Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
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The synchronization of pricing and promotions leaves no doubt about the terms connected with particular pricing, Sheehan adds. “I can get different pricing based on qualifiers,” he says, “If I send my own truck it can be a certain price, or if I buy a thousand pieces it can be a different price. The variability is so high, the chances for errors are great.”
By synchronizing the terms used to define promotions and pricing, Shaw’s and its suppliers are assured they’re using the same information. “I know that suppliers are using the same conditions behind pricing,” Sheehan says.
Indeed, Internet-based data communication is fostering stronger merchant-supplier communications in elementary ways that have long eluded trading partners, Sheehan says. The most important: formalizing ground rules for setting prices. Before the web became available as a communications network, Sheehan says, it was too cumbersome and expensive to establish and carry out rules. “The Internet was the driving force behind this because of the ability to have instant, easy communication,” he says. “All that information would go into any transaction-item description, price, etc.-but then it would get lost in past conversations and dropped from transactions.”
Moreover, by operating with synchronized and “clean” data that accurately describe products in a consistent form, the global retail industry is moving toward a universal system that supports research of any product from any supplier.
But data synchronization doesn’t just support access to product data through central registries like UCCnet, Sheehan says. Having synchronized data makes it easier to research all products for various purposes, such as reports on how well they have sold in different markets or seasons. “What it comes down to is that the world becomes a virtual database,” Sheehan says.
Getting small suppliers on board
It’s one thing for a retailer to communicate over the web through synchronized product data with large suppliers who have integrated their data with UCCnet, which serves as a data registry. But it’s another thing to communicate with small suppliers who haven’t integrated with UCCnet.
To get the small suppliers on board, Shaw’s Supermarkets Inc. connects with them through VistaKiosk from JDA Software Group Inc., which is designed to let these suppliers follow a simple set of instructions to enter data using the same attributes used by UCCnet, where the information is then accessible by the retailer through VistaRetail.
No training is necessary, which can be important in getting many small suppliers up on the system, JDA says. “A mid-sized retailer could have 2,000 suppliers, and each supplier could have two users of VistaKiosk, so the application needs to be very easy to use,” says Milan Vacval, senior director at JDA.
VistaKiosk is also designed to deal with inconsistency in the way small suppliers define product packaging. “The most difficult problem we have to overcome is to make it easy for the smaller supplier to define packaging levels,” Vacval says. “The typical small supplier doesn’t associate information about a product’s case or palette, its weight or size; they just put it as one level.”
Many retailers, meanwhile, don’t organize their back-end records to account for multiple packaging levels of the same product. “A can of Coke can be sold individually, but it can be packaged in many different ways in different cases,” Vacval says. “If you’re suddenly getting shipments from different suppliers, each can package the same product in a different way.”
That can force the retailer to take extra steps to clarify the size of a received order, unless the supplier has assigned a unique code identifier to the packaging as well as the product-a task supported by VistaKiosk, which lets suppliers electronically enter global trade identification numbers, or GTINs, on packaging as well as products according to UCCnet standards.
Data synch deadlines to meet
If all goes according to plan, most companies will have synchronized their product data with global trade identification numbers, or GTINs, this time next year under the Sunrise 2005 plan outlined by the data standards organization Uniform Code Council and its cross-Atlantic counterpart, EAN International.
“Everybody’s system should be able to process 14-digit numbers to accommodate global trade identification numbers,” says Milan Vacval, senior director at JDA Software Group Inc.
The move is also being pushed by Wal-Mart Stores Inc., which wants its suppliers’ product data synchronized under the Sunrise 2005 schedule. But not all companies should feel pressured into meeting the 2005 deadline, says Gene Alvarez, vice president of technology research services at research and consulting firm Meta Group. “That’s a very ambitious schedule,” he says, adding that difficulty in getting all retailers and their suppliers on board could push back the 2005 deadline.
“If you’re a supplier facing compliance dates by Wal-Mart, you’ll want to put more money and resources into this,” he says. “If you’re a retailer competing with Wal-Mart, 2005 is not a drop-dead date, but you should be concerned about performance in communicating with suppliers.”
Alvarez suggests, however, that companies not pressed by particular deadlines at least begin to prepare for data synchronization. “You should at least spend 2004 evaluating your readiness, then if you start in 2005 you’ll be up and running in 2006 or 2007.”
By then, he adds, a large number of retailers and suppliers will have followed Wal-Mart’s lead in synchronizing data and electronically sharing product and pricing information. “If you push it much beyond 2007, you raise the risk of falling too far behind,” he says.