Debunking Data Sharing Concerns

by | Aug 22, 2013 | Omnichannel

There has been a substantial trend in the retail world in recent years. Retailers and suppliers are collaborating with Point-of-Sale (POS) data at a much higher rate to help deal with the new retail norms, and the results have been highly profitable. However, this is an immense cultural shift and some retailers still believe in keeping this data secret. This mindset is still common, but it is actually based on persistent myths within the industry.

Myth #1: The data will be used against the retailer
Retailers fear that their data will be shared with competitors, and business will be lost. Fortunately, this is untrue. Think about it – suppliers already know what you are selling, how much of it, and when and where they are shipping it out. By sharing data, you’re not actually giving them any new information. However, when you provide the data to your suppliers in a manageable and useful way, you are decreasing volatility in the supply chain (reducing the dreaded Bullwhip Effect), increasing your odds of the “Perfect Order,” and empowering your suppliers to identify opportunities to profitably drive your business. In addition, the good will that is generated by being transparent and providing POS data often results in preferential treatment by the suppliers when facing service level decisions (e.g. not enough inventory to fill open orders from every retailer, bottlenecks in shipping, etc.).

Myth #2: Suppliers can’t use the data, so there is no point in sharing it.
Thankfully, this is also untrue. With the introduction of cloud computing and shared services, suppliers now have cost effective access to data management tools that allow them to leverage your sales data. POS data is complex and highly detailed, and suppliers are becoming much more sophisticated. It no longer requires a full-time employee to manually manage the data or a several hundred thousand Business Intelligence software investment. For as little as a few hundred dollars a month, suppliers are able to have their data collection and management hosted and leverage enterprise-level intelligence platforms tailored for retail analytics. There are no longer significant barriers to effectively using this data, and suppliers are now using it to increase their, and your, bottom lines.

Myth #3: Sharing data is too much effort for the return on investment. It’s not mandatory, so it’s not worth the bother.
There was a time when the time and effort required to share data might have made it unwieldy, but those days are over. Cloud computing services eliminate the pain and high cost of sharing this information with suppliers. Since every retailer should be compiling these data sets already, sharing them with their suppliers provides immense benefits at a minimum cost.

When you share information, you help your suppliers stay on top of trends and collaborate with you. It increases the nimbleness in the supply chain, minimizing obsolescence in the supply chain and the associated costs that would ultimately appear on your invoice. It is one of the macro-trends that will continue as technology and services evovle, and retailers who refuse to acknowledge it will be left behind.

SPS Commerce Blog Team