In the retail/CPG industry, there's nothing worse than a defective product. A close second is defective data about the product.
Bad product data isn't just wrong information about a product. It's also information that is out of sync -- not the same in both the retailer's system and the manufacturer's system. In this age of high-tech IT systems, either kind of bad data can wreak havoc upon the supply chain, causing delays, increasing costs, and ultimately affecting the availability of products on the shelf.
Recognizing the need for good, in-sync data, the retail industry, through the Uniform Code Council and EAN International, is in the process of setting up a global system that will enable trading partners from anywhere in the world to synchronize their item data. The overall system is called the Global Data Synchronization Network (GDSN).
As reported in SN last week, testing began for the GDSN last month and will continue through July, leading up to a July 31 launch.
Under GDSN, data will reside in data pools that will communicate with each other (see diagram above). Manufacturers will "publish" their data to source data pools, while retailers will "subscribe" to this data through recipient data pools. Overseeing and managing the whole process is the Global Registry, to which all data pools must register and be certified. The Global Registry will enable retailers to determine the location of the data pool containing any desired item data. (A GDSN "Roadmap" is available at www.uccnet.org.)
GDSN in effect globalizes a process developed in North America by UCCnet, which has served as both data pool and registry. UCCnet will continue as the U.S. data pool while ceding its registry role to the Global Registry, managed by UCC and EAN; UCCnet will run the technical operation of the Global Registry.
Other data pools expected to be certified in time for the July 31 launch are Transora and WorldWide Retail Exchange (WWRE).
At UCC's U Connect Conference in Anaheim, Calif., late last month, much discussion was focused on how companies will benefit from GDSN and how they will transition to it. Given the global implications, it's not surprising that two global retailers, Wal-Mart and Royal Ahold, were among those addressing these issues.
Yet retailers currently operating only in the United States will also benefit because most deal with manufacturers based abroad. In any event, the system will apply equally well within U.S. borders.
Wal-Mart has been at the forefront of the data synchronization movement, joining UCCnet in 2001 as one of its first members. Today, Wal-Mart and Wegmans have the most trading partners "in production" in North America with data synchronization through UCCnet.
As of May, Wal-Mart was synchronizing data in production mode with 547 manufacturers, compared with 72 manufacturers a year earlier, according to Bruce Hawkins, senior strategy architect for Wal-Mart Stores, who spoke at U Connect.
Wal-Mart plans to bring its Sam's Club division into data synchronization in the fourth quarter of this year. The club stores are being converted to the same item file structure that the rest of the company uses, Hawkins said.
Wal-Mart jump-started its data synchronization program in 2002 with a letter urging manufacturers to send all item data electronically to Wal-Mart by January 2004, preferably via UCCnet. Among its top 100 vendors -- who also have been asked to begin using RFID tags on pallets and cases by next January -- compliance with data synchronization has exceeded 80%, said Hawkins.
Smaller companies have been far less compliant: Among companies selling 200 or more items to Wal-Mart, 27% have engaged in data synchronization; for companies selling just one or two items, it's been just 3%. "Our challenge now is, how do we get more small companies involved with standards?" Hawkins queried.
He also described the progress made in moving away from paper forms in vendor communications: Use of paper, which represented 37% of communications when Wal-Mart started with data synchronization, has been cut to 10% today, though the goal is to eliminate all paper forms.
Addressing the manufacturers in his U Connect audience, Hawkins thanked those who have worked with Wal-Mart on synchronizing data, yet also encouraged vendors to get all of their items synchronized. He noted that data synchronization is no longer "just a grocery initiative" since Wal-Mart is now synchronizing items in each of its departments.
Hawkins acknowledged that Wal-Mart has a decided preference for data synchronization through "machine-to-machine" communication, which ensures data accuracy. He realizes, however, that not every company will adopt that solution. Some companies with a small number of items may opt for manual methods that include spreadsheets, though he cautioned that manual re-entry "opens the opportunity for errors to get into the system." Spreadsheets can help with data accuracy when they are generated from system data, he added.
Hawkins observed that the industry needs to develop a minimally disruptive migration plan for moving data from UCCnet's registry to the new Global Registry under GDSN. Companies should consult with data pools and standards groups to determine the "right time" to move.
For Wal-Mart, the right time is now. Hawkins said the company planned a late-May launch of a pilot with P&G in the United Kingdom. Wal-Mart also plans a pilot in Mexico in about a month, followed by one in Canada a month later. Depending on the results of those pilots, others will be pursued in countries where Wal-Mart does business, such as Brazil, Germany, China and elsewhere. "We are not waiting until July 31 when the Global Registry is turned on" to pursue international links, he said. Wal-Mart's data pool will be UCCnet.
Looking ahead, Hawkins had several recommendations on how GDSN could be improved. For example, as the industry develops interoperability and certification standards for data pools, he encouraged focus on what to do when data pools merge or when a retailer or manufacturer decides to change data pools.
Another issue that needs to be addressed, he said, is the time it takes for published data to be updated in internal systems. "A lot has to happen to get data set up in legacy systems on our side."
Regarding synchronization of private-label data, Hawkins cited the need for standards to enable retailers to maintain ownership of the GTIN. This would make the retailer the owner of administrative records, while suppliers provide the item information.
