Creating value in the supply chain has a close relationship with cutting out waste – and one of the best ways of removing waste from the supply chain is to automate repetitive processes that add little value. Electronic commerce may have oiled the links between customers and suppliers, but consistent, complete and up-to-date product information is essential if errors are to be eliminated, or at least, greatly reduced.
The problem is, attaining accurate product information is hellishly difficult, with pools of inconsistent data residing in disparate systems scattered throughout a manufacturing enterprise or across distant ERP platforms in supplier organisations. Making a small change to a product often requires considerable manual intervention to update product data across all these locations – the result being inconsistency and inaccuracy. Inevitably, problems manifest themselves across the supply chain in the form of shipment and invoicing errors that can be expensive to sort out.
If a manufacturer requires a high degree of agility to maintain a competitive stance – as is often stated in learned supply chain management white papers – then products need to be introduced and updated quickly and efficiently, with product data transmitted to customers in a consistent format.
What’s required is a central pool of product data across a sector. And that’s exactly what a growing number of consumer packaged goods (CPG) manufacturers and a few leading retailers are actively engaged in creating. The initiative, orchestrated by 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 network consists of 26 local data pools across 50 countries.
According to analysts, Gartner: “Mismatched and obsolete item data costs companies millions of dollars every year in problems like inaccurate invoices and shipments, and the growing adoption of standards like global data synchronisation is making it imperative for companies to reconcile these disparities to do business with the Wal-Marts and Krogers of the world.”
Robert Besford, business manager for Global Data Synchronisation at GS1, gives the historical basis for the Global Data Synchronisation initiative: “GDS goes back a number of years to when ECR [Efficient Consumer Response – a forum for leading CPG manufacturers and retailers] globally decided that there needed to be a common standardised approach to sharing product information. They created an early paper on the benefits of having a standardised approach and then it was passed on to GS1 globally to take it forward.” GS1 has been working for the past four years on developing the standards and launching a worldwide system for transmitting this standardised product data and the result is the global data synchronisation network.
So, how successful is this initiative so far? How many manufacturers and retailers are involved? To date, the number of suppliers signed up to the scheme is around 15,000, with 145 retailers participating. Of course, there are always going to be more suppliers than retailers taking part, but which of the retailers are active? According to Besford, “the major retailers are involved, like Wal-Mart in the US – they’re very progressive, they have several thousand suppliers using GDS. In Europe we have, for example, Metro Group which is very much into GDS with its suppliers.” However, there is one notable exception, Tesco. Although it is active in setting the standards the company is not yet using the GDSN. But Besford believes the important statistic here relates to how many product items are on the GDSN, and as of July this year, that figure is 2.7 million items. Over a million items have been added in the last year alone.
Any supplier that sends data via the GDS network has to have a Global Trade Item Number (GTIN) or barcode associated with the product. In addition, a supplier using the network also has to use what is called a Global Location Number, which associates a company with a location – unique numbers associate companies with locations and with product information. Suppliers must also provide a brand description for an item – critical information for the supply chain often surrounds product dimensions: height, width and depth. But of increasing importance, due to government legislation, is consumer information relating to a product’s nutritional value, dietary offering and its potential to create an allergic reaction. Indeed, whether the product is organic or not, or perhaps Free Trade, is also of rising significance and may need to be included in the data.
However, information on a product’s carbon footprint is not presently being inputted to the GDSN. Why is this, as many leading retailers are pushing their green credentials? “There are a number of standards out there on how you collect carbon footprint data. When there is a globally accepted standard, then that is when the GDSN will come into play to exchange that information,” says Besford. So perhaps that’s something for the future rather than right now? “Absolutely, that’s obviously something that would have benefits,” he confirmed.
So what are the benefits of GDS? “One of the key benefits for a supplier is being able to code their data once into a data pool of their choice and then publish that to as many trading partners as they need to,” says Besford. “Because the data is standardised and the recipient accepts that as the type of data they want to receive, you are not in a position, as a supplier, of having to fill out different types of information with different retailers… It reduces the amount of overheads you have in terms of inputting data.”
Perhaps the greatest challenge facing the initiative is how to agree common standards. “That goes to the heart of what GS1 is about,” says Besford. “We are a standards body. In the UK we have a group called the Data Synchronisation Group and that has members who are large suppliers – the blue chips – and it has all the major UK retailers on-board. The group agrees that there needs to be a standard around collecting ‘x, y or z’, that the group will then review and make a decision on whether it has a valid business requirement. If it has, and it is not being met by an existing standard, it will then be put forward by GS1 UK into the Global Standards Management Process, called the GSMP. This comprises all GS1 member organisations globally – 150 organisations. Most of the major retailers and suppliers in the world are members.
“The proposed standard will be submitted to one of the groups where it will be reviewed, agreed and put out for everyone to comment on – eventually it will become a global standard.” Besford agrees that this sounds a lengthy process but, “we can bring in these standards quite quickly; we brought some in last year in about three months.”
Most of the data flowing around the GDSN is presently related to food and beverage products. However, there are other active sectors, such as electrical, and they are taking a category-by-category approach.
Bryan Scott Larkin is director of marketing – retail, consumer products and high-tech industries – at GXS. Much of the data synchronisation technology around the globe is powered by GXS technology.
