Keeping Your Finger On The Pulse Of Retail Success With POS Data


Top-level retailers like Amazon and Walmart continuously shake things up to snatch the most significant market share in an already competitive commerce market. And at the center of the ring is the adaptation of digital solutions into the physical experience.

Look at the shopping experience as an example. A shopper can now browse for items they need from an eCommerce site, pay for it online, and choose to have it delivered to their doorstep or pick it up at the physical store. Customers crave convenience
.

And because of digital solutions like artificial intelligence and machine learning, retail businesses can study customer purchase behavior and recommend add-on products at the checkout stage that prompt the shopper to make impulse buys, thus increasing sales revenue.

What has made this possible is the ability to collect data from every business touchpoint in the retail industry. Hence, the rave about data and its contributions to business growth in every sector. However, most retail businesses use their efforts to gather and decipher data from stores and warehouse reorders.

The problem with this approach is that many are operating behind the curve of demand because they miss out on the advantages of using frontline sales data.

By consistently keeping track of your sales data, otherwise known as POS data, you can build your retail business agility and identify the changing demands of your consumers before they affect your supplier and warehouse needs. But how?



Keep Your Eyes On Your Sales

On average, you can determine the demand for your products 30 to 100 days faster when you use POS data vis-a-vis order sales data. In response, your suppliers can react more quickly with access to this information because they will know beforehand what your consumers need. Think about the retail inventory management
 process for a minute.

One of the most critical aspects of retail inventory management is monitoring how stock moves throughout the supply chain. This has given birth to methods like First in, First out (FIFO)
 to ensure that retail businesses can track the movement of products in and out of the warehouse.

But to combat some of the unexpected challenges of meeting customer demand and ensuring the right inventory balance
, retail businesses adopt the concept of safety stock. Safety stock works because it ensures that retail stores never run out of products, even during unexpected peak demand sprees.

However, customer demands are changing faster than most businesses can comprehend. Therefore, safety stock presents the risk of reducing the time a retail store reacts to these changes in customer demand.

Additionally, because of the standard time it takes for safety stock to deplete in the warehouse, measuring demand using order sales doesn't accurately depict customer needs and purchase behavior. That is, at the onset, order sales show a spike in demand because of the purchase order records.

But for the next weeks or months, depending on your inventory movement, your order sales records show no activity because your retail business is relying on safety stock. And if the purchase of a considerable product shows no sales activity for a period, the company is more likely to write it off prematurely.



On the other hand, POS data capture the actual customer purchase behavior for the said stock regardless of safety stock. Therefore, when used correctly, POS data gives a retail business the aptitude to react to demand changes faster. POS data gives you the capability to change your stock levels throughout the supply chain quickly so that you can meet customer demands.


Word of caution:
Your suppliers and warehouse managers must match your agility. Picture this scenario: If POS data forecasts a need for increased inventory levels, sending that information to your suppliers prompts them to quickly build up the stock amount to match your purchase orders.

But, if your central warehouse still has a bulk of safety stock, the purchase order could lead to an inventory overstock and loss of sales revenue and business cash flow. Therefore, POS data must be used with safety stock to generate order forecasts that accurately meet end-user demand. Remember to consider the delivery schedules and lead times that affect the order flow.


Keeping Control of Order Forecasts

Your order forecasts maintain an accurate reaction speed to supply and warehouse demands, but only when controlled by POS data. That is, use the POS data to forecast customer demand for products, identify the current stock levels and the replenishment orders
, and parameters like product quantity and time that affect purchase orders.

With the three sets of data, you can then forecast an accurate demand for product orders for your retail store when needed short term and in the future regardless of the product life cycle. For instance:

  1. If you are launching a new product, it is customary to include safety stock to fill your supply chain pipeline. But since the product is new, determining when the flow of orders between actual sales and safety stock will harmonize becomes challenging (it can take a few weeks to a couple of months). However, with order forecasts (and POS data), you can effectively determine your supplier and warehouse needs, despite the stock levels in your pipeline fill.

  2. If you are selling seasonal goods, determining how fast your products will go from the shelves becomes difficult. But with order forecasts, you can accurately assess available stock and consider the demand to decide on your exact supply needs. Additionally, order forecasts ensure you have the proper inventory levels before the season begins and toward the end. This prevents you from having a lot of products left over once the season is complete.

  3. Suppose unexpected changes occur in your distribution or delivery schedules. In that case, you don't need to worry about failed deliveries or purchase orders. The order forecast automatically reflects any updates or changes in real-time. Therefore, any changes in distribution reflect immediately throughout the supply chain, ensuring product deliveries are done on time and to the correct warehouse location.

Order forecasting also gives you a competitive advantage
 because it has more than one application. For instance, sharing your order forecasts with your suppliers allows them to forecast their stock requirements accurately. As such, instead of overloading on stock to prevent shortages, they can focus more on offering fresher and quality products and services.




Your Next Steps

At Erply, we understand the importance of data. That is why we have developed a cloud-based POS system that gathers all your POS data, encrypts it completely, and keeps it safe and secure. We've made the process simple and fast if you need to move your data from your existing system into our cloud solution. We also have a backup feature that protects your data from loss. You can also use any device to access your POS data from anywhere. And whether you are adding customer or sales data, adding new products into your system, or updating your stock levels, we ensure your data is well recorded and updated in your back-office operations in real-time. Additionally, when using the ERPLY app, any data entered through the app is automatically synched into your POS system, thus ensuring you always have accurate and updated data. If you want to know more about how Erply can help you reach demand, get a free demo or consultation here
.