Finally, in reference to synchronizing price and promotion, Hawkins said that while Wal-Mart can use Retail Link to handle that information, the company prefers that standards in development be completed. Those standards are needed to ensure that "information flows to the right trading partner and cannot flow to inappropriate partners."
Wal-Mart's biggest internal hurdle in pursuing data synchronization is ensuring the accuracy of its own data, which he observed is an industry-wide problem. He cited a UDEX study that showed 72% of suppliers have inaccurate consumer unit data. "I challenge all of us to work on ensuring that we don't defeat this data synchronization process by sending junk data through the system," he said.
Given the complexity of the data accuracy issue, which can be influenced by such factors as humidity, Hawkins called for "an industry solution to help ensure accuracy in a cost-efficient way."
Marcel Yska, project manager of e-commerce for Royal Ahold, Zaandam, Netherlands, also spoke at U Connect about the need to improve internal data as a prerequisite for data synchronization. "Product information needs to be consistent, complete, accurate and standardized. If you do global data synchronization without looking at data quality, you only get bad data faster," he said.
Ahold, like Wal-Mart an early champion of data synchronization through its U.S. subsidiary, Ahold USA, sees global data synchronization serving many needs for its far-flung global company. Yska described the following company objectives:
In reference to the last objective, Yska noted that Ahold wants to avoid educating its new suppliers on "Ahold-specific paper documents." With standards, "it's the same process they're using with other retailers."
Like many global operators, Yska lamented the current scenario where in every country a local supplier needs to publish product information to a local Ahold organization. "Multinational suppliers must be able to publish product and price information through a single process to Ahold globally," he said.
In addition, Ahold doesn't want the process of synchronization limited to large suppliers like P&G and Unilever. "We want to do it with all of our suppliers," he said.
Yska summed up Ahold's view this way: "We get French wine, and currently French wine suppliers have to go to a data pool in the Netherlands to key in the data," he said. "Well, there aren't many French wine suppliers who are capable of reading the Dutch user interface. They should be able to do that in a local French data pool. Through GDSN, that is possible."
Yska announced at U Connect that Ahold's data pool for GDSN would be WWRE. He also described the process by which Ahold made its selection.
A data pool, he said, should be compliant to EAN.UCC standards for GDSN and must establish connectivity to the network. (WWRE is involved in beta tests of interoperability set to begin this month, along with UCCnet, Transora and others.) Ahold wants to work with an early adopter, he said.
Also important, Yska noted, is that a data pool should be connected to non-compliant data pools worldwide. "Not all of our data sources [will be] compliant," he said. "So we need a migration strategy that allows our business to get data from those data pools."
Yska said Ahold needs a data pool that can support Ahold-specific information like price, in the way Wal-Mart does through its Retail Link. "We will migrate to standards [for those processes] when they become available," he said.
Ahold also values WWRE for the fact that other retailers are using it for data synchronization. "If more retailers are working with the data pool, then we get the synergies of developing functionality," he said.
Having selected WWRE, Ahold is nonetheless not done preparing for GDSN, stated Yska. Besides working on data accuracy, Ahold needs to integrate GDSN processes with its internal data management process. For example, the company's item maintenance is paper-based. When it becomes electronic, the company has to figure out how to route information to the right buyer -- something the Global Classification Process addresses (see story, Page 56).
Yska said that Ahold also needs to set up its B2B infrastructure to connect to its data pool and to process messages sent in XML.
Finally, Ahold needs to organize the process of bringing its suppliers into the global network. "How do you handle thousands of suppliers?" he asked.
To help retailers and suppliers organize their product information in the new Global Data Synchronization Network (GDSN), Uniform Code Council and EAN International are developing a new Global Product Classification (GPC) standard.
GPC will be a required part of GDSN, through which trading partners will synchronize their product data. It is intended to facilitate searching for products and making comparisons between supplier offers. Retailers said a standard classification system would help route electronic communications to the right buyers in a retail organization.
GPC is based on "bricks," or categories of like products, such as milk and milk substitutes. Standards for 216 bricks within food, beverage and tobacco have been developed, with another expanded version due by the end of July, when standards for nonfood products are also due. Standards for hard lines and general merchandise are expected by October. Additions can be made through change requests.
Some retailers are beginning to replace their product classification structures with GPC standards, noted observers. Retailers using UDEX classifications will be able to transition to GPC standards.
Bruce Hawkins, senior strategy architect for Wal-Mart Stores, said two-thirds of Wal-Mart's items are covered by GPC standards. In the meantime, an interim plan has been developed to address remaining products. Under this plan, current standards will be supplemented by information from retail vertical working groups and by categories used by UDEX; some products may remain unclassified for a short time.
Procter & Gamble is one of the suppliers reorganizing around GPC. "At P&G, all of our price lists, order guides and the joint business planning we do with our trading partners will take the structure of the GPC," said Greg White, associate director of global data management for P&G, and co-chair of GPC Task Group, who spoke at U Connect.
White said the GPC system should promote "talking apples to apples in comparing categories and brands." Today, retailers doing business with P&G use their own classification schemes, causing P&G to "spend much time reorganizing our data to match their structures."