A BRAVE NEW WORLD OF DATA SYNC

MICHAEL GARRY

In the political realm, the world remains in some turmoil. But in the commercial arena, the world has agreed to a new Global Data Synchronization (GDSN), which is already beginning to see some activity.

The GDSN, which is managed by Brussels, Belgium-based EAN International and Lawrenceville, N.J.-based Uniform Code Council, does for data synchronization between retailers and manufacturers what the Internet does for communication between computers: One point of entry gives you standardized access to everybody on the network. For retailers and manufacturers operating in an increasingly complex global economy, this represents a major step forward for the cause of efficient and harmonized business relations.

Indeed, operating in sync with your trading partners -- sharing the same product, pricing and promotion information -- is now considered essential to preventing hugely expensive errors and inefficiencies in everything from billing to transportation.

The GDSN, as depicted above, encompasses a relatively straightforward scenario: Retailers/distributors (data recipients) and manufacturers (data sources) sign up with a data pool, 10 of which have been certified as GDSN-compliant, EAN International (soon to be renamed GS1) announced last week. The source data pools register their manufacturers' items with the GS1 Global Registry, which serves as a "pointer" for recipient data pools seeking product data. Actual synchronization then takes place directly between data pools.

This is all an outgrowth of work done over the past few years by a number of large retailers and suppliers operating under the auspices of UCCnet, a division of UCC based in Lawrenceville, N.J. UCCnet developed the original concept of a Global Registry, but decided, in the interests of international comity, to allow the registry to act as a stand-alone global body.

Last year, the stage was set for the GDSN, which became official last fall. "I think we made a lot of progress in 2004," said Dennis Harrison, senior vice president, UCC. "We finally have the world agreeing on a global network. We have a data pool certification process, interoperable data pools and lots of activity on the network. Prior to 2004, none of this was happening."

As of last week, 151,108 Global Trade Item Numbers (GTINs) were registered in the GS1 Global Registry, and 97 trading partners were using the registry, six retailers and 91 suppliers, said UCC. Four certified data pools -- UCCnet, Transora, WorldWide Retail Exchange (WWRE) and Sinfos -- are actively synchronizing data via the network; six other data pools are certified but not yet active.

"My prediction is that this year you will see a lot of activity," said Harrison. "As more companies realize it's for real and come on board, we'll get closer to critical mass." He acknowledged that the larger retailers and suppliers are leading the drive, with smaller companies taking a "wait-and-see" approach.

Rob Garf, retail analyst for AMR Research, Boston, believes that the GDSN "will be adopted over time." The challenge, he added, will be for early adopters to rationalize their initial investment because they may not see cost savings in the short term.

The cost of participating in GDSN is not so much the price of subscribing to the network, which reaches a ceiling of $100,000 based on size, but on "all the time it takes to make it happen," said Harrison, referring to internal company projects. Manufacturers need to "clean" their data while retailers must rework their infrastructure to accept and process the data.

One factor motivating some companies is the emergence of radio frequency identification (RFID) and the electronic product code (EPC), which are said to require clean, synchronized data as a foundation. "They're going to have to do [GDSN] anyway for EPC," said Harrison.

The Case for GDSN

Of course, data synchronization per se is not new. UCCnet retailers and manufacturers have been synchronizing data through its system and registry for the past few years, and companies in Transora and WWRE and have been synchronizing privately with each other and with UCCnet.

However, the idea that all of these data pools would subscribe to a common network connected via a common Global Registry is new. Although this means that manufacturers and retailers would have a single point of entry and should never have to subscribe to more than one data pool, it remains to be seen whether the standardized, global vision espoused by the GDSN will ultimately prevail.

Some manufacturers are already grousing about having to pay the Global Registry fees, especially if they only want to synchronize with retailers in their own data pool. Data pools, including UCCnet, have not required manufacturers to subscribe to the Global Registry, which has raised concerns about its long-term viability (see story, this page).

Still, progress is being made. The biggest data synchronizers in retail continue to be the UCCnet pioneers, Wal-Mart Stores, Wegmans and Supervalu. At Chicago-based Transora, Kroger is "on track" to begin accepting new-item data in February and synchronizing data in April, said David Garcia, vice president, global marketing, Transora. Kroger will roll out on "a category basis, working closely with Transora [manufacturers] first," he added. Other Transora retailers include Publix and Schnucks, which are still in a planning phase, with activity anticipated beginning in the second quarter, said Garcia. Wakefern is the latest distributor to publicly announce selecting Transora as its data pool.

