Archive for August, 2006

Web Site Update

August 31, 2006

The Accelerated Analytics marketing team added many new resources to our web site this week including a detailed site map.

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Excellent Category Management Resource

August 31, 2006

We were recently referred to check out a great new association for category management professionals.  We spent some time on their web site and joined the organization.  I must say so far we’ve been impressed.

Check out CPG Cat Net.  http://www.cpgcatnet.org/

Call to action: what other category management resources do you find beneficial?

Vendor Collaboration Success Story

August 30, 2006

In the June issue of Consumer Goods Technology (read article) there is a terrific success story on how data sharing and collaboration between a retailer and vendor should work.  This is a must read for any retail or vendor operations, sales, or supply chain professional. 

Here is a clip from the article:

Smart & Final offers the same service to its key vendor partners. “We can filter the information by product line so we can tell Coca-Cola or Pepsi, or the Ice Man, what they are selling in real time by item and by store,” he says. “By sharing real-time sales information with the ice vendor, the vendor now manages its own sell-through on the ice,” says Duge. As a result, Smart & Final’s ice sales increased 40 percent in the first year.

Did you catch the bottom line – 40% increase in sales on ice!  I can’t think of too many strategies that are this simple, and can drive a double-digit increase in sales.  OK, everyone lets collaborate.

Making sense out of EDI 852 data

August 30, 2006

We have been contacted by many vendors to major retailers in the past two weeks looking for a solution to EDI 852 reporting.  It’s not surprising since many major retailers send the EDI data out and simply hope vendors are able to use the data in some beneficial manor.  The fact is most vendors are not in a good position to make this happen.  Especially since most vendors have many retail customers, all of which have different EDI templates and reporting requirements.  What a mess.

What is the point of making sales and inventory data available to suppliers if the data is unusuable, or inaccurate. 

To make sense out of EDI 852 data requires a reporting tool capable of presenting summarized views (e.g. sales by month for each SKU and store) and then drill down capability to investigate problems.  In addition a solid reporting tool needs to provide exception based management of the data.  This provides the vendor the ability to ingrain business logic like min and mix inventory turns and then be notified when something is out of whack. 

If you are struggling with EDI 852 data reporting take solice.  You are not alone. 

Betting your business on a spreadsheet part II

August 29, 2006

In the August 2006 RIS News a Tech Trends Study provides a stark answer to our rhetorical question from just a few days ago.  “Are you betting your business on a spreadsheet?”  Well the survey’s are in, the numbers are counted, and the answer is YES.  According to the Tech Trends Study 57% of organizations are using spreadsheets as their primary analytics tool.  On the positive side of the ledger 37% of respondants said they already have a “BI workbench” in place.  “BI workbench” is a pretty broad term but it does at least indicate an investment has been made into improving analysis capabilities.

Trade Promotion Management Event

August 26, 2006

Our President and CEO will be a featured speaker at the upcoming Trade Promotion Association event in Chicago.  If your organization is concerned about trade promotion this is a must attend event.

The Trade Promotion Management Association (TPMA), is a non-profit trade association for professionals and organizations involved with trade promotion. TPMA provides members with information, education and research on the dynamic world of trade promotion, including co-op advertising, market development funds, slotting fees, off-invoice deductions, channel promotions and more.

Event Overview

Mark your calendars today for TPMA’s Annual Conference, September 24th – 27th, 2006 in Chicago, IL. This will prove to be a watershed event, raising the bar for all trade promotion programs and their measurable results. New strategies, identifiable metrics, new media, and the supporting analytics to continuously improve results will be presented.
View the conference brochure

Accelerated Analytics Product News

August 26, 2006

Our Accelerated Analytics product was highlighted in the retail blog ShiShlist recently.  We recommend taking a look at their posting as well as looking around the blog.  Lots of good content on retail collaboration.

Accelerated Analytics was designed and built using Microsoft SQL 2005 and ProClarity (for the non-geek that means latest great technology) for business users to perform category management analysis, POS data analysis, and to support collaboration between retailers and their vendors. 

Take the product tour

Betting your business on a spreadsheet?

