Investing in accurate global data synchronization (GDS) brings potential benefits, such as improved supply chain efficiency, cost savings and increased revenue to consumer packaged goods and retail companies, according to a report by Accenture, the Food Marketing Institute (FMI), the Grocery Manufacturers Association (GMA), Wegmans Food Markets and 1SYNC.
The report is based on a study of Wegmans Food Markets, a chain of 71 supermarkets in New York, Pennsylvania, New Jersey, Virginia and Maryland, and seven suppliers: Coca-Cola, General Mills, The Hershey Co., The J.M. Smucker Co., Nestle, PepsiCo and Procter & Gamble.
It involved interviews with more than 120 personnel in sales, customer service, logistics and accounting at Wegmans and the seven suppliers. Interviews were conducted this past March and April.
One of the more surprising finds in the study is the impact that data synchronization has on transportation costs. Accurate synchronized data will allow Wegmans to minimize pallet cube variance and eliminate approximately 10 percent of its outbound shipments—generating more than $1 million in savings. In addition, accurate and synchronized item information will enable Wegmans’ inbound logistics team to use technology to optimize inbound truckloads. This will provide the retailer and its partners an estimated annual saving of $2.5 million, which is 5 percent of all inbound transportation costs.
The study confirms the power of GDS, the harmonization of manufacturers’ and retailers’ product information, by quantifying the actual benefits gained by companies—up to 64 percent improvements in supply chain and operational areas and 67 percent in customer relationship and growth areas.
“The main messages from this study are compelling,” says Marianne Timmons, vice president of supply chain and global business to business, Wegmans Food Markets. “We have realized many quantifiable benefits from accurate data synchronization. Further, it is foundational to next-generation business processes for Wegmans and our trading partners.”
“GDS affects all parts of the supply chain. Our study shows that benefits are available to everyone from the sales account manager to the backroom receiving clerk,” says Pamela Stegeman, GMA’s vice president of supply chain and technology. “When accurate data is synchronized between trading partners and used by all parts of both organizations, we can better meet consumers’ needs.”
While the number of consumer goods and retail companies using GDS has increased in the last three years from 100 to nearly 10,000, there is potential for more growth in the industry. As current GDS initiatives gain more traction and additional companies enlist the appropriate technology, the benefits associated with GDS are expected to increase.
“Among the important findings of this research is that high-performing companies need to make accurate data synchronization a business priority, not just an IT priority,” says Marco Ziegler, senior executive at Accenture’s Consumer Goods & Services practice. “Global data synchronization can be an effective catalyst for transforming business processes and delivering significantly improved results throughout the supply chain.”
“We are confident that the competitive advantage achieved by leading companies through synchronizing accurate data will encourage and inspire other companies that have been waiting for the right time to get started. As companies expand item data synchronization to all product lines and geographies, the pace of change in the industry will accelerate and enable widespread synchronizing of accurate price data to achieve even greater returns,” adds Steve Vazzano, senior director of market development at 1SYNC. For a copy of the report, go to: 1sync.org.
MeadWestvaco ‘Fast-Tracks’ Beverage Products To Shelf
MeadWestvaco has opened its Pack Center, a one-stop multiple packaging consulting, design, testing and fulfillment service. The company created the service to “fast-track” products to market, as well as improve consumer testing of innovative packaging solutions with higher quality test results.
“The Pack Center is a full-service fulfillment program developed for companies entering the market, as well as for established companies that want to rapidly test and launch new products,” says John Perkins, MeadWestvaco’s vice president of business development. “Our customers use Pack Center to develop new multi-pack solutions for their products, then quickly move these into retail channels. Once we have an approved design and graphics, Pack Center can produce cartons, pack product and distribute multi-packs to stores in a matter of days.”
The Pack Center handles every aspect of the packaging process from carton design and printing to packing and shipping, within tiered turn-around options.
By getting to market faster, Richmond, VA-based MeadWestvaco says customers may gather higher quality consumer data to validate their business cases and realize the profits of new product launches sooner. And, after the launches, when sales are growing, customers can work with advisors to plan for dedicated packaging systems to handle higher product volumes.