Four to five of WWRE's retail members, including Albertsons and Ahold, are actively synchronizing data through the Global Registry, said Nick Parnaby, WWRE's global director, member development and marketing.

As an incentive to sign on for GDSN services, including the Global Registry, GS1 GDSN Inc., the new governing body for GDSN under GS1, last month began offering a 50% fee discount to those who do so before July 1. Retailers and manufacturers will only have to work through their certified data pool of choice for data sync and GDSN services.

The food industry trade associations have also gotten into the act. Food Marketing Institute and Grocery Manufacturers of America, both Washington-based, with Deloitte Consulting, in November launched an online Global Data Synchronization roadmap tool called the GDSLaunch Pad.

The tool, available for free at www.gdslaunchpad.com, offers retailers and manufacturers techniques for determining a customized business case for data sync as well as an implementation plan.

As a leader in the field, Wegmans Food Markets, Rochester, N.Y., currently has more than 13,000 items synchronized from more than 650 suppliers, said Marianne Timmons, Wegmans' director of business to business. "Our numbers have grown by more than 50% since September, and we have seen significant growth and development in the understanding and rates of implementation of our supplier community," she said. Wegmans has started syncing data in the GDSN.

Wegmans is not letting up on its data sync efforts, planning to finish synchronization with suppliers as well as to help develop industry standards, said Timmons.

Wegmans has been the subject of public case studies on the benefits of data synchronization, and Timmons said two more projects -- dubbed Project Jury and Project Reality -- are in the works. "We remain confident that the savings will fall in three primary areas: supply chain, store operations and transactional efficiency," she said.

Food Lion, Salisbury, N.C., which switched from UCCnet to WWRE for data pool services, intends to use the GS1 Global Registry, said Carolyn Hager, Food Lion's manager of e-business. "We are committed to GDSN and the concepts and assurances it brings for the future. We will continue to pursue data synchronization for all items, all types of items and for expanded attributes."

Hager regards the GDSN as having huge benefits for both suppliers and manufacturers. "Having accurate data and the ability to quickly respond to changes is absolutely necessary for supply chains to function in our fast pace world with RFID, Internet shopping and other future initiatives," she said.

In particular, Hager cited the benefits of data sync as "quicker response to new items and changes, fewer discrepancies in purchase orders, deliveries and invoices, and better information for consumers, to list a few."

Food Lion is currently in "testing stages," said Hager, but expects to synchronize the majority of its items over the next few years.

Giant Eagle, Pittsburgh, which plans to continue to use UCCnet as its data pool, has been actively working on item synchronization and is currently in the final phase of testing with a select group of suppliers, said Cliff Gallagher, Giant Eagle's business area manager of corporate systems. "We have prioritized a list of our larger volume suppliers and will examine opportunities to test with them in the near future."

In transitioning from the UCCnet-only world to GDSN, Giant Eagle is working with each of its suppliers individually "as we adapt our processes to approach item synchronization on a more global basis," said Gallagher. "Most of the changes are in our supplier setup module."

Even at this early stage of adoption, Giant Eagle has observed numerous benefits in the synchronization process, such as that derived from getting its own data in order, said Gallagher. In one instance, adoption of item synchronization resulted in a cost reduction from a supplier.

Unified Western Grocers, Commerce, Calif., has finished synchronizing with Nestle Purina PetCare, said Greg Vick, executive director, supply chain and e-commerce systems for Unified. The wholesaler, using UCCnet as its data pool, is also working with Procter & Gamble to synchronize the coffee category and with Kraft on the Jello category. Thus far, though P&G and Kraft switched from UCCnet to Transora, transitioning from the UCCnet-centric scenario to GDSN "has been rather transparent to us," said Vick. He does have concerns about future changes in fee structures.

Vick said that Unified has benefited from synchronizing item attributes like case and pallet dimensions, which allows it to maximize use of space. "We have had dimension information wrong," he said. "The potential here is that 5% to 10% of the SKUs in a warehouse can have significant errors with product dimensions." Previously, dimension errors could only be checked by physically measuring products in the warehouse.

