Analytics: Finding common ground for retailers and suppliers

by | Jul 24, 2015

By Rob Davis & Jenni Dillon, SPS Commerce

When it comes to understanding performance, retailers and suppliers each track different metrics to measure and define success. But what happens when they discuss these metrics with each other? Can they review them collaboratively and assess their joint performance? How do they find metrics that measure what is important to both of them?

The following are some tips and suggestions for retailers and suppliers looking to collaborate and find common ground as they use analytics to make data-driven decisions.

Define the Common Terms and Shared Level of Analysis

Different terms mean different things to different companies. Understanding terms like “gross margin” and “same store sale” is important, since companies use different calculations to determine those figures. While one party thinks their gross margins are high, another might think they’re too low. Both parties need to understand the calculation and expectations, so they can come to an understanding.

Suppliers and retailers also need to see the data uniformly and with a common understanding. A supplier may expect to see sales at the UPC level, while a retailer may only supply at the style, category or department level. It’s hard to make decisions on whether a product is successful if the data isn’t aligned to present a complete picture.

Share Promotional and Purchase Data

Knowing periods of peak sales and promotional performance by store or region can help retailers and suppliers jointly make decisions about upcoming programs and promotions. If a retailer can show that a certain day of the week or month regularly sees more sales than the rest of the week, the supplier may decide to run a special promotion or offer to capitalize on that increased activity.

Of course, this also means both retailers and suppliers have to agree on the granularity of data. This is where sharing the same level of data is important: if a retailer only shares regional data, but the improved performance happens at the store level, this will limit the insight it provides.

Provide More Frequent and Consistent Inventory Updates

Rather than waiting for sales reports at the end of the week or month, it’s better if there is frequent and consistent data visibility for both parties. This can ultimately help both retailers and suppliers better manage their end of the relationship. Being alerted to potential stock-outs or rapidly selling items gives merchandisers time to react and align their assortments to the demand.

By delivering analyses at a regular cadence, retailers and suppliers can schedule ongoing meetings to review performance and discuss strategies. This consistency enables suppliers to set aside time and resources to properly review the information and prepare recommendations. In our experience, we’ve seen the retailer-supplier relationship become more productive and drive more sales as they rely on insight from the analyses and the timely dialogue they devote to them.

Our cloud-based analytics helps retailers and suppliers make smart forecasting and allocation decisions. If you would like to learn more about how SPS Commerce’s analytics solutions can help you, please visit our website and request a free demonstration.

SPS Commerce Blog Team

The SPS Commerce Blog Team is your resource for insider knowledge, news, research reports and best practices that will boost your business.
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