Jun 11, 2003
Washington, DC — June 11, 2003 — CPG manufacturers and retailers that synchronize electronic commerce data and transactions using global standards will increase sales, reduce errors and save thousands of hours in labor costs, according to the results of six case studies presented at a weekend forum at the Grocery Manufacturers of America (GMA) Executive Conference at The Greenbrier.

The six studies — three each of retailers and manufacturers — were conducted independently by A.T. Kearney for the Grocery Manufacturers of America/Food Marketing Institute Trading Partner Alliance (TPA). The TPA’s mission is to facilitate and speed the use of e-commerce in the food and consumer products industry worldwide.

According to one case study, data synchronization in Wegmans Food Markets can yield an ROI of more than 500 percent and provide direct benefits for consumers and suppliers. Accurate, standardized data can reduce the 5 percent of out-of-stock products caused by faulty information in purchase orders, freight scheduling and other communications. It can speed new product introductions by reducing the data entry time from two weeks to a few hours.

For consumers, it should reduce the frustration of out-of-stock merchandise and shorten the checkout time by reducing instances when items don’t scan because of outdated Universal Product Codes (U.P.C.s).

The ROI for suppliers such as Nestlé Purina PetCare and The Procter & Gamble Company (P&G) is expected exceed that of the retailers, according to three other case studies. For P&G, synchronized global e-commerce may generate benefits worth more than $30 million a year after a startup investment of approximately $2.4 million and yearly costs of about $1.4 million.

In addition to reducing out-of-stocks with its retail customers and speeding new product introductions, the initiative will save the P&G sales force tens of thousands of hours in labor per year by automating data entry and information updates. The case studies of Kraft Foods North America, Shaw’s Supermarkets and BI-LO showed similar results.

“At last year’s Forum, companies expressed reservations about an investment in data synchronization without having a clear sense of the business case for data synchronization and e-collaboration,” said GMA President and CEO C. Manly Molpus. “These results should dispel any doubts and accelerate data synchronization across the industry.”

“These six data synchronization case studies prove there are direct benefits for consumers, retailers and manufacturers,” said FMI President and CEO Tim Hammonds. “Having clean, current and accurate data and the capability to transport it electronically clearly adds value for consumers as well as industry trading partners.”

The case studies were distributed at the CEO/President’s Forum at GMA’s 2003 Executive Conference and reported on during a presentation given by representatives of A.T. Kearney and Kurt Salmon Associates.

Data Synchronization Critical First Step to Implement Emerging Technologies

The presentation emphasized the need for the entire industry to join the data synchronization initiative as a crucial first step toward implementing the emerging technology using the electronic product code (EPC). This technology can provide instantaneous product tracking and sale information using automatic identification (Auto ID) radio frequency readers and EPCs assigned to individual product packages, cases and pallets. Over the next decade, it is expected to revolutionize industry operations to a greater extent than the U.P.C. has.

“Data synchronization is a foundational work process that needs to be implemented now to realize the true potential of the electronic product code and radio frequency identification,” Molpus said. “One of the most important first steps is for companies to begin using the Global Product Registry administered by the Uniform Code Council known as UCCnet. All industry companies need to register their data with the registry to ensure that all our computer communications use the same language and protocols.”

Also released at the Forum was an e-commerce roadmap for companies titled Aligning to Global Standards and Best Practices. This guide, produced in conjunction with the Global Commerce Initiative, provides the specific steps that companies need to organize internally and in concert with industry associations in order to expedite data synchronization and to communicate progress within their companies across all functional areas and geographic territories.

On this point, Hammonds said, “The issue is not whether global standards are important but rather how effectively a company can mobilize its internal resources to implement the standards.”

Molpus noted that at the Forum, manufacturers and retailers both expressed a willingness to assist other companies to get started on data synchronization.

“Right now, we have 22 retailers representing more than 50 percent of ACV have joined UCCnet, and more than 550 manufacturers,” Molpus said. “The sooner we get to a critical mass of trading partners, the sooner we will realize the benefits discovered in the case studies. So it’s in everyone’s interest to step up and do whatever it takes to assist trading partners to not just sign up with UCCnet, but to begin the process of cleaning up and synchronizing data.”

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Food Marketing Institute (FMI) conducts programs in research, education, industry relations and public affairs on behalf of its 2,300 member companies — food retailers and wholesalers — in the United States and around the world. FMI’s U.S. members operate approximately 26,000 retail food stores with a combined annual sales volume of $340 billion — three-quarters of all food retail store sales in the United States. FMI’s retail membership is composed of large multi-store chains, regional firms and independent supermarkets. Its international membership includes 200 companies from 60 countries.

GMA is the world’s largest association of food, beverage and consumer product companies. With U.S. sales of more than $500 billion, GMA members employ more than 2.5 million workers in all 50 states. The organization applies legal, scientific and political expertise from its member companies to vital food, nutrition and public policy issues affecting the industry. Led by a board of 42 Chief Executive Officers, GMA speaks for food and consumer product manufacturers and sales agencies at the state, federal and international levels on legislative and regulatory issues. The association also leads efforts to increase productivity, efficiency and growth in the food, beverage and consumer products industry.