LAS VEGAS — Speaking to many of its product suppliers at a conference here, Kroger Co. last week outlined an ambitious, multi-year plan to transform how it receives and manages product information, including the adoption of data synchronization, a master data management system and a number of new merchandising and store applications.
The overall program, called Project Mercury, has been several years in the making and will be “the largest IT initiative in the company’s history,” said Greg Menz, enterprise solutions architect for Kroger, in a presentation at GS1 Connect, sponsored by GS1 US, Lawrenceville, N.J. The program will be tested starting this October with nine categories and rolled out to more than 650 categories over the next three years; it will apply to all Kroger divisions except for Fred Meyer.
In a letter to suppliers handed out at the presentation, Kroger, Cincinnati, said the program would “help us get your products to market faster, and more efficiently manage item modifications.” For shoppers, the changes will result in fewer POS disruptions, more descriptive receipts and shelf tags and improved product tracking for recalls, the letter said.
Menz was accompanied on the stage by five other veteran Kroger executives, who were available to help suppliers navigate what will be a major change in how they interact with Kroger: Dave Schmidt, director of Project Mercury; Holly Abernathy, business solution architect responsible for data integrity and quality; Chris Kirkland, business solution architect for perishables; Kathy Sant, business solution architect for grocery and pharmacy; and Chadd St. Clair, business solution architect for drug/GM. “They are here to hear your ideas and concerns,” Menz told attendees.
Under the new program, suppliers will be encouraged to leverage the Global Data Synchronization Network (GDSN), which links the product databases of suppliers and retailers in a standardized system overseen by GS1, Brussels, when modifying item data or introducing new items. Kroger, through its data pool, 1SYNC, a division of GS1 US, is also establishing a vendor item portal through which GDSN data — as well as a considerable amount of data not supported by GDSN — will flow.
“The GDSN already contains data on more than 9 million items, and GS1 US and 1SYNC are working to expand that number and the amount of information about all those items,” said Bob Carpenter, president and chief executive officer, GS1 US. “We welcome the participation of the Kroger Company, and we’re confident that their involvement will help accelerate the progress of this important work.”
PHOTO, from left: Kroger’s Chris Kirkland, Kathy Sant, Holly Abernathy, Chadd St. Clair, Dave Schmidt, Greg Menz at GS1 Connect.
Kroger’s embrace of the GDSN revives an earlier, aborted effort to synchronize data with suppliers in 2004, the year the GDSN was launched. The retail giant is one of the last top-10 food retailing companies on SN’s list of the Top 75 food retailers in North America to adopt the GDSN for data synchronization, which helps trading partners improve the accuracy of their data and avoid logistical, invoicing and merchandising errors.
While the GDSN has grown in recent years, the absence of Kroger — with $90 billion-plus in annual sales, the largest traditional supermarket operator in the U.S. — was known to rankle some CPG suppliers, many of whom use the system to improve efficiencies with other food retailers.
“We’ve been watching from the sidelines,” acknowledged Menz. “But we just couldn’t do it before.”
Menz attributed the delay to the limitations of a 30-year-old “data model” for item information that resulted in a “labor-intensive and error-prone business process for product data management.” Kroger is now working on replacing that data model with a master data management (MDM) system that includes a repository, a set of work flows, “a lot of rules” and “roles for managing items, supplies and services,” he said.
The MDM represents the foundation for the program and a desire to “get the data right first,” said Menz. “Managing data is not the glory of being a supplier or a retailer, but it is a necessary evil.”
IT plays a big role in the program, but Menz described it as a “business-led strategy” that will also include replacing numerous legacy merchandising, allocation and store applications.
While Kroger will use the GDSN to bring a wide variety of product attributes into its internal system, the retailer will be going several steps further by asking suppliers for numerous other attributes not yet supported in the GDSN.
Approximately 120 attributes — which are listed on www.1sync.org/kroger — will be required; about half are already provided through GDSN, while 25 are unique to Kroger and some will be category-specific. The attributes encompass basic item information, supply chain data, hazard-related attributes, sales planning, reclaim, discontinued products, nutritional information, family-tree-specific information, shrink and WIC-related information. In total, the program will include between 2,000 and 3,000 attributes across categories.
Suppliers that don’t use the GDSN will be required to manually enter all data for new and existing items into the vendor item portal. All paper forms will be eliminated.
Menz said Kroger’s own corporate brands will be subjected to the same data requirements. “There will be no shortcuts for corporate brands.” The program includes DSD suppliers.
Product attributes are typically of a descriptive or logistical nature and include dimensions, weight and other features that impact distribution. But the growth of social media, mobile shopping and e-commerce has put a new premium on information sought by consumers such as nutritional components and allergic reactions. Thus CPG companies and retailers are seeking to ensure the accuracy of that consumer-related data as well in a program called the GS1 B2C (business to consumer) Initiative that has thus far identified 19 attributes. Kroger will ask suppliers to include some of that consumer data along with the traditional data elements.
“The timing of the B2C Initiative is perfect for us,” said Menz. “We’re looking for consumer-driven attributes from a trusted source for mobile and web applications.”
The data-synchronization phase of the program begins in October, when Kroger will test the system with suppliers in nine categories: packaged cheese, salad dressing, breakfast sausage, baby HBC, coffee filters, bagged salad mix, air care, paper towels and packaged deli meat. Kroger will go into production for those categories in the first quarter of 2013, and follow with more than 650 categories over the next three years.
“The first nine categories will be a big learning process for us,” said Menz.