Apex Tool Group

Point of Sale (POS) data has been an important tool for retailers and distributors for many years, allowing them to make data-driven decisions that are best for their business. Manufacturers, on the other hand, have been late in adapting and utilizing this ever-increasingly valuable POS information. But, as the traditional channels of moving product from manufacturer to the end-user have become more complex and varied, properly understanding the value of POS data has become, and will continue to be, more valuable to a manufacturers’ business at all levels. As consumer and end-user purchasing behavior and options continue to evolve, it has become more important than ever for a manufacturer to know how their products are being purchased, what role distribution plays, and how other factors, such as demographics and geography, affect the decision process. Like so many other things in business today, if you are not on the leading edge of utilizing these data tools, you are rapidly falling behind your competition.

Embrace POS Analytics Across Your Business

Committing to a POS analytics program will provide many rewards for a manufacturing organization and will provide the basis for enhanced organizational decision making and strategic planning. Over the next few years, the most successful manufacturers will engrain POS analytics in their standard business practices, which will create a better understanding of their business and a closer partnership with their distribution channel customers. Through this enhanced knowledge and relationships, manufacturers and distributors/retailers will mutually benefit in areas such promotional and sales efforts, and order forecasting. Comparing purchasing data to POS data (purchases in vs. sales out) will offer great insight to customer behavior in this rapidly changing selling environment, while delivering more value to customers by offering analytics around how to optimize inventory levels and other KPI’s.

It is also worth noting that when you’re able to explore POS data, you will find unexpected areas of enlightenment including enhanced seasonality or weather trends, sales spikes around previously unrecognized events such as sporting events, the influence of social media campaigns or influencers, equity market movement, housing trends and more.

"Over the next few years, the most successful manufacturers will engrain POS analytics in their standard business practices"

Challenges and Solutions to Utilizing POS

While the value that POS analytics can provide to manufacturers is becoming more and more apparent and embraced, be prepared for challenges. For instance, some distributor partners may be hesitant to share POS data, believing that it’s “their data.” They may be concerned that you may use it to sell around them or that you may share it with their competitors. With a solid conversation explaining what you, as their manufacturing partner, will, and will not, do with the POS data, and how you will both benefit from using the data, oftentimes those concerns will subside.

Another challenge that can be common is finding the right resources to take on this project. When gathering POS data from various distributors/retailers it is expected that each data set will have its version and format. This leads to the need to transform the data from its original format to a common format and terminology, which can be used for analysis. In the past, it was true that doing this required highly technical coding skills, which oftentimes were not feasible for many organizations. However, in recent years, through advances in software programs, this is no longer true. There are several robust ETL (Extract, Transform & Load) programs (i.e., Alteryx) that allow you to input the data in its raw form, manipulate the format, combine multiple data sources, and either do in-program analytics or output one clean dataset which can be analyzed by other programs. The rise of data visualization programs (i.e., Tableau) has also allowed companies to create dashboards and visualizations that are easily understood, repeatable, and interactive.

The Future Value of POS

The importance of POS data will grow exponentially in the coming years, both for manufacturers as well as distributors/ retailers. With the continued trend of consumer purchasing methods and the evolving way retailers & distributors handle this, it is more important than ever for manufacturers to have a deep understanding of where and how their products are bought while partnering with retailers &distributors to grow the overall business. POS data will prove to be critical to the success of our products and companies going forward. If you’re not taking advantage of POS analytics currently, now is the time to get familiar with it and understand its power.