Making sense of retail link
Due to the overwhelming width and depth of data that Wal-Mart's Retail Link service spews forth, it is an ongoing struggle for manufacturers to uncover the key insights that will enable profitability. Where should the analysis process begin? It's a confounding riddle that perplexes even the heartiest of Retail Link users as they typically spend a considerable amount of time creating and updating weekly scorecards, in essence becoming "data pullers and chart builders" versus discovering, developing and accurately communicating the actionable business insights.
Understanding the Cost
While obtaining access to Retail Link is free to Wal-Mart's supplier community, there are certainly costs associated with its usage. Hands down the largest investment companies make in utilizing this tool is people, according to Sterling Woodard, a former Retail Link software workshop trainer and current principal with Delta Associates.
Woodard says the average company in Northwest Arkansas alone has two to five business analysts that are responsible for analyzing, reporting and monitoring Wal-Mart's business while some purchase or internally develop software tools that assist them with business intelligence needs."An opportunity exists to bring intelligence to the data itself by bringing causal information that impacts various business metrics," says Woodard. For example, if an analyst identifies that an item's in-stock is less than 96 percent, it means nothing if the direct causations, such as forecasting or poor fill rate, aren't known.
Visibility With RFID
Brian Milsap, vice president and chief information officer at Hampton Products, an outdoor lighting and lock manufacturer, says that thanks to the company's RFID efforts, Retail Link is becoming more manageable. "When we get a purchase order from Wal-Mart, it doesn't tell us what each of the stores is ordering," says Milsap. "It just tells us what to ship to the DC. There is a special report that we get from our Retail Link analyst to give us the detail on those 99 stores and what quantities are supposed to go to each store. We can look and see if the goods are getting to the destination in a timely manner."
Retail Link provides yard receiving data, so it is easy to see when trailers arrive at Wal-Mart, but Milsap says there is no real initiative to use this information in a meaningful way. "Now that RFID is talking to us, it's whetted our appetite for more. We want to integrate the receiving report from the yard, into our tool." Additionally, Milsap gets reports from Hampton carriers that are not automated or RFID-enabled. "It gives us a much better understanding of what transpires between our back door and when product arrives at the DC."
Abilities Outstripped?
Given the magnitude of Wal-Mart's Retail Link investment, some say the mega-retailer should expect the manufacturing community to leverage the service with exacting precision to drive absolute demand chain efficiency and superior in-store execution. "Wal-mart is sharing its intimate operating detail for perfect execution," says Bill Nowacki, president, enterprise solutions group at Information Resources Inc. "However, beyond major manufacturers like P&G, Pepsi and a handful of others, the sheer volume, sophistication and service level requirements out-strip most manufacturers abilities."
Even though Retail Link is built "as much on trust as it is on state-of-the-art technology", Nowacki says it isn't hard to imagine how the data can be exploited by competitors or even by the manufacturer against Wal-Mart itself. Given this potential for mischief, Wal-Mart has wisely restricted the data by practice or agreement from being co-mingled with other data sources or shipped to a manufacturer's off-shore research facilities. "It may well be these exact things that will ultimately yield a single insight that will enable Wal-Mart to extract 50 more basis points out of its cost model or increase same store sales by the same," says Nowacki.
Making the Investment
As important as Wal-Mart is to a majority of today's manufacturers, representing upwards of 30 percent of global distribution, it's alarming how little investment has been made by manufacturers on their Retail Link receptacles. Nowacki says most manufacturers balk at solutions that exceed $200,000 per year, which is why there appears to be a booming business in the sub $100,000 range. These solutions provide basic Retail Link data connectors and transforms that enable straightforward downloading and reporting. Unfortunately, this class of solution has neither forward-looking planning and forecasting capabilities nor the ability to optimize for each store or cluster. "True store level demand planning represents the next paradigm in local market merchandising," says Nowacki. "Those manufacturers who invest in robust decision technology will have a marked advantage in the next few years." -Tim Clark