The Chinese e-commerce giant will have $8 billion in cash after its IPO as well as valuable stock it can use for acquisitions. The ...
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By making product information consistent across multiple databases, information used by internal merchandising and marketing managers, for example, is the same as that used by inventory management systems and the supplier’s shipping systems. That assures that the product specifications that marketing and merchandising managers use to plan promotions and displays are the same warehouses and stores are using.
Otherwise, inconsistent data can result in missed deliveries or stock outages of popular products like West Marine’s fish-locating sonar devices. In season, the sonar devices, which are priced at $100 to $1,200 depending on features, are in big demand and sell quickly. “It’s incredibly important to have good data integration, so we can get new products to market as fast as possible,” Parrish says. He adds that key items with poor information were not shipped from West Marine’s warehouses to its stores on time and the company missed selling opportunities.
The PIM application not only speeds approval by automatically routing specifications for approval over a web connection to managers, but it also saves time by eliminating approvals that have become redundant. For example, in the past West Marine’s replenishment managers would have to review new-product information to assure that it was entered correctly into replenishment software. But now WebSphere Product Center automatically updates new-product data in West Marine’s replenishment software.
The supplier component
IBM offers its PIM application for as low as $90,000, down from its usual base price of $300,000, for customers that also use WebSphere Commerce Server, says Dan Druker, IBM’s director of product information management.
West Marine is also looking at the WebSphere Portal application, which will let suppliers directly enter product information through an extranet connection to West Marine’s intranet for view by the retailer’s category managers. “Our category managers will receive on an IBM Product Center web page a message that a supplier has five new items to review,” Parrish says. “The managers would then make a decision whether they want to set up the new products and through what channels.”
If West Marine accepts the products, the category manager sends an acceptance notification through the WebSphere Product Center to the supplier and can ask for more detailed product information, such as the gallons-per-minute capacity of a water pump. “Upon receipt of that information, we immediately publish it through the Product Center, where it’s available to marketing for print fliers and for buyers to purchase it for stores and other channels,” Parrish says.
West Marine’s PIM application is helping it to better compete with rivals who, because of their smaller size, don’t have to manage as much data across as many departments and databases. Indeed, although West Marine has grown into the largest U.S. marine supplies specialty retailer, its size doesn’t necessarily help in getting products to market faster than its smaller rivals. Many of West Marine’s competitors are small retailers with one or two stores near marinas, where their proximity to boats and fishermen can give them a market advantage. That puts pressure on West Marine to rely on its size and relationships with suppliers to get hot products to market faster than the competition.
PIM is still in the early stages of deployment, used mainly by large retailers and suppliers on the cutting edge of web-based product management, experts say. In addition to West Marine, major retailers such as Royal Ahold and The Home Depot are just moving beyond PIM pilot projects. The number of available PIM applications, meanwhile, is expanding, with the market’s leading applications from FullTilt Solutions Inc., i2 Technologies Inc., IBM, Global eXchange Services Inc. and SAP, according to a December 2004 report by Forrester Research, “Product Information Management Leaders Emerge.”
But PIM will also serve as a central tool for getting value out of several trends in e-commerce, experts say. As retailers and suppliers track product and shipment information throughout the supply chain on RFID systems, for example, those with PIM applications will have an advantage by assuring that RFID data synchronizes across several applications, for example, managing inventory, purchase orders and accounting records. “As e-commerce standards continue to evolve, and the balance of power between buyers and sellers oscillates, the agile company with a sound PIM strategy will enjoy a significant competitive advantage,” AMR Research Inc. says in a March report on PIM technology.
West Marine is on course to sail with that advantage, Parrish says. “PIM is one of the most important initial steps into the future of our company,” he says. “We’ll use it for process enhancements as well as to speed up our market presence and channel more efficient business with our vendor community.” l
How PIM boosts productivity 25%
Retailers and suppliers that use web-based product information management systems realize an average 25% improvement in operations related to inventory control, such as the number of times apparel is out of stock on retail shelves, Yankee Group says in a recent study, “2005 Product Information Management.”
Yankee identified 30 metrics where retailers and suppliers realize improvements. The metrics include fewer calls to customer service centers related to product definitions and pricing, fewer discrepancies related to product promotions, time saved in trading partner communications, and a reduction in the number of times store inventory levels were either too high or too low. The study also found an average cost savings of 24%, and that 59% of respondents said PIM met their expectations for return on investment.
The study focuses on five retail industry categories: general merchandise, grocery, apparel, health and beauty products, and hardlines. PIM synchronizes product data shared externally among trading partners and internally by multiple applications and departments.
Kosin Huang, Yankee Group senior analyst for business applications and commerce, says PIM enables retailers and their suppliers to overcome problems of incorrect data records resulting from data being kept in multiple silos of applications and multiple ERP systems, assuring, for example, that product packaging carries the same pricing and descriptions as in marketing campaigns and supplier catalogs.