Posts Tagged ‘EDI 852’

Six key facts your EDI 852 can tell you about your business

February 8, 2010

A vendor to a large home improvement retailer called Friday and asked a very simple question: “What can the EDI 852 data our retail customer is sending us tell us about our business?”

This is a great question and one we hear often. It’s worth exploring for a few minutes. Here are six things your EDI 852 data can tell you about your business.

(1) At a store level what items are out of stock or will go out of stock soon. The key measure here is units on hand. By isolating each of your items at a store level and applying filtering for your desired min / max inventory position you can quickly determine where the problems exist. We recommend you also calculate an average units sold based on a reasonable time frame for your business (last 4 weeks or last 8 weeks) and then use this to calculate inventory weeks supply on-hand. If your products move very quickly convert this to days supply on-hand. The weeks/days supply on-hand is a predictive indicator that will alert you to trouble while you still have time to take action.

(2) At a store level what items are overstocked. The key measure here is also units on-hand but again the weeks or days supply is very helpful in identifying an overstock situation.

(3) Top selling items. The key measure here is units sold. Isolate one item at a store by store level and then fitter the top items by units sold. e.g. top 10 items or top 25 items. We also recommend calculating sell-thru for each of your items. Sell-thru is a composite measure that shows sales and inventory in one metric. Sell-thru is very useful as a filter for top selling items. Maybe more useful than simple units sold.

(4) Poor selling items. This is essentially the same at #3 but simply a reserve on the filter.

(5) Period over period comparisons. We encourage vendors to save all EDI 852 files for at least 18 months. This provides a great opportunity to compare sales and inventory for similar periods and gain an understanding of how to adjust your inventory min / max. (e.g. sales for week 3 2006 vs.week 3 2007)

(6) Regional comparisons. Isolating item sales and on-hand by geographic regions can provide very useful insight. Especially with store level detail that includes zip code and major metro descriptions. Most retailers provide a detailed store list with a hierarchy by region, state, city, and zip. Some retailers will also provide rich demographic information which can be integrated into this analysis.

Most EDI 852 data arrives with only a couple very basis measures for units on-hand and units sold. By extending these units and calculating weeks supply and sell-thru you can learn a great deal about your business. The coaching we provided to this vendor also included this advise – if you are spending more than 10 minutes manipulating data it’s too long. Engage an outsourced service to do the EDI 852 translation, database storage and number crunching. Focus your team on the analysis activities and engaging with the retail buyers to improve your business.

check out sample point of sale reports built using EDI 852 data

Advertisements

Retail sales improvement requires careful forecasting

February 5, 2010

The WSJ reported retail sales Rose 3.3% showing signs consumers are returning to stores.  This is a great sign for the retail market as it seems a turnaround may be in the works.  Macy’s posted a 3.4% increase, Saks reported 7%, and Costco 8%.  As demand begins to increase vendors need to keep a careful eye on the supply chain.  Retail buyers have been operating on low open to buy for over a year so inventory levels may be below where they will need to be to satisfy demand.  Vendors using EDI 852 data for forecasting need to make some careful adjustments to their forecasting model to not be caught by surprise.  Here’s why.  Forecast models using historical demand as the foundation for current year predictions but last January was a terrible month for retail sales so a simple look at comp year demand will give a misleading result.  To correct for this vendors should be considering not only last year’s demand but also the prior year’s demand and the current period trend.  By combining these three numbers vendors will have a more accurate model and hopefully not get caught by surprise.  But even with a good forecast we expect sales to be unpredictable for the foreseeable future so vendors must carefully watch demand and inventory levels by analyzing the EDI 852 data weekly or even daily and making push order recommendations to their buyers.

Analyzing Home Depot Market Sales

February 3, 2010

Over the past month or so we have been rolling out new sales analysis for our Home Depot vendors on market performance.  Vendors to Home Depot using EDI 852 know buyers often want to receive sales analysis at a market level.  What we often find however is the analysis conducted does not take into consideration the number of store in the Home Depot market.  To conduct a proper POS analysis of Home Depot markets you really have to take into account the number of stores in market.  For example Home Depot market 48 has 80 stores while market’s 138 and 160 have one store.  By summing the units sold from the EDI 852 to a market level and then dividing by the store count in that market you can get an average sales per store for the market.  This metric is very useful in comparing the performance of the markets in a meaningful way.  In addition you can use the SKU count in your plan-o-gram to further compare the performance of the stores at a market level.   You might also consider a store level sales analysis so you can rank your stores by sales volume A to E.  This lets you not only compare the store against the average sale in the Home Depot market but also against its sales volume peers.  POS sales analysis by Home Depot market can yield some very actionable results, give it a try.