GETTING THE STRAIGHT DOPE

DENISE ZIMMERMAN

Accurate scan data may just be the single most important element in the industry's quest to implement Efficient Consumer Response.

In a wide range of ECR initiatives, from continuous replenishment to pay-for-performance promotions, progress may come only when point-of-sale scan data precisely reflect what consumers are purchasing at the front end.

The industry has made major strides in improving the quality of POS scan data in recent years, retailers and other industry observers interviewed by SN said. But there is still much more work to be done.

The industry must determine not only what measures can be taken to ensure highly accurate POS scan data, but whether achieving that goal is worth the effort.

"The real question is: Are we as an industry any better off on the retail side? We are in control of this issue. If we want to have scan data integrity on everything that goes through our stores, we can do that. We just have to decide to do it," said Peter Rolandelli, corporate vice president of management information systems at A&P, Montvale, N.J.

Without doubt, many retailers are deciding to enhance the quality of their POS scan data. Among the key steps:

No Multiple Key: For scan data to reflect consumer item purchases accurately, cashiers must be trained to stop using the multiple key. However, making that switch can impair checkout speed.

Reduce Not-On-Files: To improve scanning accuracy, all products must be on file in the POS system. But ensuring that all items are on file can force a retailer to refuse unauthorized items from suppliers.

Updated Systems: Using outdated communications equipment to transmit information can corrupt data. Updating equipment can involve considerable expense.

Bar-Code Symbols: The bar-code symbol on each product must be readable by the POS scanner. But informing suppliers about bar-coding problems can be labor-intensive and time-consuming.

For many retailers, the issues are how much to do, how quickly to do it and evaluating how it will affect in-store operations. If capital expenditures are needed to enhance scan data quality, retailers have to convince top management.

"If you tell [top management] you want data integrity, they'll say, 'Yes, it's a good thing, but prove to me how disintegrity is hurting me today.' That's the $64,000 question," Rolandelli said.

Despite these challenges, retailers, to varying degrees, are making considerable strides in scan data integrity.

One chain that discourages use of the "repeat" key is Super S Foods, San Antonio. The 61-store chain is using a software program that prevents cashiers from using the repeat key to scan more than one package of certain high-frequency, multiflavor items.

One of those items is Kool-Aid, said Mike Bollman Jr., Super S's information systems manager. "Kool-Aid happens to be an item cashiers like to do that on. We've got a 'flag' turned on that prevents them from repeating that particular universal product code so that they have to scan every one.

"Baby food is another example where we've got it blocked, so they can't keep repeating it," he said.

Taking such steps can enhance scan data accuracy, retailers agree. But at what cost?

Paul Gannon, vice president of information technology systems at Shaw's Supermarkets, East Bridgewater, Mass., questioned the value of imposing rigid scanning procedures if they come at the expense of customer service.

Shaw's is examining the cost-benefit implications of preventing cashiers from using the repeat key, with no clear results thus far.

"In two test stores we've seen that it makes about a percentage point difference" in the accuracy of scan data. But it also "has a slight productivity impact," said Gannon.

Because of the effect on checkout speed, Shaw's has not yet decided whether to eliminate use of the repeat key on a chainwide basis.

Instead, the chain may focus on other scan data issues. "Most of it is internal procedures, to validate to the greatest extent possible that the product coming into the system is on file in the scanning system at the point of sale," Gannon said.

Ensuring that the POS file is up to date not only enhances data integrity but speeds customer checkout, which is critical. Shoppers are accustomed to moving quickly through checkouts at retail formats such as Wal-Mart and have less patience at supermarket checkouts.

"Waiting for that price check is not something people are used to -- or want to be used to anymore," said A&P's Rolandelli.

David Sefcik, manager of corporate scanning at 160-store Giant Food, Landover, Md., said closer monitoring of product shipments at the back door, thus eliminating not-on-files, is crucial to accurate scan data at the front end.

"Reducing not-on-files and reducing unauthorized product is one way to improve scan data," Sefcik said.

Dealing with unauthorized products and the not-on-file problems they frequently trigger can be difficult, according to A&P's Rolandelli.

"Here's a perfect example: We've got spatulas that some vendor delivers to our stores -- general merchandise is probably the worst in this area, by far. You've got a UPC for the white one, the red one and the green one," Rolandelli said.

"Well, he puts a blue one out there and doesn't tell you," he continued. "Now it appears at your front end and you have no price for it. But the thing is, if you stopped that spatula at the back door, you wouldn't have taken the blue one."

Many retailers, though, accept merchandise they didn't order, "and we are one of them," Rolandelli said. "If it's a sale item, we can't very well tell them to take it back now, can we?" he asked.

