KIAWAH ISLAND, S.C. -- Wegmans Food Markets' data synchronization efforts have paid off to the tune of $1.5 million in annual savings, a third of which falls within the logistics and distribution areas.
Wegmans is now actively synchronizing item-level data for about 6,000 items with more than 250 suppliers representing more than 50% of its grocery/dairy/frozen tonnage.
That was the update provided by Marianne Timmons, director of business-to-business for Wegmans, Rochester, N.Y., in a presentation here last week at Food Marketing Institute's 2004 Distribution Conference. Timmons shared the presentation with Jolene Magruder, manager of customer supply chain, Nestle Purina PetCare. Wegmans and Nestle are longtime synchronization partners.
Timmons noted that just two years ago, Wegmans, a pioneer in data synchronization and probably the most advanced of any conventional supermarket chain in this area, was synchronizing data with only 12 suppliers; by last last July, the number had grown to 80. Over the past two years, she added, UCCnet, the data synchronization division of the Uniform Code Council that runs a standardized item registry, has increased its membership from 260 companies to more than 2,900; vendors representing 85% of Wegmans tonnage are now UCCnet members, she said.
After her presentation, Timmons told SN Wegmans wouldn't achieve maximum benefits until "about 90% to 95% of our volume" was synchronized. "We're aggressively moving toward our goal of getting all of our business in sync with our manufacturers," she said.
Last June, Wegmans mailed a letter to about 3,000 suppliers stipulating a series of deadlines it expected the companies to meet regarding data synchronization. The final deadline, when the companies would be synchronizing data with Wegmans, was set at Jan. 1, 2005.
Data synchronization is the standard computer-to-computer process by which manufacturers provide retailers with as many as 63 attributes about each of their products, including UPC (GTIN), cube, weight, height and brand name. By eliminating manual processes, retailers can get more accurate data and more efficient product movement. For example, Wegmans found that before data synchronization, about half of its items had data inaccuracies, said Timmons. Last year, an A.T. Kearney study in which Wegmans and Nestle participated documented the benefits of data synchronization.
In addition to the cost savings it provides, data synchronization is considered "foundational to everything else we want to do in the business," such as RFID (radio frequency identification), CPFR (collaborative planning, forecasting and replenishment) and e-procurement, said Timmons.
Timmons broke down the $500,000 annual savings in logistics and distribution gained through data synchronization as follows: 66% in inbound logistics (to warehouses); 24% in warehouse operations; and 10% in outbound logistics (to stores).
The $334,000 in annual savings related to inbound logistics resulted from better use of trucks, fewer extra shipments, and fewer LTL (less than truckload) shipments, Timmons said. The $130,000 in cost savings in warehouses came from a reduction in rework and improved product flow. The $50,000 in outbound logistics savings came from a reduction in extra shipments and in LTL shipments.
Magruder said Nestle Purina expected to gain $2 million in benefits from synchronization over five years, assuming the company gets to "critical mass" with enough retailers.