Data synchronization has also helped Unified discover "holes" in its categories -- items that were available and selling well in the marketplace but that Unified was not aware of, Vick said. To do that, it's necessary to match the category data received from a manufacturer with internal legacy data.

This week at the National Retail Federation's annual conference in New York, Unified will be named as a user of the Cactus GDS Accelerator for BizTalk, from Cactus Commerce, Ottawa. The system allows Unified to connect to UCCnet and the Global Registry, as well as integrate data into its existing systems.

Challenges to Overcome

Few people would deny that data synchronization is hard work, both for retailers and manufacturers. With many companies having disparate systems and sources of data, reconciling them has been a challenge, said Hager. "Data synchronization has caused companies to rethink their internal processes and implement more efficient ways of handling item data."

Another concern, noted Gallagher, is the level of data validations performed at each data pool. "To be comfortable with a data pool, we will need to internally certify the data," he said.

For manufacturers, a major challenge remains the cleanliness of data. "Manufacturers are beginning to work hard in this area but there is a long way to go," noted Timmons. "Synchronizing bad data will not benefit us and in many circumstances, it will set us back. We are using this data in our internal systems every day."

To clean their data, suppliers need to look carefully at their business processes and "find a way to correct this problem now and for the future," Timmons said. For example, manufacturers should capture changes to the physical attributes of products to keep the data up to date.

Another issue is that outside of 151 standard data attributes, there remain numerous attributes, such as price, promotion and DSD that have not been made standard. Timmons urges retailers and manufacturers to get involved in the standards development process. "The more organizations we have working on it, the more rapidly and completely the standards will be developed," she said.

Progress is being made with some non-standard attributes. For example, a proposal for DSD at the store level has been submitted to the Global Standards Management Process (GSMP), the division of GS1 that handles new standards requests, said Ann Dozier, vice president, business development, Coca-Cola Enterprises, Atlanta. "We're confident there will be a January 2006 release" of the store-level DSD standard, she said.

Standardization of Price/Promotion (known as relationship-dependent data, the cause of most invoice errors) took a "major leap forward" with the GSMP approval in December of a business requirements document that takes a "crawl-walk-run" approach to price synchronization, said Transora's Garcia. But more work is needed to make it a standard. In addition, he said, a GSMP Task Group has begun to define requirements for new item forms. Transora meanwhile supports price and new item forms with its own solutions.

Another issue facing retailers and manufacturers is which data pool to select among the 10 that have so far been certified. Timmons likened this decision to the choice of Internet Service Providers that consumers need to make.

Food Lion's Hager suggested that before choosing a data pool, a company should evaluate its business needs and consider internal skills and resources.

Unified's Vick is concerned that the GDSN data pools, to compete with each other, will offer non-standard enticements such as "value-added filtering" of information coming from another data pool. Distributors would then have to react to the results of the filtering. "Data pools may not have the best interests of standards in mind when they add value in non-standard ways," he said. Until further standardization takes place, data pools are also offering their own non-standard item attributes, noted Garcia.

Vick advised beginners not to "synchronize like crazy." Instead, they should first "understand the gray areas and the changes needed to deal with them."

Global Data Sync Glossary

Data Source: Typically a manufacturer that holds trade item information it wants communicated.

Data Recipient: Typically a retailer that requests trade item information.

GDSN (Global Data Synchronization Network): The GS1 Global Registry and a network of interoperable data pools that enable data synchronization per EAN.UCC System standards.

GS1 Global Registry: The global directory of the GDSN for the registration of items and parties that validates registered data and ensures the uniqueness of items and parties based on their GTIN and Global Location Number (GLN). Basic item and party information is stored in the registry and a pointer is provided to the appropriate data pool where more information about a specific item or party can be found.

GSMP (Global Standards Management Process): A collection of procedures, methods, and practices that develop and maintain EAN.UCC System standards. EAN International and the Uniform Code Council co-manage the GSMP.

GTIN (Global Trade Item Number) The globally unique EAN.UCC System identification number for products and services. A GTIN may be 8, 12, 13, or 14 digits in length.

Recipient Data Pool: The group that contacts GS1 Global Registry for data recipient, and channels trade item information from source data pool to data recipient.

Source Data Pool: The group that collects trade item information from data sources to be registered in the Global Registry.

Source: Uniform Code Council; GSMP