Another problem with not-on-files stems from the multiple UPC codes sometimes assigned to a single product.

"I still notice a lot of multiple UPCs for the same product, which kind of defeats the purpose of what the UPC is supposed to be for in the first place," said Bollman of Super S.

"I've taken products with two [different] UPCs and laid them side by side and scrutinized them, trying to figure out what the difference was -- and there wasn't any. Comet Lemon is one that comes to mind. I looked at the labels, at ounces, at everything, and could see no reason why there's two UPCs for that item.'

Bollman said Super S handles multiple UPCs assigned to otherwise identical products by maintaining separate scanner price files.

"Even though Comet Lemon is one item, we have to begin to maintain that item [price] twice," he said. "Every time there's a price change, every time there's a temporary price reduction, an allowance, an ad, we begin to have to key that multiple times -- just for one product."

Gannon of Shaw's said he's seen similar UPC problems on bonus packs, but manufacturers have taken steps to minimize them.

A case of cat food, for example, contains individual cans -- each with its own UPC -- as well as one UPC reflecting the price of all 24 items. Some distributors disable the individual cans' UPCs by printing over them, or package the items in such a way as to conceal the individual items' UPCs from the scanner's eye. "It's not the problem that it was two years ago," Gannon said.

Outmoded communications equipment and traditional data-collecting practices contribute to poor scan data integrity, other retailers said.

"One thing that happens is that a lot of point-of-sale system activities that store managers undertake may cause product numbers to disappear from a movement file. That happens most often during the middle of the week," said an industry observer, who asked not to be named.

"The traditional approach to getting scan data out of the store is to wait until the end of the week. But what happens many times is a store manager may execute a price change on Wednesday, and in the process of doing that, erase the movement tracked from Saturday through Wednesday. Then the movement starts counting again, from zero. It's very easy for store managers to inadvertently erase point-of-sale data."

Overtaxed, outdated communications equipment can corrupt data files on a regular basis, while expensive and sluggish transfer rates add insult to injury.

"The other gremlin that causes a lot of problems today is retailers using the old-fashioned method -- the old modem-to-modem stuff. They're probably only getting their data back 80% to 85% of the time from each store."

Despite the obstacles, retailers agree that improving the quality of scan data is important to enhance efficiency, especially to implement Efficient Consumer Response initiatives.

Among the more important ECR practices that rely upon accurate scan data are computer-assisted ordering, continuous replenishment and category management.

In computer-assisted ordering, for example, shelf inventory data is used to generate replenishment orders from the warehouse. Accurate POS data is crucial to determine precisely what is needed.

With the right scan data information, distribution costs can be trimmed and sales and profits increased. But inaccurate scan data can have the opposite effect. "If you get scan data wrong and try to use it, you can make billions of dollars in mistakes," warned one industry observer.

"A classic example is a retailer who reorders before fixing or cleaning the scan data. They may end up with cases of Rock-a-dile Kool-Aid gathering dust in the back room because the cashier used the quantity key," he said. "You can spend a fortune getting it wrong."

In an effort to get it right, Homeland Stores, Oklahoma City, recently enlisted a third party to collect POS scan data, clean it of "impurities" and prepare reports daily for its 104 stores with scanning capability.

Bill Rulla, MIS director, said POS scan data is gathered each evening from in-store personal computers. The product movement information is processed off-site and returned the next morning in store-by-store reports.

"It's going to provide us a way to get into perpetual inventory with computer-aided ordering and shelf management," he said.

Homeland had been collecting POS information in the past, but because it wasn't broken down by store, its value for making buying decisions and tracking movement was limited. "We were doing movement but we weren't doing any movement by store," Rulla said. "It was more of a composite of the whole company."

Dennis Wisdom, MIS director at Furr's Supermarkets, Albuquerque, N.M., said retailers are beginning to appreciate the benefits of computer-assisted ordering. "Retailers, I think, are looking more at computer-assisted ordering. That's where I see the real push, this year and next year. They'll be trying to get good data to automate the ordering process."

The value of computer-assisted ordering in reducing overall distribution costs, and the need to have accurate POS scan data to do that, is becoming clearer.

"There's a lot bigger savings in reducing inventory than the marginal savings of labor reduction. That's why I think people are looking at it more now than they did in the past," he added.

Sefcik said Giant Food places a high priority on scan data integrity, especially for tracking product movement and allocating shelf space.

"For instance, with a new product, we'll look at sales and make a determination on whether to continue carrying an item as well as where it should be carried within the store. Does it receive a prime location or does it get a lesser optimum shelf area," he said.