Coming off of BLUEPrint can be such an exhilarating and motivating time. Don’t let the daily grind keep you from the planning and goal setting you were cooking up last week. At BLUEPrint, we had a keynote speaker, Dr. Jennifer Lewis Priestley, Department of Statistics and Data Science at Kennesaw State University in Kennesaw, GA. Dr. Priestley was witty, engaging, smart, funny, and left us all thinking about what is truly possible with data.
Like many of you, I wanted to hear more. Her message challenged us to understand and utilize data within and outside of our organizations, which in turn will help us make better business decisions. Some call this “Big Data” (sorry Dr. Priestley, I said it) and others call it analytics. As we learned, data exists in two primary forms: 1- Structured (easy) and 2- Unstructured (more difficult), but still accessible. She encouraged us to embrace the technology shift to better leverage data within our organization.
Whether or not you embrace the technology, it’s coming, and for many, its already here. If you are not on the data train, you are going to be left behind. This reminded me of Red’s famous line in the movie The Shawshank Redemption… “Get busy living or get busy dying”. So let’s get busy living, gang!
What does an item do?
Greg asked us a great question last week. We all have suppliers and we all have items associated with those suppliers, and the basic question is, “what does an item do?”
The short answer: NOTHING! Consumers do the work and generate the demand for an item. Without consumers, an item simply sits on the shelf in the warehouse or store. Now I know some of you are thinking, “Wait a second, I have consumers who are not doing their part. They are not buying the items that I have in stock” Well, that’s a story for another day. See my previous article on smart category management.
In the meantime, let’s go back to the statement ‘consumers do the work and generate the demand.’ This is a very accurate statement, so why are we not tying in consumer behavior to demand?
Blue Ridge Takes the First Step
I realize some of you are saying, “wait a second Barry, I am sending you my demand as dated demand, doesn’t that count?” Well, yes it does. In fact, it was the first step we took many years ago and serves as the foundation to understanding daily demand during the week (as opposed to just a lump of weekly demand). Understanding daily demand has enabled us to implement a very granular level of forecasting and precise inventory management for short shelf-life, perishable products. Some of you may be thinking, “but we have been sending you our customer transactions for our daily demand.” You are correct, and I know this because I played a role in every implementation. Yes, you have been part of a great “transactional demand” movement over the last few years.
However, not all of you are part of that movement yet, but hopefully you will be soon. Not only does transactional demand include ordered and shipped or sold information, but it also contains customer data, market segment data, time stamped data and regional data. For a retailer, this transactional data also contains store data, time-stamped data, and consumer data for customer loyalty programs. Woohoo!!! Now we’re getting down to it, Dr. Priestley!
Blue Ridge Takes Step Two
Transactional demand is insightful because it shows us who, what, when, where, and how many. This is an important step in a proactive approach to understanding more about our customers and providing insight into a market basket that we may not have known about in the past. It’s terrific information for reporting, analyzing, understanding, and a host of other ‘post’ transactional events.
To take this a step further, we can use a predictive model based on transactional demand data plus other causal factors of demand (I did say causal and NOT casual)- like weather, promotions, and social media influence. This type of data allows us to “get ahead” of the demand and predict more effectively for our customers. Can you imagine the power of knowing what a customer is going to buy before the customer calls us or walks into our store? It sounds crazy, insane, impossible, unrealistic, but I tell you, one day this will become a reality.
If you don’t think so, ponder this: Robots can run factories and pick warehouse orders for shipments, drones make deliveries, and 3D printers will eventually make products on demand directly from the delivery truck.
We are on the verge of something huge. Looking at demand via the ways of the past will eventually make you obsolete. Embrace change and embrace the vision of predictive analytics. You will be ahead of most and your bottom line will thank you.
Demand for jobs in predictive analytics is outpacing our ability to produce the people required for these jobs. That should be an eye-opener for you. Go “Big Data” or Go Home.