Using point of sale data

To get more value from their warehouse management systems (WMS), retailers are using more data from more places.

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 10/18/2006

The retail store and not the warehouse is the next frontier for optimizing the retail supply chain, according to Ron Riggin, senior vice president of technology for RedPrairie.

“If you already have a warehouse management system (WMS) in place, optimizing your DC will give you incremental improvement,” says Riggin. That’s great, Riggin adds, “but if I can use consumer demand from the store to figure out my inventory levels and share that with my supplier, I might not even need that DC.”

That may sound surprising coming from a company like RedPrairie that sells warehouse management systems. But the point is that the investment DCs have made in WMS over the years has already paid off: The best DCs using a WMS are often operating with 99% accuracy and order fulfillment rates.

Meanwhile, the out of stock rate at stores is about 8% and hasn’t improved for the past 10 years.

What’s needed instead is a better view of real demand, using point of sale data, RFID and bar code data, movement signals in the distribution center and external factors like promotions and seasonality.

The next step is to use that wealth of information to calculate a replenishment plan that can be executed by existing supply chain execution systems. What’s more, that plan can take into consideration pricing and promotion information, on-hand inventory levels in the store and the distribution center as well as visibility into in-transit inventory coming from a manufacturing plant or already in route from the DC to a store.

“If I can get visibility into demand from the store and the supply in my network, I can tie that into my WMS, my labor management and my transportation management systems and do something with that information,” says David Landau, senior director of retailer solutions for Manhattan Associates. “That allows me to eliminate out of stocks and reduce markdowns at the store, and to lower my transportation and distribution costs in the DC.”

To learn more about supply chain software in the retail supply chain, look for the November issue of Modern Materials Handling.