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POS Data - Do You Get It? PDF Print E-mail
Written by Scott Koegler   
Thursday, 09 April 2009

If you're a supplier, how do you know if/when/and how many of your products are selling? How do you know whether retailer A is selling your product better than reseller B, so that you can even ask the right questions, and improve sales at reseller A? Last month I was introduced to a document I probably should have know about for some time, the 852. While these documents can become huge and unwieldy, I'm told that using the data they contain can answer the questions above, and many more.

Here's the scenario as it was explained to me:
  • Retailers record their cash register transactions (POS data)as a matter of their normal business operations. Normally those transactions are responsible for what you would expect - recording sales. Of course the data is also useful internally for inventory and purchasing planning.
  • The POS data can be formatted in a variety of ways including flat files and the EDI 852 document. And those documents can be transferred to companies interested in using the data. Those recipients are likely to include the suppliers of the product sales data.
  • Once the POS data has been received by the supplier, it can be analyzed to determine sales volumes and velocities, and to predict trends.

Here are the problems with the data:
  • POS data files, in whatever format, can be extremely large. The actual size is only an issue in that transferring the files through a VAN that charges on a per character basis can get expensive. The real problem with the size is that the amount of data contained in the files means very long processing times. And the tools most companies would use for analysis include applications like Microsoft Excel, that may prove to be inadequate to address the size and complexity of the job.
  • Related to the size is the fact that in order to be best used, the data needs to be compared. Not only compared store by store within a single retailer, but compared retailer to retailer. This kind of comparison can yield information related to the issues I identified earlier: how are your products selling between stores, between retailers, between regions, etc.
  • And as you might expect with any EDI document, though the 852 is standardized, each retailer is likely to have its own version of the format, made to fit its own needs and uses.
A Business Tool
I can imagine that a single supplier could glean business intelligence from the POS data received from one of its retailers. I can even believe that there could be a demonstrable ROI from the effort. However, I also believe that this is a technology that does not scale well for a single entity. The effort to create and update mappings for multiple retailers, much less the time required to collect and process large amounts of data on a continuing basis, is likely to quickly overrun any expected payback.

It would seem that getting more data more frequently, from more retailers would yield better intelligence and insight. Not only that, but retaining historical data provides the opportunity to analyze trends over time, and in the best cases, to lead to more accurate predictions.

How can the information be used?
  • Suppliers can be proactive in their production planning activities. Rather than waiting for the nest purchase order, they can understand how their products are selling.
  • Suppliers can become advisors to their retailers, letting them know which products are performing better in different locations, and recommend changes in their marketing approaches.
  • Suppliers can spot regional or seasonal trends, and adjust their production, shipping, and warehousing activities to better fit the reality of upcoming orders.

How to do this
Collecting and processing POS data is clearly not for the faint of heart. It requires file transfers, mappings, and significant processing power, just to retrieve and house the data. Once the data is available in a single format, analytical tools are required to turn the data into actionable information. Hosted services, or SaaS applications are natural fit for this kind of work. These applications can be built and maintained once, and used for multiple customers, taking advantage of economies of scale.

There are some companies addressing this market, and they have differing modes of operation. We will be reporting on those companies next time. For now, I'd like to hear how your organization is dealing with POS data, and if you are getting the kind of ROI you need from your efforts. Send me This e-mail address is being protected from spam bots, you need JavaScript enabled to view it , comment on this article (below), or join the conversation in our LinkedIn forum .

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