Every supplier craves access to point-of-sale data from retailers. But simply achieving that goal isn't enough. It's what you do with the information that counts. The ability to make proper use of POS data can mean the difference between profit and loss, according to Michael Aguilar, president of the newly formed Intrepid Consulting Group LLC. "Market dynamics are constantly changing," he said at the Consumer Electronics Supply Chain Academy. "You need to watch your demand signals." Real information is preferable to the best internal forecast, which often is skewed according to the department that generated it. Buying teams, for example, are rewarded for having more product on hand, leading to higher inventories. "You always have to start with [asking], what is the end consumer buying every single day, and in which stores?" said Aguilar. Buying patterns should be reviewed no less than weekly, and probably twice that often. Performance scorecards, with their results fed into executive dashboards, are essential tools for achieving the desired level of visibility. POS-based planning allows for the alignment of inventory with what's really needed on the store floor.
Of equal importance, said Aguilar, is the proper management of product lifecycles. The phaseout of one item should be closely coordinated with the beginning of another. "The single biggest drain on profit is the end-of-life expense," he said. Proper monitoring of POS data can bring that number close to zero. For new-product launches, however, such information must be supplemented by in-depth market intelligence that identifies competitive threats and opportunities. Finally, suppliers must decide who will handle the job of data gathering, cleaning, analysis and reporting. Qualified staff is a must, but it doesn't have to come from within. Often it's wiser to outsource the work to experts in low-cost countries, Aguilar said. Suppliers who get it right will be trusted by retailers to make key decisions on quantity and frequency of replenishment. "You become the buyer, forecaster and expert handling the entire back end," he said.
