E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
Managing internal product information so all hands are reaching for the same data
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.