|
|
| eNewsletter | Issue 3 |
|
Featured Article
"BI" Means Buyer's Insight
From the early days of the computer, systems folks have wanted to help the buyer approach their jobs more analytically. So much data...so little time, we thought. Back then, buyers were divided into two camps: those who used computer-generated reports and those who didn't. We used to say that technology could not help a superior buyer, but it could make a mediocre buyer a good one. Now virtually all retailers rely heavily on IT systems. For most firms with all of this computerization, however, the buyer is horribly underserved. Over time, most merchandising organizations have developed too many reports from too many information sources. And they've become too dependent on ad-hoc reporting tools such as Excel. The result is an overwhelming sea of reports, all designed to inform but not to promote action. Business Intelligence software has been making steady inroads into the buyer's world. Now, much like in the dawn of computers, the world of buyers is divided into two camps: BI buyers and non-BI buyers. Non-BI buyers are simply informed. But BI buyers take action based on insights gained from their BI. To these buyers, BI means "Buyer's Insight." The Buyer's DilemmaBuyers live in a constant time warp. They must look forward to next season, learn from the past, all while they respond to the current. It is demanding for Buyers to maintain their focus. One minute they need a general focus: What's going on in fashion? Who is setting the new trend? What's the competition doing? The next minute, it's specific: What's going on in store 43? How will the storm in the Midwest affect the weekend's sales? Why is the shipment late? Buyers must maintain outstanding relationships with dozens of sources each of whom is constantly seeking their attention — many of whom live half way around the world. Every vendor in the category knows the path to the buyer's door. Dealing constantly with salespersons can be stressful. Buyers live in a constant time warp. They must look forward to next season, learn from the past, all while they respond to the current. To make matters more difficult, buyers must collaborate within their organization with an ever increasing number of specialists: allocators, supply chain managers, visual merchandisers, marketers, pricing specialists, logistics experts, etc. Unless they are careful, the buyer can sit in meetings all week while the specialists make demands on their precious time. Buyers also play a key role in providing and analyzing information. Most retailers meet religiously every Monday to review the prior week and set priorities. At the end of the season, an even more rigorous meeting is held to recap. These meetings center on a package of reports, many of which are implemented in Excel or Access by information specialists working for the buyers. Information from these reports comes from many sources which have been cobbled together over the years. The fragileness and lack of integrity of these reports is a fact of life across the industry.
The buyer typically has a couple of hours every Monday to provide a comprehensive analysis of this material, often hundreds of pages. In the end, buyers must be able to intelligently answer the two key questions asked every week: What went wrong? What can we do to improve? BI buyers can answer these questions and still have time to take productive action. Non-BI buyers struggle with the answers because they are so absorbed in the information itself. That's where business intelligence comes in. The BI BuyerBuyers have ten primary responsibilities. In each area, they can exploit BI as they gain insight and take action on opportunities and problems. Non-BI Buyers will continue to be underserved by a proliferation of disjointed information services and systems. Let's look at how BI serves the buyers by looking at their primary responsibilities
Buying the right stuffBuyers manage chain-wide inventories. They trigger new orders and flow existing orders. They delay orders when sales are slow and accelerate when sales are good. Non-BI buyers labor over their computer reports to find the right opportunities for in-season buying. BI buyers gain insights as to when, what, and how much to buy, when to cancel, accelerate, and delay. Innovate or dieBuyers are typically the innovators within a well-run retailer. There's always something new: merchandise, sources, displays, promotions, and prices. Good buyers hate to rollout a promising idea without a controlled test. BI becomes essential to project chain-wide outcomes and reveal necessary refinements. Because non-BI Buyers struggle getting feedback on great innovations, their innovative spirit eventually dims. Who are the customers? And what do they want?Buyers must stay in touch with their customer. Yet non-BI Buyers suffer because traditional merchandise and store hierarchies don't show how customers respond to key competitors, new store formats, and new technology. BI Buyers spot the regional trends, fashions and fads, and hot suppliers using robust sets of product, vendor, channel, and customer attributes. What's the right mix?Buyers group products into assortments, collections, wardrobes, and sets. In season, they feverishly make refinements to protect assortment integrity. If key items sell out, the whole assortment tanks. BI Buyers recall history to highlight top sellers, dogs, web-store action, and consistent sellers. Non-BI Buyers are challenged to determine assortment breadth and depth and spotlight key items. Ensuring qualityThrough a product's life cycle, Buyers ensure quality. Beyond quality inspections in receiving, the true measure of quality is customer acceptance. When return activity creeps above acceptable thresholds, good BI buyers sniff out quality problems and take remedial action. To complete the view on quality, BI should count downstream customer service calls and warranty claims. Eroding marginBuyers play a primary role in pricing. BI Buyers can analyze the price mix with the best margins at full price, promotional and clearance pricing. They leverage rich historical information to suggest the right initial prices, the sales-stimulating promotions, and progressive markdowns to clear inventory. Non-BI Buyers often miss the right markdown/promotional candidates, and rarely exclude high performing individual stores and color groups. Understanding pullBuyers can't fully understand their customer without knowing what customers are purchasing. BI Buyers view their customers through the lens of the buyer's category. Were the key items truly the magnets? Did Web-store demand predict brick and mortar success? These measures, delivered though BI, give Buyers insights into customer that profoundly affect future performance. Getting the most from vendorsKeeping score is crucial to managing successful vendor relationships. Vendors hunger to see their relative performance. BI Buyers, with scorecards, drive home what retail success means. Beyond gross profit and GMROI, buyers measure vendors on stock-outs, lost sales, key items, chargebacks, average sales, customer returns, quality, and Web traffic. Non-BI Buyers typically lack the tools to sustain contemporary collaborative practices. Coming to termsPurchase order terms determine cash flow. Good buyers work hard to bring in merchandise when they expect to sell it. BI Buyers convince vendors to accept payment terms that mimic anticipated retail revenues. Historic inventory turnover rates instruct BI Buyers in payment term negotiations and reveal past situations where merchandise was allowed to languish months after it was paid for. Problems, problems, problemsNon BI buyers take too much time uncovering bad news, leaving little time to react. BI Buyers shift the burden of finding problems to the technology: stockouts, inventory buildups, problems in assortment, price mix, and order flow. A BI Buyer then spends the available time resolving the most pressing issues. There is no faster way to competitive advantage. Competitive AdvantageBuyers who make effective use of Business Intelligence software are the vanguard of competitive advantage because they are constantly taking action based on the insights gained from the tools. More insights gained yields more action. More action begets more advantage. Indeed, BI is Buyer's Insight. About the Author: Questions? |
Contact Us
QuantiSense Atlanta Headquarters:
Sales
Support About QuantiSense
QuantiSense delivers packaged business intelligence and data warehousing applications designed exclusively for specialty retail chains. Our customers include Hallmark Cards, Pacific Sunwear, Restoration Hardware, and FAO Schwarz. Implemented in 100 days, QuantiSense enables your team to improve bottom line business results using packaged analytics, reports, and role-based dashboards tailored for executives, buyers, planners, allocators, and additional roles throughout the retail enterprise. |
| Copyright ©2007 QuantiSense. All Rights Reserved. | contact us | back to top |
PDF Version
If you work with retail buyers, you can't help come to the conclusion that their jobs are very challenging. In this issue of Retailing with Insight, we probe into the nature of a typical buyer's responsibilities and show how BI, or "Business Intelligence" software, provides a buyer immeasurable assistance by harnessing the power of technology.
