Getting In Synch

Food retailers are seeing the benefits of global data synchronization.


Ed Licul, World Wide GDS Strategy Leader with the WebSphere Product Center of IBM Software Group, Chicago, who's been involved in the synchronization effort from early on, says no one should make the mistake of thinking the initiative is going to go away.

Retailers, he says, are looking for growing volumes and types of information to feed to their downstream systems.

"They also need to provide consumers with increasing amounts of extremely detailed information about products today," he points out.

There is a reason some suppliers may have underestimated retailers' interest in GDS, he adds. After putting out their initial demands, most of them did not follow up quickly with their suppliers to insure that they are in compliance.

"A lot of retailers may look like they've gone dark or fallen off the radar. But that's because in the interim, they've been busy concentrating on their own internal requirements for GDS. Many have been installing Product Information Management systems and lining up their legacy systems to send and receive data through the PIM," Licul says. As this work is completed, no doubt retailer pressure on suppliers for compliance will grow.

One sign of mounting momentum is a letter sent out jointly last November to their suppliers by Albertsons, Associated Food Stores, Associated Wholesale Grocers, Supervalu, Unified Western Grocers, Wal-Mart and Wegmans Food Markets. The group endorsed the Global Data Synchronization Network and requested that all their vendors use GDSN to synchronize data with them.

Among self-distributing retailers, Rochester, NY-based Wegmans in particular has been a leader and prime mover in prodding and cajoling suppliers to get with the program. Its dedicated efforts have paid off. By last fall, the supermarket operator reported commitments from nearly 1,900 suppliers to synchronize their data, representing 95 percent of the chain's cost volume.

Nearly 900 of these vendors, accounting for 92 percent of volume, were already engaged in the effort, and more than 350 suppliers, representing slightly less than half of Wegman's business, had completed their synchronization projects.

The company has already reaped substantial benefits. As a participant in the A.T. Kearney study, Wegmans documented savings of $500,000 annually based on participation by a then-smaller percentage of its vendor base.

Extrapolating from Wegmans' experience, and that of two other retailer participants, Ahold USA and Shaws Supermarkets, the A.T. Kearney study projects retailers can achieve savings ranging from $700,000 to $1 million for every $1 billion of sales by synchronizing data with suppliers.

A Multi-Stage Process

It is important for retailers, as they get involved in this initiative, to realize that data synchronization itself is not the value driver or the end goal. It's only the requisite foundation for other, more complex steps toward increased efficiency.

"The idea isn't just to synch up with each other on what an item is, but to be able to exchange useful information about items.

For example, once retailers have synchronized data with their trading partners, manufacturers and retailers can both use their data processing systems to automatically exchange such information as how much of a given product is in inventory, what quantities a retailer plans to order when, and what the manufacturer's production capacity and shipment capabilities are," notes Kim Ekstrom, senior consultant with Teradata, a division of NCR Corp. based in Dayton, OH. "GDS provides the bridge to communicate all the elements necessary for these kinds of collaborative activities."

It is through such improved business processes, as well as by elimination of data input errors through the use of synchronized information, that some of the biggest benefits can be derived. But before they can play on this field, companies have to take the first, foundational steps of synchronizing their data.

To do so, manufacturers and retailers first need to agree on what an "item" is, Ekstrom comments. This means creating standard ways to identify and describe products, including all the attributes that pertain to them and how these attributes should be expressed and encoded.

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