 852 translation
  • Eliminate manual data entry and manipulation
  • Consolidate all Belk store data on all your SKU’s into one reporting database
  • Pre-built exception reports with color coded dashboards
  • No software or hardware to purchase
  • Sophisticated charts and graphs

Available reports:

  • This weeks sales and inventory by store and SKU
  • Last weeks sales and inventory by store and SKU
  • This months sales and inventory by store and SKU
  • 6 week rolling sales and inventory by store and SKU
  • Stove level stock-out exposure
  • Stove level overstock
  • Fast/slow selling items
  • Sell-thru
  • Inventory turns
  • Days supply on hand 

Accelerated Analytics® will give you the ability to anticipate changes in sales and inventory, so you can make adjustments before a costly mistake occurs. Our EDI 852 reporting is the best on the market. 

The BullWhip Effect

Posted on October 12, 2010 by - Blog

The bullwhip effect is a serious problem for vendors. The article below will provide a comprehensive introduction to the problem and impact. After you finish reading the article do this exercise: calculate the total number of stores stocking your products [# of retailers * average total stores], then multiply by 2%, which is an average out of stock rate. This is the total stores that are currently out of stock on your products. Next multiply by an average weekly unit sales for your key product(s). This is your total lost sales opportunity.

Leading retailers and manufactures are dramatically improving sales and profits by embracing a new supply chain model built upon sharing point-of-sale demand data and closely collaborating on forecasts. Research conclusively demonstrates demand driven collaborative supply chain models drive more accurate forecasts, fewer out-of-stocks, higher sales, and higher operating margins.

There are many variations of demand driven collaborative models in service, the most popular of which are:

  • Efficient consumer response (ECR)
  • Collaborative planning, forecasting, and replenishment (CPRF® )
  • Vendor managed inventory (VMI)
  • Demand driven supply network (DDSN)

The overlap of these models and generally slow adoption is creating a great deal of confusion in the market. While each model is slightly different in its approach, definitions, and processes, they all have a common goal: share actual demand data with all parties in the supply chain and facilitate real-time collaboration to reduce inefficiency and improve sales.

The purpose of this article is to discuss the financial benefits of implementing a demand driven collaborative supply chain model and provide best practices for getting started.

AVOIDING THE OUCH OF THE BULLWHIP EFFECT

The basic premise of the demand driven collaborative supply chain model is that in order to achieve the highest possible in-stock and simultaneously minimize waste, all parties within the supply chain must have timely access to actual sales demand data and all parties must have a means by which they can work together to coordinate promotions and business planning.

A forecast by definition is an estimate made in advance of an event occurring and is therefore an educated guess. Unfortunately, even sophisticated forecasting software can have an error rate of 50% on promoted items. Most troubling of all, forecast accuracy decreases, moving backward into the supply chain.

The reason forecast accuracy decreases, moving backward in the supply chain,  can be illustrated by plotting sales over time for supply chain participants as depicted in CHART 1. Notice the actual sales demand recorded at the retail point-of-sale has moderate variation. This is because the retailer builds their forecast model using actual demand as tracked through their point-of-sale systems. But notice how much more chaotic and unpredictable the demand curve becomes as you move away from the actual point-of-sale. Demand as viewed by the supplier, wholesaler, and manufacturer is based on estimated sales, which combined with latency and manually adjusted “safety stock”, causes increasingly inaccurate and chaotic forecasts. Research indicates a fluctuation in actual customer demand of +/-5% will be interpreted by supply chain participants as a change in demand of up to +/-40%. As depicted in Chart 1, although actual demand has only changed +/-5%, the reaction of supply chain participants is dramatically exaggerated and is known as the bullwhip effect. Much like cracking a whip, the user only needs a small motion in their wrist (point of sale) to cause a huge motion in the end of the whip (manufacturer).

The bullwhip effect causes inaccurate forecasts, inefficiency, and waste within the supply chain. Anytime the forecast line of a supply chain participant (e.g. chart 1; wholesaler, manufacturer, or supplier) is above or below the actual demand line (e.g. chart 1; retail sales) inventory levels are not optimized and out-of-stocks or inventory build-up will occur. The U.S. Department of Commerce estimates $3 trillion in excess inventory is locked in the U.S. and European supply chains. The bullwhip effect is exacerbated by the parties within the supply chain who do not have an accurate understanding of actual demand. In other words, they are forecasting, but the inputs upon which their forecast model is built are inaccurate.

