Downstream Data: Jon Golovin, Retail Solutions Inc.
More and more retailers are sharing more and more data with their suppliers. After years of waiting, 2010 marks a visible change for the consumer goods (CG) industry. Today, almost every single one of the largest food, drug and mass retailers has either built a full-fledged program to share data with their suppliers or is in the process of making this data available. This month, Jon Golovin, chief executive officer and chairman of Retail Solutions (www.retailsolutions.com), describes the transformative impact of this trend on the dynamics of retailer/supplier collaboration and relationship management.
What is changing in the way CG companies collaborate with retailers today?
Golovin: Retailers and consumer goods companies are looking for the same things: Inventory reduction, assortment rationalization, out-of-stock reductions and top-line growth. Downstream data is one of the tools being used to attain these goals. It is certainly not a new strategy, but today's trend to share more data with suppliers is very different from what it was 10 years ago. In prior years, data was provided so that suppliers could use it better inside their enterprises. Today, retailers expect suppliers to behave almost like outsourced extensions to their organizations, bringing resources and expertise to complement retailer teams and skill sets.
We are seeing more and more suppliers become proactive with data and take the lead in fixing out of stocks down to the store level, suggesting store-by-store promotion allocations to customers, taking ownership of the inventory level all the way through the supply chain or working out optimal planograms even though they may not be the category captain.
What are the implications for CG companies looking to obtain actionable data insights?
Golovin: Traditional reporting and legacy enterprise solutions have shown their limits in their abilities to handle downstream data. For a CG company selling hundreds of SKUs in tens of thousands of stores, tracking zero-sales alone results in an enormous number of reports every day. These lists are simply not actionable. The industry requires more intelligence to transform raw data into a smaller list of high value, actionable, prioritized, quantified alerts that are matched with collaborative business processes that automate the necessary action. Second, this approach can no longer be implemented on a retailer-by-retailer basis. When only a few retailers shared data, it was acceptable to dedicate resources to each retailer and, to a certain extent, allow each customer team to select or develop their own solution. Today, more than 30 leading retailers are sharing data in North America, with almost as many in Europe. CG companies need to design a scalable, enterprise-level approach to downstream data allowing best practice sharing across customer teams, cross-retailer analyses with consistent metrics, consolidated forecasts and product launch tracking across channels.
How should CG companies approach this new discipline?
Golovin: This new discipline, retail execution management, has a dual role. First, it provides the visibility to enable the systematic identification and correction of tactical issues, such as fixing a specific out of stock in a given store. Second, it gives CG companies a fact-based foundation to design and plan more effective relationships and collaborative business processes with customers. Covering forecasting to sales and marketing to supply chain, retail execution management combines the analysis of downstream data with applications supporting resilient business processes, either internal or shared with the retailer, to create a foundation for more effective and more efficient decision-making.
A lot of tomorrow's competitive advantage is at stake today. Beyond the tactical benefits, companies that work more closely with their customers (both using their data and being more intelligent with it) will have a much better chance of becoming the privileged partners of tomorrow for their retailer customers.