“Many large retailers have extremely strict timelines dictating when product must be placed and goals for how well it must sell in order to continue to be granted shelf space in the store,” says Perkins. “We are able to help food and beverage manufacturers meet tight deadlines for retail placement. Once their products generate an established consumer base, we can then assist them with creating a packaging line in their facility to continue to supply product to meet increasing market demand.”
By using Pack Center, companies can by-pass methods like focus groups and mall-intercept to quickly and effectively test new products directly in stores, and better evaluate whether or not they would be viable for national distribution.
“We have partnered with MeadWestvaco on several occasions and turned to them once again to help add speed and flexibility to our packaging line,” says Joe Caporella, president, National Beverage Corp.
“The MeadWestvaco machines we are installing will allow us to quickly change between varied height and diameter cans, which is a must for any manufacturer offering an extended product line.”
In only 14 days, the Pack Center was able to print more than 1 million cartons, fill the multi-packs and ship them to National Beverage for distribution. The company was able to get product into the market nearly six weeks ahead of forecast.
Tyson Combines Beef Plants To Boost Efficiency
Tyson Foods Inc. is consolidating its beef plants in the Pacific Northwest as part of a plan to operate its fresh meats business more efficiently.
Effective Oct. 16, Tyson Fresh Meats Inc., a subsidiary of Springdale, AR-based Tyson Foods, will permanently close its beef slaughter plant in Boise, ID, and scale back processing operations at its Pasco, WA, complex. The Pasco plant has historically operated one shift of beef slaughter and two shifts of beef processing.
After Oct. 16, Pasco will continue to operate one slaughter shift; however, because the plant will no longer be receiving beef carcasses from Boise, it will operate only one processing shift instead of two.
“This consolidation is part of a much broader strategy designed to return Tyson Foods to profitability, while positioning our business for long-term success by ensuring our operations are cost-effective,” says Richard Bond, president and CEO of Tyson Foods. “In addition to cost savings, we also remain focused on creating product demand, improving product mix and achieving maximum price for the high-quality foods we produce.”
SYSCO To Build Texas Fold-Out Facility
SYSCO Corp. plans to construct a broadline foodservice fold-out facility in Longview, TX, to serve restaurants, hospitals, schools, colleges, retirement homes, hotels and other foodservice operations in east Texas and portions of Arkansas and Louisiana.
The complex will include approximately 290,000-square-feet of refrigerated, frozen and dry warehouse space, as well as administrative offices. It is expected to be operational in the first quarter of 2008.
According to Richard Schnieders, SYSCO’s chairman, CEO and president, “The east Texas market is currently serviced by four of our broadline companies. Establishing a local presence in that region will provide market penetration and expense reduction opportunities.”
SYSCO’s fold-out strategy involves building new facilities in an area with an established sales base that has been served by distant SYSCO companies.
The Longview operation is the 18th broadline fold-out facility that Houston-basedSYSCO has announced since first unveiling the strategy in 1995.
Study: Rising Fuel Frieght Costs Prompt Network Improvement
Rising fuel and freight costs are prompting widespread improvements in U.S. logistics networks, according to a recent report released by third-party logistics provider ProLogis and the University of Denver.
The report, Moving Freight Today—How Shippers Are Creating Greater Capacity, Reliability and Rate Stability, is based on interviews with supply chain executives at more than 30 major companies from a variety of industries. Among the findings:
- Many companies are adding consolidation and deconsolidation centers to their supply chain networks to ensure that freight gets moved in full container and truckloads. These centers serve as freight pooling hubs and, under the right circumstances, can substantially increase efficiency.
- Companies are “de-coupling” freight costs from product costs. In the past, suppliers paid freight charges and simply added them to their materials invoices. Today, companies are adopting practices that ensure that they receive the best shipping rates available on a consistent basis, through centralized command and control of freight movement.
- Shippers are working hard to improve collaboration with carriers and other transportation providers, through better forecasting, shorter payment cycles and implementation of two-way operational scorecards.
- Logistics managers are creating new capacity in their networks by eliminating sources of waste and inefficiency. Techniques include collaborating with other companies to reduce the number of empty trucks on the road and establishing 24/7 work schedules at distribution centers.
For a copy of Moving Freight Today, go to prologisresearch.com/movingfreight.