Whether you are talking about a breakfast cereal called Corn Flakes or one called Flakes of Corn may not sound a big deal in the human world, but when it comes to exchanging information about products in the supply chain it could mean the difference between getting paid or not.
Gathering product data and maintaining it accurately in a standard format so that it can be used in electronic trade sounds like a no brainer, but product data synchronisation, as its is called, has proved a tough nut to crack.
For four years GS1, the European body responsible for bar coding and radio frequency identification (RFID), has been building up a worldwide system for swapping product data called the Global Data Synchronisation Network (GDSN).
The GDSN, which started in August 2004, now consists of 26 local data pools covering 50 countries in which suppliers deposit information about the attributes of their wares according to strict rules. In January this year, GS1 announced it had amassed details of two million products worldwide, twice as many as a year earlier.
The data is accessed by retailers and others via a global registry that acts as a kind of telephone exchange, directing calls to the appropriate data pool. Product information – tied to the 14-digit global trade identification number (GTIN) – is used in logistics, accounting and warehouse applications.
Accurately identifying goods is vital to efficient business transactions. Cash and carry firm Makro, part of the German Metro Group, says it suffers from the fact that over three per cent of its invoices contain invalid GTINs that cause failures in its systems, at a cost of nearly €1m per year.
Makro has also been experiencing problems with missing or inaccurate product dimensions which resulted in queries on an average 500 orders per year. The company says the errors also cause problems in planning shelves and in warehouse operations.
The company has started to use data synchronisation to align supplier product data so that just one description for each item is used in the supply chain. The first step is to carry out data cleansing to eliminate errors from data already stored about products.
Although Makro has not completed the move to data synchronisation, it already sees improvements, according to Philip Steedman, the firm”s e-commerce manager. Introducing new lines used to take a week because of the time involved in gathering information and filling in forms. Now the exercise can be completed in 24 hours with the help of the GDSN.
However, both suppliers and retailers have been slow to adopt synchronisation. One of the reasons is that getting accurate data posted in the pools involves a lot of hard work. Information has to be collected from different parts of a manufacturing organisation and that can be quite labour intensive because individual products must be weighed and measured.
Another reason that suppliers have been dragging their feet is that retailers, who call the shots in such matters, have been slow to insist that they put data on the GDSN. This despite the fact that some of the leading lights in supply chain automation including Wal-Mart, Metro and Ahold are committed to synchronisation.
Joining the network
In the UK some 1,000 suppliers have joined the network and nine retailers including Boots, Comet and Spar. Originally, GS1 had forecast that there would be 3,000 suppliers and 300,000 products on its books in the UK by the end of 2005. The organisation admits its estimates have been over optimistic.
”Although it was before my time, clearly take-up has been slower than we expected,” says Robert Besford, business manager for global data synchronisation at GS1. ”Adoption has been driven by the retailers in the UK getting their suppliers to join GDSN.”
Significantly, Tesco, the UK”s biggest supermarket company, is not a part of the UK data pool. When GDSN was launched in 2005, Tesco”s IT director highlighted the question of data quality. Smaller and medium-sized companies, he said, had not taken steps to address the issue.
Accurate data is critical to making data synchronisation work, especially when data is used in important business documents such as orders and invoices. Often quoted research by management consultancy AT Kearney revealed some time ago that a third of data in retail catalogues contains errors.
When the company looked at invoices it discovered 60 per cent contained errors because of mistakes in the data used to draw them up. As much of 3.5 per cent of sales are lost each year due to supply chain inefficiencies, AT Kearny concluded. These glitches cost between €60 to €90 to rectify, said the consultancy.
GS1 is aware of the data quality problem. When it set up its UK operation it contracted a company called Udex to clean up errors such as spelling mistakes, bad punctuation and wrong abbreviations. Product data also suffers from multiple variations of the same product and missing or incorrect weights.
Data pools store data about a minimum 52 aspects of a product such as its weight, dimensions, GTIN and so on. The price of a product is not a compulsory part of the mix, although individual trading partners may exchange price information.
”Every time you change something about your product you have to enter it into your data pool,” explains Besford. ”Lots of suppliers don”t have a consistent picture of what they have on the market. That”s one of the benefits of keeping their product catalogue up-to-date.”
The information held in the synchronisation network has many uses. Retailers can use it to learn more about their business. One retailer has looked up information about packaging to estimate the amount of cardboard and plastic waste the company is likely to have to deal with.
Suppliers adopt data synchronisation to ensure that customers use the right GTINs and to simplify the process of informing customers about new lines. R & R Ice Cream, one of Europe”s largest ice cream makers, says data synchronisation has been a key factor in driving up service levels over the last three years. The company introduces a new product or change to an existing product each day in the fast changing ice cream business. It has to supply customers with details of up to 20 ingredients in a typical product.
”Because we”ve been through so many mergers and acquisitions, we”ve done a lot of work to get our product data in our internal systems into good shape,” says the company”s group data integrity controller Jon Bemrose. ”But we hadn”t done much about supplying that data to external users, especially the retailers who are our customers.”
Fewer failures and exceptions
R & R has used the UK data pool to provide more accurate information to customers at a lower cost. ”Because the data we deliver to customers is more accurate and they are using the correct GTINs we see fewer failures and exceptions when getting products listed in our EDI-based ordering and invoicing,” notes Bemrose.
For now GS1 is concentrating on the fast moving consumer goods that have been allocated GTINs. The EPC code that is used for Radio Frequency Identification (RFID) is not included. ”At the moment EPC is not part of the solution because it is not as developed (as GTIN codes),” says Besford.
However, experts point out that synchronisation is also vital to effective use of RFID. ”You can”t use RFID if data synchronisation is not 100 per cent,” says Eddy van Herbruggen, group specialist RFID at services company Zetes. ”I have no doubt it will happen, although that may be some time off.” But for now, GS1 is concentrating on persuading more retailers and suppliers of the business benefits of data synchronisation.