UCCNET NEEDS BETTER MESSAGE, SAYS WAL-MART VP

MICHAEL GARRY

CHICAGO -- UCCnet needs to explain its importance to the industry more effectively if the standards body is to boost its membership and succeed in bringing data synchronization to the food industry, said Randy Salley, vice president of merchandising systems, Wal-Mart.

In a presentation at the Retail Systems 2002 Conference and Exposition held here, Salley said Wal-Mart, a major UCCnet user, strongly endorsed UCCnet and encouraged suppliers and retailers to participate in it. But he felt the nonprofit group, a division of the Uniform Code Council, Lawrenceville, N.J., was not defining its role clearly enough.

"I don't think [UCCnet] has done a very good job in simplifying their message," said Salley at the conference, which ran through June 27. "They haven't differentiated themselves from the exchanges." That lack of differentiation, he added, has caused some "confusion" in the market.

Quoting from an A.T. Kearney study presented at the Grocery Manufacturers of America annual executive conference last month, Salley said that there has been "an incomplete and unconvincing message about cost and benefit" regarding UCCnet and "no straightforward how-tos on how to get it done."

Responding to Salley's comments, Jennifer Roberts, public relations manager for UCCnet, told SN that the organization is "aware" of this criticism and has been "focused on it" over the past few months. "We've been hearing echoes of this at our last few industry meetings," she said. "Simplify your message. Explain how it works. We're moving in the right direction. We look to the industry to provide input."

Roberts said that the UCCnet's most recent press kit, released at the Retail Systems 2002 show, tried to "de-technify the descriptions and show what the real benefits were." She stressed that UCCnet was not in competition with B2B exchanges, pointing out that retailers and manufacturers can subscribe to UCCnet through the WorldWide Retail Exchange (WWRE) and Transora.

As of last Monday, after signing up nine new suppliers in the previous week, UCCnet had 120 subscribers, 110 of them manufacturers and 10 of them retailers, said Roberts. The 10 retail companies are Wal-Mart, Ahold USA, Food Lion, Hy-Vee, Meijer, Supervalu, Schnuck Markets, Shaw's and Wegmans.

But that is far short of the 600 members the organization hopes to have signed by the end of this month and in production by the end of the year. Still, compared with earlier industry initiatives like bar-code scanning, UCCnet has done well in the 15 months since its first successful synchronization between trading partners, she said.

UCCnet hosts a standard global data registry in which suppliers and retailers can participate -- suppliers publishing item information and other data to the registry and retailers subscribing to that information. The upshot is that UCCnet trading partners would be in agreement on data, eliminating costly and time-consuming invoice discrepancies. The A.T. Kearney study estimated that $40 billion, or 3.5%, of total sales lost each year are due to supply chain information inefficiencies.

Wal-Mart, with $218 billion in sales last year, launched its UCCnet program with Procter & Gamble, and was in production with P&G in the diaper category in April. In total, Wal-Mart was in production on UCCnet with eight suppliers across 17 categories when Salley gave his speech, and he said that two more suppliers (Kellogg's and Campbell Soup) were very close to going live.

He added that the mass merchant, which operates 1,100 dual-format Supercenters in the United States along with 1,600 traditional discount stores and 510 Sam's Clubs, was testing UCCnet with 21 other suppliers, and seven of those would be in production by mid-July. In addition, he said Wal-Mart intends to be in production with UCCnet in two foreign countries by the end of this year.

Salley said that Wal-Mart has encouraged suppliers on its Web-based RetailLink supplier hub to examine UCCnet. But he was dismayed at the reluctance of suppliers to join. In fact, some suppliers, invoking the legendary Wal-Mart clout, have even told him that "it would really help me get this through my organization if you would just mandate I get it done."

Added Salley: "It's possible for us to do that, but I don't understand why it takes that to move an industry initiative forward. That just doesn't feel like collaboration to me."

Salley compared the sluggish adoption of UCCnet to the glacial pace at which UPC scanning and electronic data interchange (EDI) were accepted. As with those initiatives, "everybody knows [UCCnet's] the right thing to do, but for some reason we're having difficulty making a commitment and moving forward with what to me seems to be a pretty straightforward decision."

Salley explained in detail what Wal-Mart likes about UCCnet. First, UCCnet, a computer-to-computer process, eliminates keying in of item data, which is so prone to error. Second, standardized data elements make for better reporting, not only internally but back to suppliers through RetailLink.

Next, Salley applauded UCCnet's speed in processing new items and updating existing items. In addition, UCCnet, which Salley described as "a utility run by a neutral party," allows Wal-Mart to conduct an "electronic review and approval process" for products. Salley also noted the simplicity of the procedure to Wal-Mart buyers. And finally, the most important attribute of UCCnet, he said, was that "it builds a foundation for future applications."

As for results, Salley said they have been "significant," with "a promise for greater things to come." In particular, he said item maintenance was reduced to one day from between 15 and 30 days. "That can mean a lot in correcting problems," he said. In addition, the chain has seen improvement in case-level, global trade item numbers (GTINs) and has added dimension information for cases. Wal-Mart has also been able to get rid of de-listed items still lingering in its databases.

Increasing the speed of new-item introductions had a dramatic effect on sales in a pilot Wal-Mart conducted in South America, Salley said. The growth of one Procter & Gamble category in Argentina, where UCCnet was applied, was 15%, compared to a 5% growth in Brazil where normal practices were followed.

On the technical side, Salley said Wal-Mart had "a lot of work to do" taking standard XML from the UCCnet registry and populating it seamlessly back into Wal-Mart's data models.