Getting into sync

Getting into sync

Mistakes will happen, but when it comes to invoicing errors, the retail industry has run out of patience and is determined to prevent them. Reportedly $40 billion, or 3.5%, of total sales is lost every year due to data errors, according to consulting firm A.T. Kearney (www.atkearney.com). Understandably, a major push is on to get all suppliers to synchronize their product data with their retail customers.

While retailers are the driving force behind data synchronization, the common starting point for all participants is UCCnet Inc. (www.uccnet.com), a service designed to act as a global registry of item-level data, based on EAN.UCC global standards. To date, more than 2,000 companies have signed up as UCCnet members.

One benefit of data synchronization is its potential ability to resurrect some abandoned supply chain initiatives. “Data synchronization gives us the ability to revisit those supply chain technologies and see if we can begin to get the return on investment that companies, especially retailers, made in those programs,” says Ron Stich, UCCnet coordinator with QEP Co. Inc. (www.qep.com), a manufacturer of flooring tools.

Companies who supply products to some of the country’s leading retailers are expected to get their items in sync with their retail customers at some point during 2004 (each retailer has its own timetable, but by Jan. 1, 2005, all suppliers are expected to be in sync).

“It’s absolutely imperative that you have accurate, consistent, synchronized data,” says Michael Heschel, executive vice president - information systems and services with grocery retail giant Kroger Co. (www.kroger.com). “How in the world are you going to have quick replenishment and other programs if you’ve got aggregated data that the supplier thinks is A and the retailer thinks is B. That doesn’t work.”

According to Marianne Timmons, director of business-to-business with Wegman’s (www.wegmans.com), a grocery chain located in the Northeast, her company stands to save about a half percent (0.5%) — roughly $1.5 million a year, on $3.5 billion in sales — through data synchronization. Typical benefits to retailers include improved time-to-market with new items (up to 14 extra days’ sales), thousands of hours saved in receiving at the warehouse thanks to the elimination of item discrepancies, and up to 1% reduction in logistics costs.

“About 50% of the data sent to us by our suppliers is bad in some way, shape or form,” Timmons points out. “On inbound logistics, for example, we found that 5% of the truckloads are underutilized because a buyer thinks that a case weighs 30 pounds and it only weighs 28 pounds, so they’re not running full truckloads.”

By having better information in the system from some of its major suppliers, Wegman’s has been able to eliminate roughly one truckload per month.

Although data synchronization is largely perceived as a boon to retailers, manufacturers stand to gain just as much.

QEP committed to data synchronization last July, and according to Stich, there are three major components to the effort. “First is synchronizing and cleaning up our own internal data,” he says. “Second is getting that data to the UCCnet repository and then on to our customers. And third is the ongoing maintenance after the initialization process.”

The majority of QEP’s sales are to home improvement retailers Lowe’s and Home Depot, and Stich admits that one of the reasons propelling his company’s data consistency efforts is to be supportive of the goals and objectives of QEP’s major customers. “It’s part of our customer service strategy,” he says. LT

Data synchronization: What’s in it for you?

Benefits to manufacturers Benefits to retailers
3%-5% reduction in out-of-stocks 3%-5% reduction in out-of-stocks
0.2%-0.7% reduction in outbound logistics costs 0.5%-1% reduction in inbound freight costs
0.5% reduction in inventory 1% reduction in inventory
Reduction in invoice write-offs Reduction in invoice auditor fees
Source: A.T. Kearney

Survey says
Westward ho!
Even without a 21st Century Horace Greeley to issue the call, Americans continue to migrate westward, according to a recent study of relocations by United Van Lines (www.unitedvanlines.com). Based on more than 200,000 household goods shipments handled by the company, 2003 saw more people moving into the west and out of the northeast and midwest.

The migration study shows more inbound than outbound moves in Oregon, Idaho, Nevada, Arizona and New Mexico. The Southeast gained in North Carolina, South Carolina, Alabama and Florida. Delaware (as well as Washington, D.C.) in the Northeast also gained.

Losing states included New York, Massachusetts, New Jersey, Michigan, Indiana, Illinois, Wisconsin, Kansas and North Dakota.

The study uses 55% or more inbound moves to classify a state as “high inbound” and a similar figure for outbound.

Nevada has continued a 25-year inbound trend as well as achieving the largest inbound percentage — 66.5%. The two Carolinas saw their highest inbound percentages in the history of the study — 61.3%.

Logistics Today logo
April, 2004

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