BUILDING A GLOBAL FOUNDATION

Michael Garry

Ahold takes global standards seriously -- very seriously.

After all, not many retail organizations will assemble a special 14-member team dedicated to the understanding and adoption of global standards, but that's what Ahold did over a year ago. The team, Ahold Global Standards, is split up between Ahold's global headquarters in Zaandam, Netherlands, and its U.S. headquarters in Braintree, Mass.

Ahold Global Standards is addressing standards for two of the most significant technology-based initiatives in the consumer-packaged goods manufacturing and distribution industries -- global data synchronization and radio frequency identification (RFID). The team is also responsible for such related matters as data accuracy, supplier relations and the development of a product-information management (PIM) system.

Ahold has been in transition following its "Road to Recovery" strategy announced in November 2003. Since then, it has divested some divisions, consolidated others and dealt with financial improprieties at its U.S. Foodservice division.

Notably, in the United States, Ahold sold its Bruno's and Bi-Lo chains this year to a private investment group, while moving its U.S. headquarters to Braintree, Mass., from Chantilly, Va. Its U.S. retail companies are Stop & Shop and Giant-Landover, whose operations are being consolidated; Giant-Carlisle and Tops Friendly Markets, also being consolidated operationally; and online retailer Peapod. In Europe, it operates such food retailers as Albert Heijn in the Netherlands and ICA in Sweden and Norway.

Ahold's Global Standards group, led by Bob Bersani, chief global standards officer, supports the company's desire to become more efficient and competitive on a global scale.

Moreover, the group's emphasis on global data synchronization and RFID positions Ahold to enhance its role as one of the leaders in these growing arenas. To date, companies like Wegmans Food Market, Supervalu and Wal-Mart Stores have gone further with data synchronization, while Wal-Mart has almost single-handedly pioneered CPG supply-chain RFID implementation in the United States.

In support of its activities, the Ahold Global Standards team has created a communications function, charged with the education, engagement and enrollment of Ahold's far-flung divisions into the world of standards-based data synchronization and RFID. Heading up the communications effort is Rhonda B. Horn, director of global adoption strategies for Ahold Global Standards, who recently agreed to be interviewed by SN.

Horn, who joined Ahold a little more than a year ago, previously worked for UCCnet, the Uniform Code Council's data synchronization division that last year became a data pool and recently announced a merger with Transora. Her role on the Global Standards team overlaps with all of its activities, as she speaks to Ahold executives throughout its divisions. "When we need buy-in to help develop standards or to participate in an effort -- that's my role," Horn said. "I don't know if other [retail] organizations have that type of role."

PIONEERING DATA SYNC

Data synchronization is an area that Ahold has been pursuing for several years, well before the formation of the Global Standards team. The company was one of the pioneering members of UCCnet, conducting data sync tests with suppliers through its now-divested Bi-Lo division. Over the past year, Ahold selected the WorldWide Retail Exchange, Alexandria, Va., as its data pool, and helped develop the Global Registry for the Global Data Synchronization Network (GDSN), a new model for the exchange of standard- product data under the auspices of UCC and EAN International.

Ahold has also been active in helping the industry at large move forward with data synchronization. For example, it has participated in studies demonstrating the benefits to be gained from synchronized data, such as more accurate invoices and purchase orders and reduced data management. Last month, Horn gave a presentation at the Food Marketing Institute show in Chicago on ways retailers and suppliers could gear up internally for data synchronization. And several Ahold executives, including Horn, will be participating in sessions at UCC's U Connect Conference, being held June 7 to 9 at the Gaylord Texan Resort and Convention Center, Dallas.

"There needs to be more implementation [of data synchronization] in the industry," Horn said. "People understand it, but have a hard time getting started. Companies are waiting for a magic disk they can plug in to make it go. But the reality is that only a portion of this is technology. The largest portion has to do with business and change, and change is very hard."

In the United States, Horn has been helping to jump-start data synchronization pilots at Ahold's U.S. operating companies. That effort began a year ago, when she visited key executives to "give them a base-level understanding of global standards, what they are and why we should care about them," she said. More recently, she has made return trips -- for example, to Stop & Shop -- asking for resources to support standards development and pilot activities.

The Giant-Carlisle chain, based in Carlisle, Pa., has already begun a data synchronization pilot, consulting with the Global Standards group on an implementation strategy. The chain is accepting standard item data from Procter & Gamble and other vendors, working through WWRE within the GDSN.

Overall, Giant-Carlisle is targeting the 20 to 30 vendors with which Bi-Lo was synchronizing data prior to being sold by Ahold. "They went back to the same suppliers to find out who was available," Horn said.

