POS — Collecting and Utilizing Customer Data

Never before has capturing point of sale data been more important. More and more consumer product goods companies are realizing that capturing point of sale data and using it to better understand and predict consumer demand is vital to their success. POS data has the potential to benefit both manufacturers and retailers. It can help them achieve higher service levels, lower inventory costs, and increase market share, just for starters.

Put simply, collecting historical POS information is not enough. For its true value to be realized, POS data must be integrated into business applications across an enterprise. It’s equally important that the POS data be immediate and detailed, so that it does not just reflect sales performance after the fact, but also delivers information that can be acted upon immediately to influence sales performance in the future.

POS Data — the importance of granular detail

A key element of POS data gathering is the level of detail available for analysis. The best POS data-management solutions offer the ability to track and segment data by item, by store, and by day. As most retailers realize, the benefits of granularity are significant.

For one thing, having an immediate store-level view of POS data can enable manufacturers to see store variations and use that information to better allocate inventory and optimize resources. For instance, during a given promotional activity there may be significant variation in the volume lift achieved across a group of stores. Granular POS data emables retailers to evaluating promotions on a store-by-store basis, which provides the ability to focus resources in locations that deliver the strongest consumer response and take corrective actions in those that did not generate a lift.

In adition, a store-level view of POS data can give manufacturers the ability to assign attributes to stores to develop store clusters, thereby better understanding assortment performance variation by cluster variable. With this insight they can then develop store-level micromarketing solutions.

Such a granular view of POS data can also help improve supply chain performance. By looking at the forecast variation on a store-by-store level, manufacturers can better plan product and aggregate replenishment demand back to the supply point, as well as improve the accuracy of their predictions and forecasts.

Putting POS data to use

POS data needs analysis and application to produce real results, even at its most granular level. Organizations need to integrate POS data throughout the enterprise to extract the full value of the data gathered. With highly accurate data providing a single, integrated view of consumer demand, consumer product companies can achieve significant improvements in financial planning, forecasting, product allocation and lowered inventory costs.

By integrating POS data with such enterprise applications as marketing, logistics and finance, companies can achieve the Holy Grail–a true demand-driven business model.

The key to profitable growth is to evolve the enterprise into a demand-driven supply network (DDSN). With a DDSN companies switch from a push method of moving product, based on incomplete or inaccurate demand information, to a pull method, based on responding quickly to real-time demand signals.

Specifically, companies that are 30% better at demand forecasting average 15% lower inventories, 17% stronger perfect order fulfillment and 35% shorter cash-to-cash cycle times.

Transforming POS data into results

Some POS data-management solution providers are going beyond collecting and integrating POS data to delivering new services and tools that enable companies to act on the information inside the store. These holistic solutions combine POS data management with analytics and on-site inspection and remediation to help companies achieve a whole new level of retail sales performance.

One major consumer products company who used such a solution saw 96% of the stores of a national drug store chain scanning a new item in five days–an unprecedented rate of success. It is clear that POS data will continue to play an increasingly important role for consumer goods companies as they move toward a demand-based business model. To fully leverage its promise, these companies must broaden their vision of where POS data fits within the organization, and embrace its potential to radically transform and improve their business processes.

POS: The Power Of Point-Of-Sale

The need for accurate and timely point-of-sale (POS) information for the electronic, plumbing, and other distribution-based industries is well documented, and several of these industries have made great strides in this area.

However, the electrical wholesaling industry seems to be having the hardest time in getting its arms around the point of sale (POS) dilemma. Electrical distributors are afraid that if they share POS data they could face disintermediation and endanger their role in the channel. Electrical manufacturers say the data is too unwieldy to use effectively.

POS data can eliminate this conflict and enable manufacturers and their channel partners to profitably grow their businesses. Here’s a case in point. Compensating independent manufacturers’ sales reps for channel sales is a source of conflict in the electrical business. If the comments at a recent meeting of electrical manufacturers and independent manufacturers’ representatives are any indication, it’s a concern that must be resolved if the electrical market hopes to eliminate inefficiencies and maximize its productivity.

One indignant manufacturers’ representative spoke for many others when he said, “There is definitely an issue with some manufacturers not paying based on point-of-sale. Every distributor that I call on tells me they make an effort to provide the information for manufacturers, but the fact remains that some of us are not being paid properly. In one instance, 30 percent of the sales we do with a distributor aren’t being credited to us.”

A manufacturer at this meeting countered that while some distributors provide POS information, it’s often inaccurate, incomplete or late. “I wind up paying an incentive on sales that occurred three months ago,” he said. “I know the rep would rather receive his commission late than never, but it’s crazy.”

Another electrical manufacturer said a remedy exists to the situation. He believes there isn’t a CEO in the electrical wholesaling industry who wouldn’t react if a group of the reps his company works with would voice their concerns about point of sale POS data. If reps voice their dissatisfaction and let manufacturers know they’re not going to continue business as usual, changes will be made.

I’m surprised by the inability of the electrical industry to overcome this problem. By not gathering and using accurate POS information, manufacturers and their partners are creating dissatisfaction and conflict. More to the point, they are missing real opportunities to grow their businesses. By collaborating to unlock the value of their POS data, manufacturers and their partners can capture previously unimagined benefits well beyond timely and accurate commission payments. Here are examples of the biggest benefits.

Rich customer intelligence

POS data can help business partners segment end users by vertical market, business size and other important dimensions.

Targeted end-customer marketing

POS data identifies customers, what they are buying, and their source of supply. Manufacturers and their partners can use this data to develop highly targeted channel campaigns.

Point of sale data for inventory tracking

POS data can help participants balance inventory, develop special promotions to increase inventory turns, and improve forecasting.

Here’s the bottom line. POS data gives you the information you need to better understand and serve your customers and profitably grow your business. It’s time for the electrical wholesaling industry to get on board.

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