Many of the vendors we work with have a specific planogram they agree to with a buyer on an annual or semi-annual basis. After reaching an agreement with the buyer on the planogram, the vendor estimates sales and then creates a production forecast based on the number of facings and estimated sales. The problem many vendors encounter is that with multiple planograms, each with a different SKU assortment at thousands of stores, auditing the execution can be a challenge—so much so that most vendors do not conduct a detailed review on a regular or even semi-regular basis. If the planogram is not executed properly, sales are lost, the vendor can end up with extra inventory, and ultimately the retail buyer may conclude incorrectly that the vendor’s products are not performing well.
The good news is that with some effort the EDI 852 data provided by the retailer can be used to audit planogram compliance. Here’s how. Create two planogram files; one file will list the SKU’s that are included in each planogram, the second file will list each store and the planogram assigned to the store. The layout for the first file should be SKU # | SKU description | POG Name 1 | POG Name 2 ,with as many distinct planograms as you have. The second file should be Store # | City | State | POG Name. Using these two files and the EDI 852 sales data, you can load these into a database and then analyze compliance, where compliance means that a store has the intended SKU(s) on hand, or has sold the item(s). If either of these conditions are true, the SKU is “active.” (Depending on where you are in the roll out process and how quickly your SKUs move, you may need to consider more than one week. For example a 4 week average of OH and sales might be appropriate.) For any store that does not have all SKUs “active,” calculate a planogram compliance percentage by dividing the active SKUs / planned SKUs. Then sort the final table descending by planogram compliance percentage. This provides the top down action list you need to go back to your buyer or replenishment manager and address execution issues.
Retail buyers and replenishment managers are busy. They don’t have the time, or in most cases the tools, to ensure proper execution of your planogram. You do not want to get to review time and find out that poor execution on the planogram caused lost sales.
Note: If you want to take planogram compliance to the next level, you can also include the minimum inventory OH for each SKU in the first file described above. That will allow you to not only check if the SKU is “active” but also if the SKU is properly stocked at the stores.