CPGmatters: Fisher-Price Leverages POS Data as Single Source of Truth
Through a special arrangement, presented here for discussion is an excerpt of a current article from the monthly e-zine, CPGmatters.
Toy maker Fisher-Price has found a way to leverage point-of-sale (POS) data as a single source of truth for retail activity. The Mattel Brands division has used this knowledge across the corporate organization to help generate better demand insights and sales forecasts, optimize orders for its customers, plan and manage promotions and categories, and execute in the field.
Since opting for a demand signal repository (DSR), Fisher-Price has been able to overcome some inherent challenges in its primary business:
- Extreme seasonality. The lesser January to July season, and the prominent August to December season, which accounts for 80 percent of sales.
- Long production lead times because so many goods are made overseas, which add to the need for precise sales forecasting.
- A narrow window of just a few weeks to make actionable decisions for the coming year, based on fast, accurate reads of POS data.
So described Steve Czajkowski, senior manager of sales IT planning and e-business at Fisher-Price, in a recent webcast, "Creating a Single Source of Truth with POS Data Across the Organization."
A demand signal repository, according to Lora Cecere, vice president-consumer products at AMR Research, is a robust centralized database that stores, harmonizes and normalizes large volumes of demand data. These include POS, wholesale distribution information, inventory movement, promotional demographics, market demographics, third-party market content, and customer loyalty data, all to support better decision-making.
Based mostly on CPG pilots, she estimated a 14-month return on investment on DSR technologies, and a six-month ROI on predictive analytics that use the data.
"When data can be used to drive better response for seasonal products, a DSR can often drive a 2 percent to 4 percent sales increase," Ms. Cecere said, while suggesting that the retailer-CPG trade has a way to go. "What should be easy is fundamentally difficult. The industry hasn't built processes to use downstream data. Most organizations have rewarded sell-in, not sell-through, and have not aligned to the shelf."
"It's extremely important for CPG to know how it is doing with an account in order to improve forecasts, and we're seeing an evolution of software applied to this," she added.
Discussion Questions: What do you think of the potential of demand signal repository (DSR) technologies? What questions would you have about such technologies given the longstanding challenges of fully leveraging point-of-sale (POS) data?