Real-Time Data, Analytics Drive Better Forecasts - InformationWeek

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2/26/2009
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Real-Time Data, Analytics Drive Better Forecasts

Manufacturers and retailers lead the way in using up-to-the-minute point-of-sale data to avoid stock-outs and overproduction.

Wal-Mart has been moving toward demand-signal analysis for more than a decade--and pushing its suppliers that way as well. Wal-Mart certainly has the leverage: It accounts for 28% to 40% of the sales of most consumer product manufacturers, according to AMR. Wal-Mart introduced its Web-based Retail Link data-access site in 1996 and five years later stopped supplying its data to independent market research firms. The goal was to force manufacturers to rely on Retail Link's detailed, store-level data to do a better job of supplying its stores.

To make the most of Retail Link data, Coty built a Wal-Mart-specific data warehouse five years ago, and it started using Information Builders' WebFocus business intelligence software to develop reports and forecasts. The frequency and granularity of the data and reports have steadily improved to the point where Coty now does weekly forecasts for individual Wal-Mart stores.

Over the last two years, Coty has pushed the responsibility for developing accurate forecasts down to its salespeople. Field-level forecasting makes for more accurate and responsive planning, says CIO Berry, who credits an analytics application from vendor CAS with making it easier for salespeople who are new to BI to analyze point-of-sale data and develop forecasts.

But even a decade into Wal-Mart's push, most companies are just starting to make full use of Retail Link data.

Wal-Mart "dumped the data on suppliers and said, 'OK, now we're expecting you to improve service levels and reduce inventory because you have this information,' but many of them weren't prepared to handle all that data," says Sandy Markin, a director in SAP's supply chain management division. Even now, though, only leading-edge companies use point-of-sale data for supply chain management, Markin says.

Another obstacle to broad adoption of demand-signal analysis has been the lack of standardization beyond Retail Link. Coty gets point-of-sale data from the likes of CVS, Target, and Walgreens, but each uses a different format than Retail Link. "The timeliness, accuracy, and depth of the data also varies from retailer to retailer, so it's tough to bring it into a data warehouse," says Berry.

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