3 Key Ways Retailers Can Get More Value out of KPI

Every retailer has a set of KPIs they focus on every week. Often these KPIs summarize thousands if not millions of data points that are occurring across thousands of stores. Stakeholders at numerous different levels of an organization need them to assess not only what is going on in the present, but to determine what to do going forward.

 The challenge in building these KPIs is not assessing the “what” but rather the when, where, why and how of the business.

Often the when, where, why and how of a problem is not occurring under a retailer’s roof. It is occurring upstream in the supply chain or it is occurring in an obscure data repository that’s tracking deliveries and returns. Fortunately, in 2018, there means to uncover the data behind incremental losses or gains, and there are SaaS solutions in the market that make it easy to share and collaborate with stakeholders across the supply chain to recognize or solve these opportunities or challenges.

Creating, using and verifying a single version of the truth

For years, software companies have been advertising to retailers that they can establish a “single version of the truth.” Nearly all retailers agree that this is important.  However, going to this model is more involved than simply declaring “Website A is the single version of truth.”  

• Clarity around filtering. Users always need to be made aware of the “as-of” date the data is through, and what set of filters are being used.  Users also must use this version of the truth when communicating with others internally and externally.  

• But even that is not enough. Retailers must also constantly verify this single version of the truth, using a science-based approach. As much as we want to have a single version of the truth, realistically a retailer is going to have a set of POS data coming right from the registers, a set of POS data being transmitted to vendors in EDI format and a portal being used by numerous parties to download and update data.

Having other versions of the truth at some point along the process continuum is frequently inevitable, but can be used to great advantage if all available data sources are ultimately leveraged to validate one another.  This is the approach we take at iControl, and in my view it is an approach that is essential to maintaining a single version of the truth.

Too often, retailers will have one set of truth that is on an ERP system and then a 2^nd set of truth – a sanitized version that isn’t necessarily false as much as incomplete – that is shared with the C-suite.  As common as this approach maybe, it is counterproductive.  Instead, retailers need to create a single version of the truth that is not only comprehensive but updated and accessible on a real-time basis.

Separating the trees from the forest

Many KPIs can be like seeing a giant forest summarized in a few lines on a dashboard. To discover the data that is driving these KPIs, we often need to look at the individual data points behind it to see if there is a key factor driving our progress. The only way to resolve this data overload is with segmentation.

Here at iControl we worked with a large national retailer in analyzing their Alcohol business. For this retailer we were seeing performance of between $10,000/store/week and $100/store/week depending on the state the store was in. Why was one state outperforming another by a factor of 100?

In this case we segmented each store based on the number of SKUs it carried. Group A were stores carrying over 150 SKUs; Group B was between 100-150; Group C was 50-100; and Group D was under 50 SKUs. Breaking stores into these groups made it clear that stores carrying over 150 SKUs were greatly outperforming the smaller SKU count stores. The top performing state had all stores carrying over 150 SKUs. 

Other cases of segmentation can be segmenting stores based on their MABD compliance or their fill rate compliance. Many retailers track their compliance rates on some level, but unfortunately not enough use it to corollate with sales trends, and few if any track compliance rates for Direct Store Delivery (DSD), where purchase orders are rare.

Ultimately, retailer success is impacted by a variety of factors, some more fixed than others. Having a flexible and intelligent analytic solutions that can answer questions comprehensively, including for DSD software, is one of the best things a retailer can invest in.  It is no longer a “nice to have” – it is now a necessity in order to compete in the modern world of retailing.