Royal Ahold expects an ROI of 8 times its data synch investment, it says

Royal Ahold, a global retailer whose U.S. brands include Stop & Shop, Giant and Tops, expects to electronically share synchronized product data with 80-90% of its suppliers within 18 months, saving millions of dollars, vice president of b2b e-commerce Ruud van der Pluijm tells Internet Retailer.

Royal Ahold, a Netherlands-based grocery company with nine branded operating units and $39.4 billion in 2003 retail sales, including $27 billion in the U.S., is one of the early adopters of data synchronization and related services, which it addresses through the WorldWide Retail Exchange, an Internet-based trading exchange for retailers and their suppliers.

The grocer sees the WWRE and data synchronization as a key element of its strategy to improve supply chain efficiencies and in-store service, van der Pluijm says. "The major problem we’re having now is that our suppliers are giving us information that is not consistent among our nine operating companies," he says. "We want one version of the truth."

He adds that about 30% of product data received from suppliers has traditionally been inaccurate, a situation that causes about 70% of all invoice problems. The grocery industry forfeits more than $40 billion a year due to inaccurate business documents processed with trading partners, according to an often-cited study by consultants A.T. Kearney. Inaccurate product data can result in inaccurate pricing, chargebacks and extensive time spent on correcting data, van der Pluijm says. It can also disrupt operations in other ways. If products and cases are shipped in the wrong dimensions, automated warehouse machines may have to be reprogrammed in order to handle incoming goods, van der Pluijm adds.

Ahold is using WWRE’s services to help set common business rules among its suppliers for checking the quality and consistency of product data – for example, keeping package accurate to Ahold’s specifications.

The overall project is expensive, but will bring huge savings, van der Pluijm says. "It will require millions of dollars of investment, but we figure about 8 times that investment in savings," he says.