Keeping It Straight

Talk about information overload. The more that retailers move toward a global web-based system of sharing product data with suppliers, the more data they have to receive and synchronize, put into workflow, review, accept or reject, and send into a system to create purchase orders.

Then the same product data must support several operational departments, including marketing, merchandising, logistics and accounting. It all works great if the product information is completely synchronized throughout a retailer’s internal applications.

Dismantling the silos

But often, it is not. The trouble is that many retail operations are divided into silos of information specific to each operating department, each of which may have received a different version of product data from separate sources within the same supplier. “It’s hard to get a single source of truth,” says Michael Parrish, senior vice president of business process management for West Marine Inc., a Watsonville, Calif.-based chain of more than 360 boating supply stores.

To meet the challenge of data overload in multiple versions of the truth, West Marine and other retailers, as well as their suppliers, are moving toward product information management systems, or PIM, that use web technology to streamline and automate data flow and make it simpler and faster for multiple departments to view and work with the same product information. “PIM solutions have evolved out of the lesson that there has to be internal control of data,” says Mike Witty, program director of supply chain strategies in the CPG and retail practice of Manufacturing Insights, a consulting unit of research firm IDC.

With a web-enabled product information management system, West Marine has slashed by 80% the time it takes to introduce products, helping it to better compete with hot-selling seasonal products, Parrish says.

Deep into the retail operation

Not to be confused with general data synchronization between suppliers and retailers, which deals with invoices, purchase orders and other supply chain issues, PIM applications push deep into a retailer’s operation to assure that product data is synchronized across all of a retailer’s internal applications. “Consistency is the name of the game,” says Kosin Huang, senior analyst for business applications and commerce at consultants Yankee Group. “Because of the way companies have kept product data in different silos, data errors are a huge issue.”

Huang, who authored a recent Yankee Group report on PIM technology, “The Cost of Waiting: Building the ROI Case to Implement Product Information Management Now,” figures that a PIM application can produce 25% improvements in productivity across multiple business operations, including merchandising, promotions and customer service. It can also slice 67% off labor cost involved in introducing new product information into business software, Huang says.

For companies with $250 million or more a year in revenue, the total first-year cost of ownership of a licensed PIM application averages close to $1.4 million, including internal and external labor, Yankee Group figures.

PIM involves workflow and data synchronization within an enterprise, assuring that the data a retailer receives from a trading partner is routed for review and approval with synchronized product data. So not only can the retailer be assured that the right people in each department are reviewing product data, but that they are all looking at the same data. Suppliers also use PIM in much the same way, only in the mode of preparing data to send to retailers.

Many large retailers and their suppliers have been synchronizing product data they send to each other as part of the move toward the Internet-based Global Data Synchronization Network, on which retailers and suppliers throughout the world share product data and other company information through Internet-based data pools.

Covering all the bases

But more retailers are now seeing the value of extending that synchronization deeper into their internal systems. “PIM allows this to happen,” says Dennis W. Harrison, president of UCCnet and senior vice president of the GDSN data standards organization Uniform Code Council Inc., which is changing its name to GS1 US this month. “Data synchronization misses the mark if it’s not covering all the internal bases.”

Information overload can build over long periods, or it can amass quickly during a burst of growth, experts say. As West Marine grew quickly over the last several years, some of its operating departments gathered information important to their own work—such as sets of colors needed by marketing and product dimensions needed by merchandising to fit store planograms. But because the influx of product data wasn’t synchronized across internal departments, the retailer was left with multiple versions of complete sets of product data. “We had product information in six to eight databases, and one was overwriting the other,” Parrish says.

To improve the way it managed product data, West Marine decided about a year ago to deploy a PIM system. That decision reflects the challenge in managing data across the five selling channels the retailer has developed and expanded in the last 15 years. “We’ve gone from 100 stores to 386, and five selling channels: stores, wholesale, catalog, the web and a service division for equipment installation and repairs,” Parrish says.

West Marine had switched its web site e-commerce platform in 2000 to IBM’s WebSphere Commerce Server. So when it decided to deploy a PIM system, it went with IBM’s new WebSphere Product Center, a PIM application developed in 2000 by Trigo, which IBM acquired last year.

By including IBM’s WebSphere Business Integrator, which uses open standards technology, the WebSphere platform enables West Marine to conduct automated workflow on its intranet among different department managers to assure internally synchronized product data, and automated data flow to update multiple databases with that single version of the truth, Parrish says.

No more manual entry

In the past, West Marine would manually enter new-product data or modifications of data into databases after getting approvals of product specifications from different department managers. Now, with its PIM application and automated and streamlined workflow operating on a corporate intranet, West Marine has reduced by 80% the time it takes to set up new-product data for use by all departments. “Now that it’s automated, we’ve reduced from five days to one day the time it takes to set up one new product,” Parrish says.

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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.

Future course

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

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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.

“As this trend continues, retailers will continue to get more ROI from PIM,” Huang says.