Accurate forecasting and close coordination between supply chain partners can help to eliminate the bullwhip effect and dramatically increase overall profitability. The most effective way to improve forecasting accuracy at each step in the supply chain is to base the forecast on actual sales demand data. In this way, each point in the supply chain can be demand driven and the parties can collaborate on the same forecast inputs. In addition, promotions can be coordinated and managed to maximize sell-thru without causing supply disruptions. As information quality improves, cycle times are compressed through the entire supply chain process.

FINANCIAL IMPACT OF DEMAND DRIVEN COLLABORATION

Numerous studies provide objective financial results from sharing demand data and collaboration including studies from the National Retail Federation, AMR Research, and VICS. The reason the financial benefits are so compelling is they impact both top line revenues and bottom line operating margins; and, these programs are a win-win for both the retailer and the supplier since the financial impact between the two is directly linked.

Financial Impact #1: Increase sales by 5-10%
Average retail industry out-of-stock rates average 8% and can be as much as 40% on promoted items, which results in a loss of sales between 5% and 10%. Demand driven collaborative supply chain programs drive higher sales by improving in-stock rates between 2% and 8%.

Financial Impact #2: Increase operating margins by 5-7%
Many retailers are managing in-stock performance by increasing their base replenishment levels and carrying additional “safety-stock.” While this approach offers a short-term advantage, the long-term drawbacks are obvious; higher operating costs due to slow inventory turnover and higher logistics costs. By sharing demand data, forecast accuracy is improved and less safety stock is required to keep in-stock levels at target. Less capital is tied up in inventory, improving both return on invested capital (ROIC) and gross margin return on investment (GMROI).

Demand driven collaborative programs also have a positive effect on customer brand loyalty. This is because stock-outs also cause another, even more insidious problem – 32% of consumers who can’t find an item will go to another store. If the stock-out occurs three times or more, the consumer is likely to purchase a different brand. So today, the retailer may loose the sale, but tomorrow, so may the supplier. This dynamic creates a powerful incentive to work together for accurate forecasts. As an example, by working with suppliers and closely monitoring point-of-sale data for its 1,450 fastest-selling items, H-E-B Grocery was able to reduce its out-of-stock rate by 22.5% in just eight weeks. Similarly, Sainsbury tracked its 2,000 top items and increased sales by 2%. These are powerful examples of how leading retailers are using demand data and working in concert with suppliers to dramatically improve operating results.

Making Sense of Retail Link Data

Posted on October 1, 2010 by - Blog

Retail Link is an internet based tool created by Wal-Mart, which allows suppliers to access point of sale data and other important information. The benefits of analyzing sales data cannot be overstated – there are case studies documenting sales increase by more than 40% per SKU. Yes! That’s the power of utilizing your POS analytics.

The Challenge Of Retail Link

While Retail Link is an awesome tool, it can be a challenge to work with.

  • Tough To Navigate
  • Tough To Learn
  • Ability To Find The Right Data
  • Ability To Create An Actionable Report

A user must navigate the system, find the correct data, download the data and then create an actionable report. This is a lot of work. Especially if you have a dozen other retail customers who make the same data available. Retail Link users consistently praise the benefits of having access to the raw data, but complain that they do not have the time or tools to turn the data into action.

Thanks to our EDI 852 and POS Reporting, that is changing!

According to an article written by Mike Troy and published in DSN Retailing Today, Retail Link has approximately 100,000 registered users, who work at 40,000 companies and run 350,000 weekly queries. Retail Link contains over 583 terabytes of data over 104 weeks. “Use Retail Link and it will grow your business at Wal-Mart, “says Dan Phillips Wal-Mart’s VP of Merchandizing Systems.

In fact, Retail Link is so sophisticated, about 50 user groups have been formed in the U.S. as an ad-hoc training and support tool. And several third party vendors provide end user training seminars on how to use Retail Link effectively.

