Obtaining and exploiting sell out data: obstacles and accelerators
Gilles Dallest
If you work for a distributor or in the world of retail, this question may seem a little strange since sell out data is obviously the most important raw material and KPI of your company. Tracking the sales of your stores or website is something you surely do every morning!
However, for those who manufacture a product sold through the distribution network of a third-party company (usually the case of a FMCG manufacturer), it is not so obvious to know what is purchased by the shopper at the point of sale and therefore to follow the real pulse of demand. In most cases, the optimization of the supply chain requires logistics centralization and the manufacturer who delivers his products to a distribution platform loses the vision of the sales of each store.
However, this information is essential to better adapt the investments and achieve operational excellence. The availability and analysis of sell out data make it possible to mitigate sales development by correctly activating key levers such as:
- Efficient distribution and assortment
- Effectiveness of the introduction of innovations
- Fight against out of stocks
- Effective promotions
- Pricing
The level of analysis made possible with sell in data and the distributors panels remains at very general level and does not allow effective measures to be taken in terms of adequacy and resource allocation. However, getting and leveraging this data is not that simple.
Information is power
The first obstacle is “philosophical”, meaning “corporate philosophy”, and not all distributors are open when it comes to sharing this type of information, whether out of mistrust or for not seeing the real benefits of working together with suppliers. The motto “information is power” is still well inscribed in the DNA of many companies and the fact that we live in the era of “open code” unfortunately does not change anything.
There is something cultural about this very protectionist approach depending on the country or the type of business. If we caricature, we can say that the more modern the company and the more northern the country, the more likely it is that sell out data will be shared.
An FMCG manufacturer must also adopt a very respectful attitude when receiving and working with sell out data originating from a distributor. In a way, the latter “opens his door” to a third party with the aim of working together for a shared benefit namely the development of a product category. Taking advantage of this situation to, for example, put pressure on the distributor in the annual negotiations would be a very bad idea. In fact, the sanction would then be very quick and simple in the form of the closure of the data source.
The goal must thus be to transform data into information to implement concrete actions aimed at the joint development of the company and categories.
There is never a free lunch
“There is never a free lunch” say the Americans and in the case of sales data this maxim applies even if the “cost of the meal” depends very much on the strategic (or tactical) approach of who provides them, that is, the distributor.
Two types of policy can be distinguished on their part: sharing the data to improve the growth of the category with the manufacturer or selling it to improve the profitability of the supplier’s operating account.
In the first case, the retailer is essentially waiting for resources to better exploit the information and “grow the cake” by an analysis work of the industrialist, specialist of a category.
In the second case, the advantage sought is more direct in the form of charging a right of access to the data which may then give rise or not to a more strategic collaboration.
In most cases obtaining the sell out data is profitable for the manufacturer and often much more than yet another promotion, an additional advertisement on a folder or an assortment extension also negotiated in return for commercial budgets of sometimes questionable profitability.
This is how getting sell out data by store must be more than ever part of business policy. The term “commercial policy” designating the definition of the levers that a manufacturer intends to activate to develop its sales to a distributor.
The technological challenge
Beyond obtaining (or not) the information, the technological part of the process is often a major obstacle that manufacturers face. If database management and business intelligence tools have developed significantly in recent years, it must also be considered that the data provided by the distributor is usually a very basic raw material.
Whether it is an EDI format or a CSV file, they will be unreadable without prior technical processing and when an Excel file or even access to a dedicated web portal is offered, the features available to make the most of them are very limited.
The information contained in sell out data is nevertheless simple and consists of the following dimensions:
- Products: SKU (EAN/internal code) and/or category total
- Sales (units and/or value)
- Period (day, week or month)
- Location (store, cluster, channel, etc.)
If the first job to take advantage of it is to build a “cube” organized according to these dimensions and to import the data in a homogeneous format (many companies do not pass this step …) it is easy to understand that to answer questions such as:
- What are the most effective promotional mechanisms?
- How effective is my assortment in channel X?
- What is my out-of-stock level for product Y?
Additional information needs to be added such as:
- Product characteristics
- Categorization/product hierarchy
- Categorization of stores and channels
- Promotional plan
- Trade and manufacturing costs
Moreover, it is necessary to design and program complex algorithms of calculations that will make it possible to move from the unusable “crude oil” to the “98 gasoline” necessary to identify all the growth opportunities and sell more and better. This whole process obviously represents a lot of time and investment with the use of adequate hardware and software.
Dissemination of information
Last point just as critical as the previous ones: make sure that the information reaches the professionals who can take advantage of it such as KAM, field salespeople, trade marketing, shopper marketing, product marketing or the supply chain.
Therefore it is important that reports, alarms or analyses have an intuitive and flexible form and are integrated into a communication system that allows their use to be integrated into the daily lives of the teams, adding value and improving process efficiency.
Unfortunately, too often business intelligence projects are designed too ambitiously or only from a theoretical or technological point of view. In these cases, the process of using the data can quickly become a heavy and complicated additional job for users who will stop using it because they do not see the added value.
The complexity of this whole process is the reason why more and more companies in the sector are using POS Potential’s services. Our mission is to support them throughout this “journey”: from identifying available and relevant data sources to making teams available and training.
POS Potential also ensures the constant adaptation of the technical means and analyses necessary for the evolution of the market and the needs of its customers. Thus only, can leveraging sales data to drive operational excellence really become a long-term strategic process.
If you’ve made it this far, you’re already one step away from being able to sell more and better! if you haven’t already, follow our posts to drive this change!
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