Major food retailers and suppliers have issued a call for more participation in UCCnet's data synchronization program aimed at reducing invoicing errors and paving the way to CPFR. It may be a signal that UCCnet's time has finally arrived four years after its formation.
The call for participation came in an open letter, signed by many of the biggest names in food retailing and manufacturing, and aimed at fellow manufacturers and retailers of consumer packaged goods in the United States and abroad.
Without a doubt, this letter signaled the food industry's intention to get serious about UCCnet and data synchronization. The letter grew out of discussions held by UCCnet participants in January and April about "what they can do to drive adoption of UCCnet," said Jennifer Roberts, manager of public relations, UCCnet.
The letter declared, "We are disappointed with the pace of progress on the electronic exchange of data between our companies. As concerned trading partners, we urge everyone in our industry to get involved."
In particular, the letter set as an objective "the sharing of data amongst a minimum of 600 trading partners by the end of 2002. Meeting this objective will require that 600 companies subscribe to UCCnet's [data] registry service by June 1 in order to be in production by the end of the year. This critical mass would allow us to begin to realize the important economic benefits that can result from the use of registry services and data synchronization."
Among the 20 signatories of the letter, dated April 9, were Kevin Turner, chief information officer of Wal-Mart; William Grize, chief executive officer of Ahold USA; Danny Wegman, president, Wegmans Food Markets; and Jeff Noddle, CEO of Supervalu. It was also signed by top executives at such CPG companies as P&G, Coca-Cola, Campbell Soup and General Mills, among others.
The call for industry participation was underscored at an early-morning session at the FMI's 2002 Supermarket Industry Convention in Chicago earlier this month. Generating considerable buzz at the convention, the session "Next Generation Logistics" featured industry leaders such as Danny Wegman and Ed Gropp, CIO of Ahold USA.
UCCnet, a subsidiary of the not-for-profit Uniform Code Council, Lawrenceville, N.J., has been promoting the importance of product data synchronization between trading partners since 1998, but only in the recent past has it been able to garner commitments from such major players as Wal-Mart and Ahold, gaining the momentum to launch this current push toward the critical mass that would make the process much more valuable for all concerned.
The premise behind UCCnet is fairly straightforward: Create a single, standard, Web-based data registry for all products, dubbed the Global registry, which features 62 significant attributes of those products, including size, weight, color and number of items per case. When manufacturers add new products to the registry, or update existing products, those changes would be communicated accurately and in real time to retailers, who could integrate them electronically into their databases or enterprise resource planning (ERP) systems.
By contributing to, and more important, adhering to the registry, participating trading partners would all be on the same page, and manual, paper-based errors -- and the costly invoicing nightmares those create -- would be eliminated, according to UCCnet. In addition, speed-to-shelf for new items and point-of-sale scanning accuracy would improve.
Moreover, observers say, with data synchronization, trading partners would finally have a foundation for pursuing coveted initiatives like CPFR (collaborative planning, forecasting and replenishment), scan-based trading and even MIT's pioneering vision of a radio frequency identification (RFID)-driven supply chain. "It's the underlying piece that most people ignore because it's not sexy," said Peter Abell, research director, retail, AMR Research, Boston. "It's an important first step they need to take."
But for this to work, the registry requires a robust roster of data contributed by as many major players as possible, or at least 600 by year's end. The current number of participants is about 70 "in various stages," including other large chains like Safeway, A&P and H-E-B, said Roberts. The annual cost for subscribing to the registry depends on revenue, and ranges from $1,500 to $400,000.
UCCnet may have taken off sooner, observers note, were it not for the advent of the trading exchanges in 2000 -- WorldWide Retail Exchange, GlobalNetXchange and Transora, which also spoke about offering data synchronization. There was also interest expressed by EAN bar-code organizations about deriving revenue from data synchronization implementation, causing some major global product suppliers to hold off commitments, said Abell. But those issues appear to be on the way to resolution. (See story, Page 20.)
Too Much Bad Data
The source of the problem, say observers, is simple: inaccurate product data, which does not match that of trading partners. "Our supply chain is full of bad data," said Gropp at the FMI session. "If you don't think it's full of bad data, go and sit down and look at the information in your files."
He cited a presentation made by a Wal-Mart executive who said that at least 25% of the chain's item information is incorrect. At Ahold, he added, the percentage is upwards of 30%.
Bad data is costly, noted Gropp. He said that it cost the Global Commerce Initiative's members around $30 billion in inefficiencies resulting in part from errors in 60% of invoices.
For Gropp, the solution to the problem is also simple: UCC-EAN standards that everyone subscribes to. He likens it to the spelling and definitional standards shared by all dictionary publishers, without which chaos would reign. "Imagine a world in which everyone has their own dictionary -- words mean what people say they mean," he said. "It would make it very difficult to do business together."
In the CPG world, those standards have been captured by UCCnet in the Global Registry, he said. "We need a Global Registry so there's one version of the truth, one place to go when you're looking for what items are available and carried by which suppliers."
Ahold itself is in production with UCCnet and is working with several of its suppliers. Kraft Foods, for example, began a live implementation with Ahold in March for two categories, according to a GMA presentation the two companies did in April.
"It works; we do it day in and day out," Gropp said at the FMI show. "So any arguments you may hear about 'we don't have enough standards,' are not right. Any comments you hear that UCCnet 'isn't appropriate, it doesn't work,' are wrong." He concluded with the call to arms: "We need your help and participation."
At the GMA presentation, Ahold, represented by Becky Pickett, manager of e-business for Ahold Information Services, and Kraft, represented by Mark Froseth, vice president of sales and customer service systems, noted some of the "tough" aspects of UCCnet implementation, such as new technologies like XML and the Internet, creating and using standard category definitions, preparing internal systems and agreeing on new business processes.
Pickett and Froseth are conducting a session on data alignment at UCC's UConnect conference being held this week in Salt Lake City.
Wegmans, which has been part of UCCnet since its inception, is working with between 10 and 12 manufacturers, including P&G, Musco Olives and Nestle Purina Petcare. Wegmans went into full production with Nestle Purina in January and will be synchronizing pricing information (not in the Global Registry) beginning in June, Wegman told SN after the FMI session. The chain has already added $1 million to its bottom line as a result of the work done with UCCnet and, over the past 1 1/2 years, with the Agribuys perishables e-procurement service, Wegman said during the session. That figure, he added, would grow to $30 million, or 1% of sales, "once everyone is on UCCnet. This isn't wishing and hoping. This is what we've learned already."
Marianne Timmons, B2B manager for Wegmans, told SN its invoice deductions, which had been a "huge problem," are down to zero. As for Nestle Purina, Don Mowery, director of e-business, said, "We know that synchronized data between us and our customer results in drastic reduction in re-work due to errors."
Wegman also described the change in the working relationship with produce suppliers as a result of the UCCnet program. Instead of worrying about the minutia of the supply chain -- Did you get the order? Was the price right? Is it on the truck? -- Wegmans could focus on more valuable issues like product quality, he said. "But it's a long learning curve," he warned. "The sooner you get on it, the better off you'll be." He told SN that he is seeing a "big change; retailers are ready to accept this."
Wegmans has built a direct, XML-based connection to UCCnet, allowing it to receive data from any manufacturer linked to UCCnet's registry, Timmons told SN. Wegmans, as a pioneer of the process, uses none of the third-party companies now available to assist retailers with integration, implementation, and infrastructure. She said connecting to the Web is not difficult; the challenge comes in mapping data and updating fields in different databases.