He believes that, “data synchronisation had trouble getting off the ground because there were some pretty enormous assumptions that just moving from one form of electronics communication – traditional EDI or Edifax – to an XML-based solution – the GDSN – format, was going to solve all the problems that were driving data synchronisation, which were data inaccuracies and conflicts between buyers and sellers. It’s been proven now that GDSN doesn’t solve the data quality problem. It does provide for a more consistent and comprehensive means of moving the data, but it still doesn’t address data quality.”
GS1 UK has adopted a data quality solution that GXS provides to help enforce and introduce data quality into the equation. Many leading companies are now looking at Product Information Management (PIM) tool sets, both on the buy side and sell side, to help manage data, often making this part of a master data management programme.
PIM tools act as a combination of validation, integration and workflow tools that allow you to assign ownership of product attributes to one or more roles, or people, within a business. It helps you set rules and enforce those rules to ensure that you accumulate, aggregate and validate your data. On the supply side you would do this before you send information out to a retailer, on the retail side you would use this to receive data from a supplier validated against your own rules and then also add whatever enhancements you might have, such as your own retailer SKU.
“It’s not about the way you move the data, it’s about the way that you manage the data,” says Larkin. His company has a product information management solution called GXS PDQ that helps create clean and accurate data. “Data quality is essential to making data synchronisation work”.
One might think that ensuring data quality is a highly manual operation, but according to Larkin, there is a lot that can be automated. “You can develop a whole set of business rules and then submit data and be able to identify the data that does not match, provide suggested fixes to that data and identify those that can’t get fixes. You would be surprised at how quickly attribute issues can be caught and resolved [an example would be the use of ‘&’ or ‘and’]if you have a good validation engine.” He adds, “manual processes got us into these problems in the first place.”
It’s widely reported that the average keystroke error rate is between two and five per cent. Manually entering product data at various points across an enterprise just compounds the number of errors. However, using a PIM system data for a product is entered through one point only, which ensures a higher level of accuracy.
The big ERP vendors, such as SAP and Oracle, now have PIM solutions as part of their master data management programmes – because it’s not just product data that needs to be sorted out but there are discrepancies with customer data and financial data too.
GS1’s Besford is also acutely aware of the data quality issue – as Besford puts it, “there’s no point in exchanging bad data”. GS1 has launched an industry forum, co-chaired by Sainsbury’s and Britvic, with the objective of developing practical means for industry to improve its data quality.
Traditionally, each retailer has its own new product set-up forms with different definitions, descriptions and data requirements. Between now and Christmas the group is looking to standardise these forms. “This is a quick win for them,” says Besford. “Suppliers can fill out these forms faster and when they take the next step of moving to GDS it’s a matter of just automating the process. Hopefully, in the New Year we are expecting to have two retailers implementing the new standardised lines form.”
One company that is migrating to the GS1 UK Data Pool to exchange product information with its suppliers is pub restaurants operator, Mitchells & Butlers. The company has around 2,000 businesses offering food and drink in the UK, including leading brands such as Browns, Vintage Inns and All Bar One.
“It’s work in progress,” says Richard Pratt, commercial director of Mitchells & Butlers. “We are just about to move from using a dedicated Mitchells & Butlers new lines form for gathering data, across into using the GDSN standard.” Within the next 12 months Pratt believes he will have moved everything across.
“We want to build the interfaces so that we can automatically import information from GDSN directly into our data warehouse – at the moment this is still done manually.” He believes the benefit will be in reducing confusion. Already he sees benefits in, “only paying for things we receive, paying the right price for the right product, improved availability, and fewer wrong products being delivered”.
Pratt offers his views on why the wider adoption of GDSN is taking so long. “The problem lies with legacy systems that people have in their businesses already. Their product codes and data are imbedded in multiple systems in their organisations.” According to Pratt, this requires the use of translation tables on top of the system which complicates the issue. He believes the software vendors hold the answer, “the way to crack this is to embed the ability to use GS1 standards within the software”.
Nihat Arkan, chief executive of SA2 Worldsync, a data pool with a global reach, gives his reasons for the apparent disparity of interest in GDSN between retailers and manufacturers. “The business values are much more easily proven to manufacturers than retailers despite the fact that, in my opinion, retailers benefit equally well.” He sees retailers working in international markets being more likely to get involved than retailers acting just locally, “because consolidation of the master item information at the global or regional level has huge value If you can immediately take a new item introduction and implement it into your ordering system and have your buyers order it and thereafter manage that into your inventory and track it, making the billing against that, and managing your overall supply chain, you can create amazing value for your organisation.for global players, such as Wal-Mart, Carrefour, Metro.” He adds, “slowness comes about because at the headquarters it’s easy to see the value, at local level this is more difficult. The real value comes not just in synchronising the data, but what you do with that data and how you evaluate that data.That’s the key.”
“If you can immediately take a new item introduction and implement it into your ordering system and have your buyers order it and thereafter manage that into your inventory and track it, making the billing against that, and managing your overall supply chain, you can create amazing value for your organisation.”
Arkan sees consolidation ahead for data pools. “I do expect further consolidation. I would say in a two year timeframe there will be two levels of data pools; one will be local and then there will be one, or a maximum of two, that will be global – our place is at the global level.” He adds, “I don’t expect local level consolidation.” Perhaps, what’s needed is a “Google” of the data pool market place? What seems clear is that getting data synchronisation right brings many benefits and is a prerequisite to the adoption of RFID. The underlying standards behind RFID and GDS are identical, but RFID is only going to bring value if the data is accurate.