ROCHESTER, N.Y. - The biggest savings experienced by Wegmans Food Markets here in its latest data synchronization study are from improvements to logistics and supply chain processes, according to Marianne Timmons, the retailer's vice president of supply chain and global business to business.
The study, "Synchronization - The Next Generation of Business Partnering," reported that Wegmans derived a $3.5 million annual savings in transportation costs ($2.5 million for inbound freight and $1 million for outbound freight) as a result of synchronizing product data with suppliers. Synchronized data attributes include name, description quantity and size, among the more than 450 that are tracked.
In addition, the retailer garnered an annual savings of $1 million through more efficient utilization of its distribution network and warehouses, including reductions in inventory, more accurate shipments from suppliers and better pallet configuration - again stemming from synchronized item data.
"Logistics and supply chain - that's where the disruption comes and there are unnecessary costs" when product information is inaccurate and out of sync, said Timmons, who has headed Wegmans' industry-leading data synchronization effort. "The savings were greater than we anticipated."
"With the price of gas going up, it's easy to get millions in savings out of [transportation and logistics efficiencies]," said Bob Noe, CEO of 1SYNC, Lawrenceville, N.J., a sponsor of the report.
The new report, released at the Data Accuracy Collaboration conference in Chicago this month, is based on a study of data synchronization activities conducted by Wegmans and seven manufacturers - Coca-Cola, General Mills, Hershey, J.M. Smucker, NestlT, PepsiCo and Procter & Gamble. Sponsored by the Food Marketing Institute, the Grocery Manufacturers Association, 1SYNC and Wegmans, the study was carried out by Accenture, New York.
As reported in the June 19 issue of SN, Wegmans unveiled some details of the report at the GMA Executive Conference last month.
Wegmans' benefits were extrapolated across its entire business, not limited to what was gained via the seven suppliers, the company said at the Data Accuracy conference. The regional retailer, which operates 71 stores, is completely synchronized on all items supplied by close to 500 manufacturers accounting for 82% of its cost volume.
The Accenture study also underlined the importance of accurate data - that is, data checked to confirm the physical reality of a product - in the data sync process.
The study validated what earlier studies indicated about the improvement in speed-to-shelf of new products at Wegmans stores. Speed-to-shelf in this study increased by 23% because of synchronized data. "We continue to be excited about this," Timmons said.
The study also demonstrated that data synchronization of coupon family code data results in smoother coupon processing at the POS. Wegmans experienced 40% fewer coupon scanning errors and 454,000 fewer POS disruptions, the report said. "This is a really big win," Timmons said. "We're improving the customer experience."
Other data-sync-driven benefits at Wegmans cited in the report: an annual savings of $163,000 in direct-store-delivery backdoor operations; a 5% reduction in reconciliation of invoice and coupon discrepancies; a 14% decrease in time spent on out-of-period adjustments; and sales personnel at participating manufacturers spend 25% to 55% less time addressing item data questions during their sales calls.
Timmons noted that the wins were not just on Weg-mans side, but on the side of manufacturers as well. "Our suppliers came up with examples where they're saving millions of dollars," she said. In one case, a manufacturer corrected inaccurate weight data in one product line, allowing it to ship up to one additional pallet on each retailer-bound truck, an annual savings of $1.5 million to $3 million in transportation costs.
The current study said it confirms and in some cases surpasses the findings of a 2003 study, "Data Synchronization Proof of Concept: Case Studies From Leading Manufacturer." Wegmans participated in another study, Project Jury, released last year, where the retailer determined that its savings from data sync were between $1.5 million and $2 million for every $1 billion in sales.
Retailers Unite Around Data Accuracy
CHICAGO - The first Data Accuracy Collaboration conference, held here July 10-11, represented "the emergence of the data quality movement in [the food retail] industry," said Marianne Timmons, the vice president of supply chain and global business to business, Wegmans Food Markets.
"Data accuracy has been a Wegmans initiative for the last couple of years, but this [conference] was the beginning of an industry initiative on data accuracy," she said. "Retailers have spoken as a community."
In addition to Wegmans, the conference, sponsored by the Food Marketing Institute, was attended and supported by Supervalu, Wal-Mart Stores, Kroger, Ahold, Associated Food Stores and Walgreens, as well as others. About 50 CPG manufacturers attended, Timmons said.
For product data to be accurate, it must reflect the actual physical dimensions and properties of the product individually and in shipping containers. Inaccuracies lead to myriad inefficiencies in the supply chain. Accurate data is also a requirement for data synchronization between retailers and suppliers.
Both manufacturers and retailers play a role in ensuring data accuracy. "Data accuracy is critical to our mutual businesses, not just retailers but suppliers as well," Timmons said. "As a community we're going to get this figured out."
The Data Accuracy Collaboration conference featured two days of educational sessions as well as one-on-one meetings between retailers and manufacturers.