This month’s question is a fantastic one: Is there a Return on Investment (ROI) calculation for EDI? More broadly, a company has to be on EDI to sell the majors. So to me the question is interesting but almost beside the point. EDI is essential. However, studying 852 Point of Sale documents – especially at store level - is not considered to be essential by many vendors – or their retail partners.
One vendor even quoted to me what one of his buyers told him: “I do not have time to look at retail sales.” Really?
Well technically – unless you are a supplier to Walmart - It is not a requirement for a vendor to study the business.
It also is not a requirement to cross the street without looking both ways. Still I wouldn’t recommend it. But you’d expect me to say, and believe, that. So let me quote some statistics and some thought leaders.
Did you know that “only 59 percent of merchandising and promotional initiatives are executed in the intended fashion”? Or that “the cost impact of poor store-level execution is 2-5% of annual sales”?
It is indeed the buyer’s job to study sales. But as stated above they do not have the time. Well then, who is minding the store? To quote The Walmart Crapshoot: “When all else is equal, adding incremental marketing or merchandising support can make the difference between being assigned to the dark-and-damp “Show” quadrant versus the sunny-and-eternally-productive “Win” quadrant”. That is why a DMM at Target told a client of ours: “We appreciate that you have studied our business more than other vendors and even more than we have.” And why a 5000+ chain’s executive told us: "I’ll keep telling suppliers about your service because I think that it is a good option".
Try this one on for size: “In the old millennium, product and service attributes were prime competitive differentiators. Excellence in products and service are still essential, of course, but they tend to be differentiators only for short windows of time before competitors catch up. The only enduring way to stand apart is to have better information - the critical ingredient that enables you to outmaneuver the competition through a continuing flow of renewal and innovation.” Or take it from Bill Gates: "How you gather, manage and use information will determine whether you win or lose."
We at ERS expect serious customers who do not want to sit back in difficult times and worry, but who get out and see what they can do to help themselves. Here are a couple of their thoughts:
- "Before I started to really study retail sales, I could not get the buyer to answer the phone. Now she calls me Monday morning to find out what is happening with the business"
- "If this sounds like we are doing our customers jobs, we are and that is one of the ways we stay important and vital to them".
We added up the additional sales and profits we know about from our client base and compared those dollars to the costs associated to the discipline. There was a 66:1 ratio. That is 66 dollars gained for every dollar spent. Now that is ROI!
What do you think? What have you heard? Please let us know.