Importance of working with real data, not anecdotes

by | Apr 19, 2017

Thanks to the capabilities of today’s analytics, it’s possible to make decisions based on real data, real facts and real patterns, rather than relying on anecdotes, subjective observations and gut feelings.

Imagine this scenario: a supplier has its products in several retail stores, and they’re seeing fairly brisk sales in all but one store. The supplier feels like something is off, but they can’t be sure. They’re just not seeing the volume they expected. After a few weeks, the month’s sales figures arrive, and the supplier realizes sales are 10% lower than their projections, but they still can’t figure out why.

People throw out suggestions — we didn’t advertise enough, the weather is too hot/cold, it’s the economy — but it’s not until they do some digging and make several phone calls that they discover the answer: one of the stores failed to put the products out on the floor, and they never sold.

The power of real data

This is where real data analytics could have made a real difference. Solutions offered like the analytics products from SPS Commerce can look at data on an ongoing basis, and flag unusual patterns, oftentimes before they would catch the attention of a human being. It’s even possible to set up an alert to notify the retailer and vendor when a store’s sales dip below expected levels. The vendor can be notified, and contact the retailer in a day, not after several weeks.

But data analytics can do more than just recover lost sales opportunities. One of our clients, a manufacturer of a popular line of insulated drinkware and coolers, used the analytics on our platform to make some manufacturing decisions that positioned them to stay ahead of demand based on seasonality.

By having that data, they were able to make decisions that helped them with demand planning in order to avoid running out of product that resulted from seasonal surges. Because their retailers shared real data with their suppliers, everyone made more money. The manufacturer was able to get funds to make more product for the predicted demand, and as a result, they didn’t run out of inventory. And the retailer was able to makes more sales because the producer didn’t run out.

That also preserved relationships with the retailers (and consumers), because the manufacturer was able to provide the goods and the retailers (and consumers) didn’t go looking for someone else to fill in the shortfall.

Can You Trust Your Own Inventory?

Sometimes we run into issues where we can’t even trust a retailer’s online inventory counts. A little while back, one of my SPS colleagues, Andrew Domeier, gave a talk to the supply chain master’s course at the Carlson School of Management at the University of Minnesota, and took a quick poll. Nearly the entire class had the experience of seeing online that a store had a particular product in stock, but when they arrived at the store for the item they learned the store was actually out of stock.

That’s an incredibly frustrating experience for every shopper. The customer looked online and the store said they had it. That customer spent a bunch of time in the store looking for an item but fail to find it. When they asked an associate, they were told that it was out of stock even though the site indicates otherwise. The customer feels lied to and is forced to take their business elsewhere. That customer is also less likely to trust the retailer’s website in the future. The retailer has just lost customer trust, loyalty and revenue.

Inventory accuracy is a matter of import for retailers who are trying to manage customer expectations, especially now that consumers are expecting more and more from their shopping experiences. People need to know when products are truly available, and when the inventory isn’t available. Not only do retailers and suppliers need to share real data, but they need to be able to analyze data quickly and easily, in order to understand it and use it to its greatest potential to satisfy consumers.

If you would like to learn more about using analytics to help with inventory management, detect early problems and patterns, and to avoid uncovering surprises weeks too late, please visit the SPS website for more information. You can read more about how our analytics solution has helped businesses succeed, or get a data analytics demo with one of our sales professionals.

Rob Davis

Senior Director of Product Management at SPS Commerce
As senior director of product management for SPS Commerce, Rob is responsible for managing the company’s cloud based Analytics product line including product requirements, roadmap, marketing and GTM activities. Before joining SPS Commerce in 2014, Rob was the director of business intelligence product management at Oracle. He has also held positions with Siebel Systems, AT&T Worldnet and internet startup Quixi. Rob has a bachelor of science degree from the University of Rhode Island.
Rob Davis

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