GETTING IN SYNC

DAN ALAIMO

CHICAGO -- The pharaohs would be proud, if only they had Internet access.

In a series of shows and conferences leading up to this week's Food Marketing Institute annual convention, top industry executives detailed the plans for this summer's launch of UCCnet, an open, standards-based Internet trading community.

Envisioning the vast industry-sponsored project as a pyramid, the UCCnet subsidiary of the Uniform Code Council, Dayton, Ohio, will start with the synchronization of new item and item maintenance data, and proceed to build an extranet that aspires to change the way the industry does business. As UCCnet evolves, future uses will grow from item search capabilities, to scan-based trading and collaborative planning, forecasting and replenishment, to advanced logistics and auction systems, to consumer marketing.

"The vision for UCCnet is business-to-business connectivity," said Craig Schnuck, chairman and chief executive officer, Schnuck Markets, St. Louis. "It is designed to be a platform for standardized, synchronized information exchange." Schnuck also chairs the UCC's board of governors.

"UCCnet will change the entire landscape of what e-commerce will do," Michael Heschel, executive vice president of Kroger, Cincinnati, said earlier this year. "We see a compelling case for building a trading community that is not only more effective and efficient but also one that transcends trading partner geography, size and proprietary links."

Pilot testing is now under way and final construction and implementation testing is scheduled for June. "If all those are successful and to date everything has been, the system should be available for industry-wide expansion in July," Schnuck said. "UCCnet is targeting to have 75 companies involved by the end of this year. And right now with the commitments that they have, it looks like they could well pass that with numbers over 100, and beyond."

Participants in UCCnet can expect a substantial return on their investment, said Paul Benchener, president and chief operating officer of UCCnet. "We are trying to provide value that exceeds the cost that it is going to take. The goal we have is to form collaborative relationships through this electronic trading capability. The collaborative relationships go beyond even the trading partner relationships," he said.

Benchener said this payback will result from:

Reduction in the number of invoice deductions;

Improved purchase order quality;

100% purchase order-to-invoice match rate;

80% improved speed to retail for new items;

100% advance ship notice receiving accuracy;

Shelf tag price and receiving accuracy;

Improved cash register scanning accuracy; and

Elimination of paper administration and processing.

"One of the jobs we all have is to sell these things to upper management on the basis on what is going to be the payback," said Michael DeCory, manager, electronic commerce, Wegmans Food Markets, Rochester, N.Y. "It's not CPFR or scan-based trading, so it's going to be hard to put a big number on it, but there are a lot of soft benefits there to make things easier. This is a very easy way to provide some nice flexibility to interact with our trading partners."

Other aspects of UCCnet's mission include information synchronization and providing access to applications in compliance with the UCCnet standard developed by software developers. "We are not developing the applications at UCCnet. We are providing the foundational services," Benchener said. Cost to participate will vary by company size and the number of users, he said, but it will reflect UCCnet's not-for profit status.

Participation at this point includes 29 retailer/distributors, more than 60 manufacturers and six trade associations. Among the supermarket companies actively involved in UCCnet's development are Kroger, Supervalu, Schnuck Markets, Wegmans, H.E. Butt Grocery and Spartan. Others on the list of participants are Ahold USA, Albertson's, Certified Grocers of California, Fleming, Giant Eagle, Meijer, NDI/Alex Lee, Publix and Safeway. Manufacturers include Ralston-Purina and Procter & Gamble, and among the associations involved are the Food Marketing Institute, Food Distributors International, Grocery Manufacturers of America and the General Merchandise Distributors Council.

"Everybody, regardless of size, whether you are a convenience store or a distribution center, can plug in and communicate through UCCnet. There is a plethora of ways that you can do this," said Anne Moses, UCCnet's product manager for the retail industry. All retailers need to connect to UCCnet is Internet access.

For a company like Supervalu, Eden Prairie, Minn., with corporately owned stores, large retailer customers and independent retailer customers -- some 4,000 in all -- "we think this is a great opportunity to re-engineer the process of what we are doing today with those retailers," said Greg Zwanziger, director of e-commerce.

"This is a great opportunity to drive forward and take a lot of expense out of the system while improving the process. We are seeing opportunities to improve what we are doing today, to drive efficiencies and drive changes to the way we do business," he said.

"We are looking at UCCnet as a core piece of how we should design our systems. So as we create systems to run our retail organization, we can leverage what UCCnet has done," Zwanziger said.

"The standards are long overdue in the grocery business. We need them," said Stuart Cohn, manager of space management schematic department, Associated Grocers, Seattle. "The retailer has to define how to segment and categorize their information, but that can be done after the fact."

While the short-term benefits of UCCnet focuses on improvements in item synchronization between suppliers and retailers, over the long run, proponents see a lower cost of goods, improved cash flow, reductions in invoice errors, improved fleet deployment, better utilization of trucking capacity, reduced inventory, decreased handling costs, lower inventory management costs, reduced out-of-stocks, better assortments, more effective consumer promotions and improved consumer targeting.

"We need to realize that there are a lot of opportunities to change what we do today and we need to make those changes happen much more quickly than in the past," said Supervalu's Zwanziger. "There are some people within our industry and outside our industry making things happen. One of the great opportunities about the Internet is that those of us who are out there today can embrace it and move forward," he said.

Synchronization has been and will always be the bane of any electronic transaction. If you don't have it, you don't have value," said Scott Williams, an executive on loan to UCCnet from Procter & Gamble, where he is senior manager of global business development. "UCCnet is guaranteeing synchronization through XML functionality, guaranteed delivery and functionality that will return an XML message upon the information transferring through the trading partners' legacy systems," he said.

XML, or Extensible Markup Language, is a computer programming language.

Although UCCnet applications ultimately will supersede EDI, and companies that now use EDI can continue to do so, Benchener said. "We consider this to be an evolutionary process. We are not blowing up EDI. Going forward, you will have the option of potentially moving off of that onto the use of the Internet for all of your business," he said.

"We are working to improve the business practices and we are doing this across the existing business processes," he said. Companies can use UCCnet with existing information systems, although they will probably want to invest in new UCCnet-compliant applications that will include EDI, as well as other uses.

"We are looking at it from the business practices standpoint. We do know that as we revise the practices and allow these practices to be linked into UCCnet, that over time, we will end up revising entire business processes. Once we do that, it will be easy to move from the traditional EDI into the various applications that we have developed and run all of your business through the Internet," Benchener said.

Although UCCnet is being developed first for the grocery industry, it will eventually be rolled out to all 23 of the industries covered by UCC, and ultimately will become a global Internet network. "One of the hallmarks of what we do is an open architecture with an open approach, and everything we do is meant to be inclusive, and not exclude any particular solution provider, or any particular industry segment, from participating in this great community," said Fred Geiger, UCCnet's director of product management. "And it provides a foundation for growth. The intention is to go global with this and across the 23 industries serviced by the Uniform Code Council."