Horn pointed out that although individual Ahold divisions like Giant-Carlisle may have their own projects, they partner with the Global Standards team in order to understand Ahold's direction for global standards and to "share the same data foundation." Initially, the important thing is to get started, ultimately moving to "one global strategy" comprising data synchronization and other elements, she said.

She acknowledged that Ahold was not finished building its base foundation serving all of its operating companies for data synchronization and other initiatives. "We're looking at the very foundation of our business on a global basis," she said. "The end strategy is for everyone to have the same data quality levels and improved processes," though the applications may still be different.

In other words, she said, the company will have "one foundation globally that is flexible in use," reflecting individual geography, country and operating company. The technological underpinning of Ahold's global infrastructure is mostly internally developed.

An important part of Ahold's global strategy for data synchronization and other initiatives is the development of a PIM system, this possibly from a third-party vendor. The technology would serve as a buffer between external and internal information, giving Ahold "control over ongoing changes in standards without having to change internal systems," Horn said. "It insulates internal systems from too much change externally." It will also help with workflow and data storage.

GETTING READY

One of the main activities at Ahold's individual companies is internal "preparedness readiness" for global data synchronization prior to going into "production" mode with suppliers later this year. As Horn put it at the FMI show, "Before we turn that faucet on, we want to make sure we have all the right elements in place."

Ahold's companies are already up to speed for basic standards such as Global Trade Item Numbers (GTINs), Global Locations Numbers (GLNs) and XML. But companies such as Giant-Carlisle have been looking at the type of standard product data, or "attributes," such as physical dimensions, that it is most interested in obtaining.

Part of the Global Standards group's assessment of business benefit for an Ahold operating company "is to provide those attributes that are most interesting to them," Horn said, declining to be specific. These could include any of 150 standard attributes within GDSN as well as currently non-standard attributes, such as price and promotion. In addition, adjustments need to be made to systems to accommodate the attribute information.

Giant-Carlisle, as well as other Ahold companies, are also examining where data is located within the organization, and "once it comes in, where else does it have to go," Horn said. The Giant-Carlisle model, she added, is made more complex because of its association with C&S Wholesale Grocers, Keane, N.H. The chain is also identifying which systems are needed to get started on the project.

An important issue surrounding data and data synchronization is the "accuracy" of the data -- that is, whether it reflects the physical reality of the products being distributed. The usefulness to retailers and manufacturers of synchronizing product information would be severely undermined if the data itself is inaccurate. Thus, a key focus area for Ahold, globally, at individual divisions, and in the industry, is data accuracy.

"Ahold's data requirements are pretty strong, so we have a high level of commitment to industry efforts to address data quality," Horn said. "As you do more, you understand how bad [data quality] is."

Ruud van der Pluijm, Ahold's Netherlands-based vice president, B2B e-commerce, is working with the GCI (Global Commerce Initiative) to address data quality. GCI, a Europe-based international body promoting standards for the global CPG industry, recently set up a subcommittee to address the data accuracy issue, Horn said.

Though the onus for correcting inaccurate data is thought to reside with manufacturers, retailers like Ahold are addressing it internally from a "consistency standpoint," Horn said. At Giant-Carlisle, an effort is made to identify "exceptions" when data from a manufacturer on a product's size, for instance, doesn't match the size the retailer has recorded. "We try to figure out who's right," Horn said. "This requires working with the manufacturer."

Stop & Shop has as many as 60 people involved in data-quality efforts.

As Ahold goes about its internal preparation, it has made good use of the GDSLaunch Pad, a free tool created last year by FMI, Grocery Manufacturers of America and Deloitte & Touche. "The nice thing about the Launch Pad, it was accepted on a global basis," Horn said. Ahold uses the GDSLaunch Pad in working with the business side of the organization. "It's a starting point to say, here's what we project for an ROI," she said. "Then, at a later date, we can compare that with actual results."

INTO IMPLEMENTATION

Ahold's Dutch supermarket division, Albert Heijn, is probably the furthest along with data synchronization of any Ahold company to date. According to Horn, Albert Heijn's suppliers have automated the submission of new item forms, and the chain has conducted a pilot using GDSN standards with four feminine-hygiene product suppliers, P&G, Kimberly Clark, Ontex and SCA Hygiene. The pilot resulted in the elimination of all dimension-related discrepancies as well as a 30% reduction in data-management labor.

However, Horn noted, Albert Heijn is not fully automated yet for data synchronization. Ahold expects that to occur in September, when the chain plans to go into production with about 50 suppliers per month. The company has not yet defined timelines for implementation at the U.S. retail chains.

Horn acknowledged that handling implementations for organizations around the globe is a significant challenge. "We have so many operating companies, yet our strategy is global, in one direction with one mind. We have to staff for implementations around the world. It's a lot to handle."