September 28, 2006, 12:00 AM

Exchanging Value

(Page 2 of 2)

Agent of change
Agentrics, moreover, has modified its strategy to serve as an “agent of change” in the retail industry, rather than simply a provider of technology, Sellers says. Now, in addition to providing Internet technology systems that help retailers and suppliers to communicate and trade, Agentrics is taking a more active role, for example, in helping retailers find more suppliers in a particular product category or geographic area, Sellers says.

Agentrics also is helping companies improve their internal product data management through its web-based product lifecyle management software and services, Sellers says. In turn, having better management of internal data will support efforts to then share that data with trading partners, he adds.

“This is one of our areas of fastest growth potential,” says Cedric Guyot, vice president of strategy and marketing. Driving demand for Agentrics’s web-based PLM application is growth in retailers’ private label programs, which require retailers to maintain complex records of product details along with information on the multiple vendors that may be involved in any one product, he adds.

Using PLM enables both retailers and manufacturers to benefit from using single versions of product data within their own systems, bringing more consistency and value to the way they process data internally among merchandising, marketing, logistics, accounting and other operations.

Guyot cites one UK grocer, whom he declines to name, that each year launches thousands of fresh-chilled products. “These products can have highly complex recipe labeling, and the retailer may decide to promote recipes with low carbohydrates and low fat,” he says. With PLM, the retailer can look across all of its fresh-chilled products, identify the ones with low carbohydrates and low fat, and see the vendors who provide those products, he adds.

More challenges
In spite of the progress made by the retail industry trading exchanges, significant challenges remain.

Some retailers and manufacturers are still holding off getting involved in data synchronization because the quality of product data is so low among many companies that data synch projects appear too costly, Swanton says. “Retailers are waiting for the pioneers among them to force more manufacturers to clean up their data,” he says.

Moreover, companies are also waiting for more useful data synchronization standards. “So far, the exchanges are still not hitting everything that retailers and manufacturers want to communicate about,” Swanton says. “For example, there are still no standards for sharing information on pricing and promotions.”

But as retailers and manufacturers continue to work on product data quality both internally and externally with their trading partners, they’ll be better prepared to take advantage of new standards when they arrive, Sellers says. Agentrics and 1SYNC both participate in multiple data standards pilot projects each year. However, the much-awaited pilot on pricing and promotional data is set for the first quarter of next year.

Retailers and manufacturers have multiple options for contributing product data to the exchanges. While large organizations often use automated XML-based transmissions, others with small amounts of data might send a spreadsheet or other document through web-based forms, e-mail or an FTP file transfer. Once data are synchronized, notices of any discrepancies are sent to the owners of the data through automated e-mail or software alerts.

Agentrics charges an annual fee that can range from several hundred to hundreds of thousands of dollars, depending on the number of products and trading partners a company works with. 1SYNC bases its fees on a client’s annual sales. Companies with sales of up to $1 million pay $100 a year for a self-implemented connection with 1SYNC or $600 if they want an assisted implementation. Companies with annual sales between $100 million and $500 million pay under similar terms annual fees of $10,000 or $13,875.

Pricing nitty-gritty
Agentrics is moving ahead with projects designed to assist collaboration in demand forecasting and pricing/promotional data outside of established data standards. For example, it has worked with VeriSign Inc., the provider of online data authentication and security tools, to offer the web-based Demand Signal Management application which lets retailers and suppliers collaborate on store-level POS data to better manage demand and production.

The coming data standard on pricing will provide a common means for manufacturers to post pricing information to their web-based product catalogs for view by retailers. But that only supports the starting point of pricing, Sellers says. “No retailer-supplier relationship is based solely on the catalog price,” he says.

But working in Agentrics’ web-based Online Negotiations application, retailers and manufacturers work out the actual pricing under their contracts, then synchronize the pricing along with other product data. “We’re trying to meet the needs of price collaboration,” Sellers says.

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