Numerous research studies demonstrate that retail point of sale reporting (POS reporting) provides vendors with a critical advantage in sales and inventory management. But we often find a disconnect between the POS report and a hard ROI. Why is that?
Many vendors that create retail POS reporting systems are managing what we call “rear view” metrics. A rear view metric tells you what happened yesterday or last week, but it is not very helpful in making actionable plans for the future. For example, a POS report which shows units and dollars sold for the last 4 weeks is a rear view report. It’s helpful to know what occurred, but without additional analysis, it does not indicate to you what actions should be taken. What you should be looking to understand is the trend that sales are likely to follow in the upcoming 4 weeks. Is the trend positive or negative? That is the key information you need to put action plans in place. An inventory weeks of supply is another very strong future looking POS reporting metric. By understanding your lead time to put product on the shelf, and then comparing it against current weeks of supply inventory, you can quickly identify potential stock outs, which kill your vendor performance scorecard and your sales.
Many vendors do not connect the dots between the POS reporting at corporate headquarters and the store. I have personally sat in many meetings reviewing POS reports with a vendor and asked what actions they have taken to address low inventory levels seen on a POS report, only to hear, “Well, there’s not much we can do.” Although I know many vendors feel that is the case, I know from practical experience it is not true. The retail buyer or replenishment manager will listen to a well thought out and well documented business case on modifying inventory allocations. Just make sure you are prepared for that conversation with accurate POS reports and make sure your fill level is not contributing to the problem. Buyers have sales and profitability goals to hit just like you do, and to do that they need to have the right amount of inventory on the shelf. A word of advice – focus your pitch on a small set of test stores where you want to change the inventory handling and have a test scorecard report ready to show the buyer so they know exactly how you will track the results.
In order to get the hard ROI out of retail POS reporting, you have to design the reports the right way. The tips above are a good start and there are many more good ideas on our blog, so stay a while and dig around. You can also jump over to the contact us page and ask specific questions.