The manufacturer and retailer is upgrading its inventory management and supply chain systems to prepare for a global network of e-commerce sites.
Web-based data synchronization might not be the sexiest topic, but Shaw’s Supermarkets is finding it attractive in expediting order review and resulting in greater product availability—and more sales.
When Shaw’s Supermarkets Inc. receives information on new products from one of its 2,000 suppliers, 18 managers must review a long list of product attributes-over 100 fields of information for each item-to decide whether and how to merchandise each product. The process is time-consuming, difficult to manage and rife with potential for inaccurate data. Those inaccuracies lead to costly mistakes in the way products are processed for delivery to stores, for merchandising and for payment to suppliers.
And the entire process impedes getting products to shelves and thus into customers’ shopping carts. “With 100% of items presented on paper, we need a flow chart to understand where items need to go for review,” says James Sheehan, director of external standards. “It takes a long time.”
Shaw’s is not alone in dealing with a cumbersome process of reviewing product information. All retailers have struggled with streamlining the process in the last few years. But the paper-based problem is especially acute in supermarkets, which stock 35,000 items in a typical store, according to trade group the Food Marketing Institute. And the problem is becoming worse as manufacturers introduce a growing stream of new products. In fact, the average supermarket chain deals with about 20,000 new products every year, says trade group Grocery Manufacturers of America Inc.
But the information that Shaw’s managers review on paper, while mundane, is crucial to a chain’s operation and includes such data as size and weight of products and number of items per package. So the solution is not simply to reduce flow from the source, but, rather, to find more effective ways to manage it.
Thus Shaw’s has become a pioneer in employing a web-based process to synchronize product data between suppliers and retailers, implementing a system that reduces manual data entry and expedites the review process with about 40 of its 2,000 suppliers. The system not only makes data more accurate from the start, it also makes catching mistakes easier and faster. And it allows for the rapid dissemination of information and greater accountability of managers’ actions. “We realized if we could put this paper information into electronics, it could go to multiple desks at the same time and we could track its movement,” Sheehan says.
If it likes the results from the 40, it will extend the web-based system to as many of its 2,000 suppliers as possible by the end of this year, Sheehan says.
The problem of data synchronization stems from the complexity of stocking retail chain stores. Retailers need all kinds of data to know how to best merchandise products. But because both supplier and retailer rely on multiple steps of manually entering data-starting with the supplier creating a new-item product list and the retailer entering product data into multiple applications including logistics, merchandising and accounting systems-there are multiple points for data entry to go bad, resulting in time-consuming efforts to correct and re-enter data and re-arrange operations. “If a supplier said we’d get a case of 24 items but we actually got a case of 12, we’d have to change our system to reflect 12,” Sheehan says. “That slows down the flow of product information.”
In more severe cases, he adds, inaccurate data can lead to costly changes in multiple operations. “If information on just one item is inaccurate, it might not be bad,” Sheehan says. “But if it’s a large order with wrong data, it could be that we’ll need 50 trucks instead of 40 to deliver items from our distribution centers to stores.”
Add to that equation the fact that some managers are better at getting to the paper on their desks than others, and the review process-and catching mistakes-ends up taking a lot longer than necessary.
Shaw’s is employing the web-based Vista Retail application from JDA Software Group Inc. to receive product data from Kraft Foods and other suppliers. The data are electronically and automatically entered into a web-based registry maintained by UCCnet, a service of the Uniform Code Council. UCCnet has established standards and protocols to assure that trading partners are using the same definitions to describe products.
The new number: 14
Data synchronization tools like VistaRetail communicate between retailers and suppliers to assure each party that the retailer has received the suppliers’ latest product information, which the supplier has described under standard guidelines of UCCnet, and updated its databases. “The supplier is assured that all retailers who buy its products have current data,” says Gene Alvarez, vice president of technology research at research and consulting firm Meta Group. To receive data from UCCnet, retailers must first align their SKU data with global trade identification numbers, or GTINs. That requires extending 12-digit UPC codes by two digits to accommodate 14-digit GTINs, which are designed to align with product data from suppliers worldwide.
Now Shaw’s and its suppliers start out with more accurate data, thanks to synchronized and cleansed data and less manual data entry. Shaw’s saves time in processing incoming products and has more accurate and timely information for arranging logistics and merchandising plans. And it deals with better information on pricing and promotions to assure that it’s sourcing and selling products at the best price. “Data come with one format, one defined approval process and a clearly defined set of attributes and product classifications,” says Milan Vacval, senior director at JDA Software.
A main, long-term benefit of these applications lies within their ability to bring trading partners into a more productive level of communication, Sheehan says. By saving time on checking scores of details on every product, retailers and their suppliers have more time to discuss information and strategies related to improving product selling and merchandising. “It replaces a lot of personal communication on mundane stuff that no one wants to do and let’s us devote time to more productive meetings,” Sheehan says. “We can discuss what value products will bring by placing them on our shelves, what data are available to show how well products are selling in other parts of the country. That’s the stuff you want to talk about.”