The impact of point-of-sale data in demand planning in the South African clothing retail industry

Douglas N Raza,Peter J Kilbourn

doi:10.4102/jtscm.v11i0.304

Abstract

Background: In modern days’ dynamic consumer markets, supply chains need to be value driven and consumer oriented. Demand planning allows supply chain members to focus on the consumer and create optimal value. In demand planning, Point-of-Sale (POS) data are an essential input to the process thereof; however, literature suggests that POS-based demand planning is often overlooked by demand planners in practice.Objective: The main purpose of this study was to determine the extent to which South African clothing retailers use POS data in demand planning.Method: This study followed the grounded theory approach based on the collection of qualitative data. The data collected was analysed following the grounded theory analysis using codes that resulted in various categories which then developed into themes.Findings: Findings suggest that companies within the clothing retail industry make considerable use of POS data and is a fundamental input factor in the demand planning process. However, this study also found that POS data cannot be applied in the planning for all types of clothing products, and that there are variables other than POS data that form a critical part of the demand planning process.Conclusion: POS data plays a fundamental role is the demand planning process and should be accurately collected and used with other qualitative and quantitative factors as an input factor to the demand planning process. The role of POS data in demand planning is expected to grow as customers are becoming increasingly demanding concerning customer service levels.

Highlights

The need for understanding customer demandResponding to volatility in market conditions, and the resulting customer demand patterns, has proved to be the biggest challenge for supply chain executives and, not surprisingly, became a key investment area (Butner 2010)
This study focuses on how retailers in the South African clothing retail industry use POS data to achieve effective demand planning
This study investigated the usage of POS data in demand planning in the South African clothing retail industry

Summary

Introduction

The need for understanding customer demandResponding to volatility in market conditions, and the resulting customer demand patterns, has proved to be the biggest challenge for supply chain executives and, not surprisingly, became a key investment area (Butner 2010). Chains often fail because of a lack of understanding of the makeup and nature of consumer demand. In the context of volatile market conditions, Bursa (2008:28) states that ‘the demand driven supply chain is a powerful weapon for businesses of all sizes’. Demand planning and its role in customer value creation ‘Demand planning is a supply chain activity that uses sales forecast as one of multiple inputs to create a demand plan aligned with financial goals and inventory plans’ (PWC 2012:2). The demand planning process is not performed on a silo basis or in isolation but involves a considerable amount of collaboration with other departments including supply chain, sales, finance, marketing, operations and consumer insights (Gallucci 2015). Demand planning allows supply chain members to focus on the consumer and create optimal value. Point-of-Sale (POS) data are an essential input to the process thereof; literature suggests that POS-based demand planning is often overlooked by demand planners in practice

Methods

Discussion

Conclusion