Re-Inventing the Wheel
For the Demand Driven Supply Network (DDSN) to truly make in-roads, collaboration must become a common practice within the consumer goods industry. Beyond question, some great collaboration examples exist today (West Marine and 3M) but examples like these are few and far between. What's the hold-up? Is private label competition giving manufacturers cold collaboration feet? Are retail mandates and federal legislation too much to bear? Whatever the reason, it looks like the mighty wheel of collaboration might finally be turning in favor of consumer goods firms with retailers at the helm.
The Whole Story
Take Associated Wholesaler Grocers (AWG) for instance. With projected sales of $5.1 billion for 2004, AWG is the nation's second largest retailer-owned grocery wholesaler in the United States and serves over 1,200 stores in 21 states. The company recently contracted with AquiTec Inc. to implement an advanced Collaborative Data Synchronization solution. AWG will utilize UCCnet as its data pool for data synchronization and the technology will be integrated with AquiTec's operational and collaborative Supply Chain Management (SCM) software currently in place at AWG. The data sync solution includes a collaborative price and promotion portal called Pavilion, allowing data synchronization of new item/price information that has been accepted by the category managers of the merchandising area to be automatically synchronized with the Item information from the Global Data Synchronization Network (GDSN), and automatically and electronically input into AWG's Procurement/Billing System.
AWG's Chief Information Officer, Keith Martin, voiced a positive response for the implementation of the collaborative solution and even got a little help from his manufacturing friends along the way. "I challenged my entire team to show me the hard dollar ROI that we would generate with this solution, and we even hosted sessions with key suppliers for their view on the solution. The results of implementing item data synchronization alone are large, but when you combine them with all the efficiencies of collaborative trade promotion management the ROI potential is huge," says Martin. "We will be tracking our metrics to evaluate the actual ROI, and expect good results'"
AquiTec's data sync solution includes a workflow engine from LANSA, which has the capability of recognizing the item attributes coming from AquiTec's category manager portal and ensuring that AWG's required data attributes are accurate before electronically passing these into AWG's procurement/billing systems. This eliminates many personnel from manual input of data, and provides an immediate reduction in invoice deductions, or short pays, due to input of erroneous data from the manufacturers as well as internal staff of the retailer.
General Mills, Kraft and Acosta are among the first to collaborate with AWG on data sync.
Next Top Model
As a provider of supply chain and advanced commerce solutions for retailers and suppliers, Prescient is also jumping on the collaboration bandwagon. Its Advanced Commerce Modeling solution includes a Scan-Based Trading (SBT) Simulation tool that enables retail-trading partners to replicate and test SBT scenarios without committing to full-scale implementation. A Pay On Scan (POS) Audit tool also enables suppliers to identify exceptions and discrepancies in POS settlements.
SBT Simulation provides visibility into commerce-level data by providing a snapshot of the information and value that an organization can gain from an SBT implementation all without involving actual inventory buy backs or invoice generations. The POS Audit utilizes the retailer's Pay On Scan catalog information and compares actual settlement to what a supplier thinks settlement should be. It also enables suppliers to spot exceptions and discrepancies and take the necessary action to resolve them.
Two of Prescient's customers recently gained valuable insights into their supply chains through utilizing the Advanced Commerce Modeling solution: 4A major snack food manufacturer was experiencing major discrepancies around product count. The manufacturer and one of its major retail partners agreed to embark on an SBT simulation program to see if it would provide the visibility necessary to resolve this issue. Prescient's modeling process helped the manufacturer to identify the problem: the manufacturer was shipping multi-packs to the store, which were then being broken down and sold as single units.
4Another manufacturer used POS Audit to identify a problem with its credit-reporting process. The Prescient system generates reports on key data, including scan sales and deliveries, highlighting areas where data that falls outside acceptable standards for that particular supplier. With POS Audit, the supplier found its internal system was not correctly reporting credits from returned products. True collaboration still has a long way to go but if the aforementioned scenarios are indications of what the future may hold, then then collaboration in the consumer goods space is looking undeniably bright.