Retail Link, Same Great Benefits At A Lower Cost

Fortunately, now there is a tool you can use to fully gain the benefits of Retail Link, while at the same time, dramatically lowering costs.

Accelerated Analytics can automate all of your Retail Link tasks. Accelerated Analytics will provide automated data downloads, pre-formatted reports, exception highlighting and an executive dashboard. Plus, using Accelerated Analytics® your entire team can collaborate in real-time on the same set of reports.

Best of all, Accelerated Analytics will allow you to combine ALL of your retail customer’s data. Imagine a single report or dashboard for JC Penny’s, Wal-Mart, Target, Sears, all on one report. And because Accelerated Analytics is a hosted service, there is no software or hardware to purchase. We can have you up and running in a matter of days for a low monthly fee.

If you’re serious about growing your retail business, let’s jump on a demo call and we’d be glad to show you how we can help you take your business to the next level. You can schedule a demo here or give us a call at (941) 746-2073.

Lowe’s EDI 852 Standards

Posted on September 16, 2010 by - Blog, EDI 852

Lowe’s provides vendors with the opportunity to receive product activity data via EDI 852. The EDI 852 data is used to report actual unit sales, on-hand, on-order and order receipts. Vendors are expected to use the data to identify items deserving increased service levels and fill rates as well as those targeted for inventory reduction. Lowe’s requires vendors to document how the data will be used and how it will benefit both parties.

Item activity can be received for all items by location. This detailed data can be very useful if the vendor has the tools to process the data and quickly analyze activity. The key is to have the tool do the work, so your administrative team is not stuck with hours of data manipulation in Excel, or worse yet, on printed reports. 

Lowe’s provides the following fields on their EDI 852 files: quantity sold units, quantity sold dollars, quantity on-hand units, quantity on-hand dollars, quantity on order units, quantity on order dollars, quantity on requisition from RDC units, quantity on requisition from RDC dollars, quantity received units, quantity received dollars, requisition quantity received units, requisition quantity received dollars. Not all fields are always populated in all files.

Sales units and sales dollars will match between EDI 852 and Lowe’s Vendor DART. But inventory on hand units may be different due to damaged inventory. Vendor part numbers are not transmitted in EDI 852. Only the Lowe’s SKU number is sent. Canadian EDI 852 is transmitted in Canadian Dollars and US sales are transmitted in US dollars. Note that Vendor DART is not available for Canada.

ShopKo EDI 852 Reporting

Posted on September 15, 2010 by - Blog

If you are a vendor supplying to ShopKo, you are eligible to receive product sales activity and inventory data via EDI 852. Preparing to setup and receive the EDI 852 files can be confusing, and creating usable reports for your team can be very time consuming. Fortunately, Accelerated Analytics® provides a simple, outsourced service for all your ShopKo EDI 852 reporting needs.

Using Accelerated Analytics® makes all your reporting headaches go away. With Accelerated Analytics®, we handle all the data conversion, database hosting and reporting. We even provide training and the end user reporting tools. 

Accelerated Analytics® benefits:

  • We do the EDI 852 translation
  • Eliminate manual data entry and manipulation
  • Consolidate all ShopKo store data on all your SKU’s into one reporting database
  • Pre-built exception reports with color coded dashboards
  • No software or hardware to purchase
  • Sophisticated charts and graphs

Available reports:

  • This weeks sales and inventory by store and SKU
  • Last weeks sales and inventory by store and SKU
  • This months sales and inventory by store and SKU
  • 6 week rolling sales and inventory by store and SKU
  • Stove level stock-out exposure
  • Stove level overstock
  • Fast/slow selling items
  • Sell-thru
  • Inventory turns
  • Days supply on hand 

Accelerated Analytics® will give you the ability to anticipate changes in sales and inventory, so you can make adjustments before a costly mistake occurs. Our EDI 852 reporting is the best on the market. 

Sears EDI 852 Reporting

Posted on September 14, 2010 by - Blog

If you are a vendor supplying to Sears, you are eligible to receive product sales activity and inventory data via EDI 852. Preparing to setup and receive the EDI 852 files can be confusing, and creating usable reports for your team can be very time consuming. Fortunately, Accelerated Analytics® provides a simple, outsourced service for all your Sears EDI 852 reporting needs.

