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Point of Sales(POS) information plays a significant role in any successful demand planning process. It can be used as a basis for future demand forecasts, to gauge the effectiveness of promotional activity, or as a building block for internal and external collaboration. In this article I share my experience in using POS data in a mid-sized durable goods company.
SOURCES OF POS DATA
There are multiple sources of POS data; here I will discuss three that I use on a regular basis. These include proprietary software such as Retail Link (used by Wal-Mart) or Partners Online (used by Target), EDI 852 transmissions, and data provided by customers on a spreadsheet, such as Microsoft Excel, or in a similar format.
Proprietary Software: For our largest customers, POS data is generally available through their proprietary software packages such as Retail Link and Partners Online. Team members within our offices (home office and on-site) regularly access this data to report on the health of our business and the accuracy of our forecasts. The type of data that is generally available to us includes not only daily and weekly POS performance, but also inventory levels by SKU and location, order status, in-stock percentage (in-stock in a store as a percentage of shelf capacity), and warehouse and store out-of-stocks.
One of the benefits of having access to the data within these databases is that the data is normally used as the basis for a customer's internal forecast and therefore it can be used as a collaborative tool. Since many accounts allow us to suggest alternate POS forecasts our demand planner can have a significant impact on retailer forecasts on an ongoing basis.
Since there is a massive amount of data available within these databases, it is extremely important to understand what you are looking for, how the customer defines each data element, and for what purpose you intend to use it. For example, store level POS data from large accounts provided on a daily basis is probably not useful for developing monthly forecasts. However, that same data targeted in a specific region or demographic area can be very useful in identifying specific opportunities.
The ease of use and the level of sophistication of proprietary software varies from one retailer...