August 25, 2006

A surprisingly large number of organizations are still using spreadsheets as the backbone of core business processes like POS data analysis, category management, and vendor collaboration.  There are many reasons for this, and even for a business intelligence professional like myself I cannot simply dismiss their use altogether.  Although, it would be good for business 😉  Spreadsheets are an incredibly useful tool in many situations.  However, they are also terribly overextended and misapplied.

I cannot tell you how many times in the past month I’ve heard some from of this statement; “our spreadsheets work just fine, I don’t see any reason for us to change.”

I am going to take a few deep breaths and be as diplomatic as possible in answering that statement.  So here are a few reasons not to use spreadsheets for POS data analysis, category management, or vendor collaboration. 

Spreadsheets are inefficient for most complex data analysis.  Spreadsheets were designed to be a presentation layer for data and allow a user to perform some limited high level math.  Unfortunately in many offices spreadsheets have become complex programming environments where power users spend hour after hour manipulating data.   Because they are on the very edge of what a spreadsheet was designed to do they spend 80% of their time fetching and manipulating data and only 20% performing analysis.

No single version of the truth.  Each spreadsheet has its own business logic, calculations, and definitions so each user must spend time simply familiarizing themselves with the information.  In some cases they will have a different definition so then the spreadsheet must be recreated to suit their needs.  One client of mine comes to each meeting, distributes his spreadsheet and then leaves to refill his coffee cup and use the restroom while all the other attendees just figure out his math. 15 minutes on the front of every meeting multiplied times a dozen senior managers!

Lack of data quality and consistency.  Any time data is manually inserted into a spreadsheet an opportunity exists to make a mistake.  The mistake could be inserting the wrong set of data or not applying the correct unit of measure.

Spreadsheets create a single point of failure.  Almost every office I have ever visited has a power user with an Access database and an Excel spreadsheet.  The rest of the office lives in fear of the day this power user might choke on a chicken bone at lunch, or decided they would rather live in Tahiti.

No auditability or verification.  In the post-SOX business world this is a key concern for any public company or large private company with ambitions of an IPO.

Reducing Retail Stock Outs

August 24, 2006

Stock outs are a serious problem.  Research has shown stock outs average 8% but can be as high as 40% on promoted items.  So retailers and vendors are loosing up to 40% of their potential sales on some items.  The financial impact is often exasperated by an overly large order to compensate for the back-order of demand and, the retailer hopes, add some safety stock.  This of course just compounds the problem by increasing inventory costs and reducing GMROI.  Maybe worst of all, research shows when consumers are faced with an out of stock situation they will continue purchasing the items on their list but go elsewhere to buy that lost item.  If the out of stock happens a second time, they are likely to change retailers.  If it happens one more time, they are likely to change brands all together.

Here are some steps that can be taken to reduce stock outs:

  1. Use a data analysis tool to proactively monitor POS data on fast moving items.
  2. Use a data analysis tool to calculate min/max on the longest time series of data possible, and be sure to account for geographic variances.
  3. Coordinate your promotions internally, and among your supply chain
  4. Assume new product introductions will create an inventory problem and plan accordingly.
  5. Leverage the experience of your vendors by empowering them to analyze sales and inventory data.

Price Elasticity

August 23, 2006

Show of hands, how many of you know how to calculate price elasticity?  Well, if you are like me you know the general concept but the math is a bit rusty.  So here is a quick and dirty refresher.

Price elasticity is a measure of how demand for a product is influenced by price changes.  This measure can help determine whether to change the price of products by calculating what effect price changes have on the quantities customers purchase.  Price elasticity can help to answer questions like:

If I increase my unit price by 20%, how much unit sales volume will I lose?

If I lower my unit price by 10%, how much unit sales volume will I gain?

To calculate the price elasticity (PE)

PE = [(Q2-Q1) / ((Q1+Q2) / 2 )] / [(P2-P1) / ((P1+P2) / 2]

Where Q1 = initial quantity; Q2 = final quantity; P1 = initial price; P2 = final price

Understanding the calculation results

If the PE > 1 the product is relatively elastic.  An increase in price would result in a decrease in revenue, and a decrease in price would result in an increase in revenue.

If the PE < 1 the product is relatively inelastic.  An increase in price would result in an increase in revenue, and an decrease in price would result in a decrease in revenue.