By Jim Lewis, CEO Enhanced Retail Solutions LLC
In the world of planning most of us analyze our business and forecast using weekly sales and inventory data. In most cases that makes sense. But recently we’ve had a growing number of clients asking us for the ability to analyze their business by day. They tend to be web-driven retailers where the assortment changes at a faster pace than traditional brick & mortar, or suppliers that want more up to date information on selling and inventory levels. We believe the key reason for this is the need for speed. The faster they can react, the faster they can please the customer and beat their competitors. As the adage goes, time is money. Technically savvy retailers like Walmart have provided suppliers with daily data for several years now- but building that discipline into the planning process requires a great deal of bandwidth (human and technical).
Getting an early read on new items – especially high velocity items – can jump start the production process. It can give one branded product retailer an edge over another if they get their orders in first. There are also interesting trends to watch, like when during the week certain products are sold. For high volume items adapting the shipping schedule can save money on freight and handling.
But many organizations’ planning teams are run very lean and there’s only so many hours in the day. Most prepare sales reports at the beginning of the week for management and don’t get to the planning part of their job until later in the week. By that time, inventory levels may have dramatically changed. Having the ability to see exactly where you are in sales and inventory on any given day gets you that much closer to optimizing inventory productivity. It also reveals shortfalls in inventory levels that would never be seen if only looking at weekly data. For example, an item could have sold out on Monday morning and not get replenished until Thursday or Friday. Yet when looking at the data the following Monday, you would have no idea. You would see a beginning and ending on hand. How much business was lost Monday-Wednesday of that week?
As mentioned earlier, looking at data daily requires an additional level of focus. It’s not easy – collecting data daily and making it easily accessible requires a good deal of consistency and automation. Ensuring all data points are available and aligned – both inventory and sales – are required. We have been able to do this for several clients and the payoff has been well worth it. We’ve built a series of exception and highlight reporting to help those retailers and suppliers find actionable opportunities that would otherwise go unnoticed. With BI solutions commoditized at this point, what sets them apart is their ability to provide interpretation of the data. I’ve seen very few that do that. They are good at visualizing and twisting and turning the data but still rely on the user’s expertise to make heads or tails of the data. That’s why we went one step further and baked our expertise into RetailNarrative – a solution that uses augmented intelligence to mine the data and provide the user with actionable opportunities and liabilities they would most likely never find on their own.
As you think about your planning process it is worth considering how mining and analyzing daily data might give you a competitive advantage.