Using Accelerated Analytics® makes all your reporting headaches go away. With Accelerated Analytics®, we handle all the data conversion, database hosting and reporting. We even provide training and the end user reporting tools. 

Accelerated Analytics® benefits:

  • Eliminate manual data entry and manipulation
  • Consolidate all Sears store data on all your SKU’s into one reporting database
  • Pre-built exception reports with color coded dashboards
  • No software or hardware to purchase
  • Sophisticated charts and graphs

Available reports:

  • This weeks sales and inventory by store and SKU
  • Last weeks sales and inventory by store and SKU
  • This months sales and inventory by store and SKU
  • 6 week rolling sales and inventory by store and SKU
  • Sell-thru
  • Inventory turns
  • Days supply on hand 

Accelerated Analytics® will give you the ability to anticipate changes in sales and inventory, so you can make adjustments before a costly mistake occurs. Our EDI 852 reporting is the best on the market. 

Lowe’s EDI 852 Reporting

Posted on September 10, 2010 by - Blog, EDI 852

If you are a vendor supplying to Lowe’s, you are eligible to receive product sales activity and inventory data via EDI 852. Preparing to setup and receive the EDI 852 files can be confusing, and creating usable reports for your team can be very time consuming. Fortunately, Accelerated Analytics® provides a simple, outsourced service for all your Lowe’s EDI 852 reporting needs.

Using Accelerated Analytics® makes all your reporting headaches go away. With Accelerated Analytics®, we handle all the data conversion, database hosting and reporting. We even provide training and the end user reporting tools. 

Accelerated Analytics® benefits:

  • Eliminate manual data entry and manipulation
  • Consolidate all Lowe’s store data on all your SKU’s into one reporting database
  • Pre-built exception reports with color coded dashboards
  • No software or hardware to purchase
  • Sophisticated charts and graphs

Available reports:

  • This weeks sales and inventory by store and SKU
  • Last weeks sales and inventory by store and SKU
  • This months sales and inventory by store and SKU
  • 6 week rolling sales and inventory by store and SKU
  • Sell-thru
  • Inventory turns
  • Days supply on hand 

Accelerated Analytics® will give you the ability to anticipate changes in sales and inventory, so you can make adjustments before a costly mistake occurs. Our EDI 852 reporting is the best on the market. 

What’s wrong with trading partner portals

Posted on September 8, 2010 by - Blog

Retail trading partner portals have been creating somewhat of a buzz lately. We happened to read an article in the current issue of the Journal of Trading Partner Practices titled, “Using Portals to Improve Collaboration.” Not surprisingly, we have been receiving a lot of questions from vendors regarding the challenges they face in managing trading partner portals.

Just in the past two weeks, vendors have called to asked questions about trading partner portals for Wal-Mart, Target, JC Penney, Goody’s, Lowes, Home Depot and Walgreens.

The stated objective of retail trading partner portals is to create a more open and collaborative relationship between the retailer and their vendors by sharing POS activity and other important documents. The expectation is that open communication will improve sell-thru and in-stock. But unfortunately, the proprietary nature of the portals is greatly limiting their effectiveness.

One of our vendor customers has more than two dozen retail customers. Among those retail customers, about two-thirds have a trading partner portal, so this vendor must log-on to more than a dozen different websites each day to analyze POS and conduct other critical business. This is very time consuming and inefficient.  For this vendor, and many more like them, these portals have quickly become a huge drain on their staff time and efficiency.

What are some of the issues with trading partner portals?  Each portal is different, so vendors must learn the in’s and out’s of each. Data format and availability is different for each portal. The data available in the portal is often different than the data available in EDI 852. e.g. some retailers only report dollars sold within a portal. Many retailers do not permit 3rd parties supporting the vendors to have access to the portal. This discourages a vendor from seeking out category management and data analysis assistance they may not have in-house. The data available within the portal is often very different than the data sent via EDI 852. We have seen large variations in units on-hand reported for an item.

What’s wrong with EDI 852? EDI was created many years ago to standardize the format and transmission of data between trading partners. In other words, it was designed to eliminate the proprietary ways of doing things (think trading partner portal) and get everyone within the supply chain onto one single framework. EDI has limitations, but at least it provides a consistent and universally acceptable means of transmitting data.

Trading partner portals are not inherently a bad idea. Like many technologies, they have just been over extended in ways that don’t necessarily make sense for end users. In our conversations with vendors and our review of various trading partner portals, we have found they do have some good uses. First, they are very good for communicating vendor compliance information. In the retail world, compliance information changes daily. Trading partner portals provide a very effective path to communicate shipping requirements, labeling requirements, vendor score cards and other related information. Portals are also very effective for communicating store information and standard document formats like EDI document guides. Unfortunately, many of these portals have been turned into an analysis tool, and for the reasons we outlined in part I of our series, this is not a good application. If POS data is going to be provided through the portal, it should be provide as a simple tab delimited text file, so vendors can simply download the data into their analysis tool.

Vendor portals are also very effective for establishing vendor support communities. Many vendors that support retailers are fairly small organizations. They benefit greatly from the ability to connect with other non-competitive vendors to share ideas and tips. When the vendors improve their capabilities, the retailer benefits too. Some of the best portals we have reviewed provide user groups by geographic region and product category. Some even go so far as to provide user group meeting information, agendas and contacts. This is a very good use of the portal.

One technology we would like to see more retailers incorporate into their trading partner portals is RSS. Really simply syndication (RSS) is a push oriented technology that notifies a vendor when news or other information has been updated. This greatly increases the efficiency of communication because a user does not need to constantly visit the portal and check for updates.

In the first two parts of our series on trading partner portals, we discussed the limitations as well as some positive aspects. In this third and final part, we want to discuss how your organization can dramatically improve the efficiency of your POS and EDI 852 data analysis.

The most efficient way to handle multiple trading partner portals is to first understand they serve two distinct purposes: (1) communication of vendor compliance information and (2) providing POS or 852 data. There are numerous services available which monitor trading partner portals and supply vendors with automated announcement of compliance changes. These services are valuable and worth investigating. You might consider Trading Partners Collaboration as one good resource or Vendor Compliance as another resource.

Many vendors we talk to have not fully considered tools to automate the analysis of POS data. They are working in each of their customers portals or manipulating data in a spreadsheet. This is time consuming and inefficient.  Improve your processes and consider a service like Accelerated Analytics, which can provide item and store level analysis without manually gathering data from the trading partner portals or manipulating data.

Extending the value of EDI 852 data with non-POS data

Posted on September 6, 2010 by - Blog, EDI 852

After you have the basics of EDI 852 data analysis covered,  it’s time to think about adding in non-point of sale source data to extend the value of data analysis.  By linking secondary data, you can create a 360 degree view of what’s happening in the business. 

Non-point of sale data that can be linked to Edi 852 data includes: plan-o-gram files, shipping data, sales force organization, store attributes, warehouse inventory, forecast, demographics and weather data.

·  Shipping data indicating inventory quantities shipped to stores.  Shipping files can include the selling price and cost of each item, so gross margin calculations can be calculated. [database key: UPC/SKU and store number]
·  Sales force organization describes each sales representative’s store management responsibilities and sales quota.  [database key: store number]
·  Store attribute files provide additional information beyond the city, state and zip code like mall, region and supplying distribution center.  [database key: store number]
·  Warehouse inventory details quantities available in the vendor’s warehouse which is available to be shipped to retail stores. [database key: UPC/SKU]
·  Demographic data describes factors like income, age, ethnicity and language for each store.
·  Weather history and forecast for each store. [database key: store number]
·  Plan-o-gram file describes the SKU assortment for each store.  [database key: UPC/SKU and store number]

By using the UPC/SKU and store number provided in the EDI 852 data, you can link together the files above using the database keys indicated.  Then, very interesting analysis can be conducted, like finding the key demographics for top and bottom performing stores or sales quota attainment at a store and sales representative level.  In addition, with plan-o-gram data linked to store sales and on hand activity, you can determine if the retail is properly executing the plan-o-gram and work with the replenishment manager to fix any issues.