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WASHINGTON -- According to a report issued yesterday by global management consulting, technology services, and outsourcing company Accenture; the Food Marketing Institute; the Grocery Manufacturers Association; Rochester, N.Y.-based Wegmans Food Markets; and Lawrenceville, N.J.-based 1SYNC, the newly formed GS1 US subsidiary, investing in accurate global data synchronization (GDS) yields such potential benefits as enhanced supply chain efficiency, cost savings, and higher revenue to CPG companies and retailers.
The report is based on a study of Wegmans and seven key suppliers: Coca-Cola, General Mills, Hershey, J.M. Smucker, Nestle, PepsiCo, and Procter & Gamble. Through the harmonization of manufacturers' and retailers' product information, the study demonstrates the efficacy of GDS by quantifying the actual benefits gained by companies -- as much as to 64 percent improvement in the supply chain and operational areas and 67 percent in customer relationship and growth areas.
"The main messages from this study are compelling," said Marianne Timmons, Wewgmans v.p. of supply chain and global business to business, in a statement. "We have realized many quantifiable benefits from accurate data synchronization. Further, it is foundational to next-generation business processes for Wegmans and our trading partners."
GMA v.p. of supply chain and technology Pamela Stegeman agreed, noting: "GDS affects all parts of the supply chain. Our study shows that benefits are available to everyone from the sales account manager to the back-room receiving clerk. When accurate data is synchronized between trading partners and used by all parts of both organizations, we can better meet consumers' needs."
According to the study trading partners can benefit from GDS by reducing disruptions across the supply chain, with:
-- Greater accuracy of product weights and measures, as one supplier discovered when it corrected a weight error on a single item and saved $2.2 million in annual transportation costs;
-- Improved logistics and distribution efficiencies, as experienced by Wegmans after cutting $1 million of labor and inventory carrying costs from its distribution network;
-- Expediting direct store delivery (DSD) check-ins at the store level: Wegmans estimated a 7 percent hike in productivity by shortening DSD check-in time
-- Synchronizing data with trading partners, as in the following examples
1. Sharing accurate item data enhances order and invoice administration: A manufacturer improved productivity by about 59,000 hours annually by reducing inspection time five minutes per order
2. Improving flow of new product information between manufacturers and retailers results in faster speed-to-market: A manufacturer cut its speed-to-shelf for new items from as much as eight weeks to two weeks
3. GDS can be used to improve customer service: Employing GDS to synchronize coupon family codes helped Wegmans minimize customer coupon scanning rejections by 40 percent
"This study makes a persuasive case for the many benefits of GDS by describing the actual ways it can transform a business. The first step that is required is that manufacturers and retailers need to accelerate their implementation efforts by executing the industry action plan as outlined in this study," said FMI senior director of industry relations Pat Walsh.
"Among the important findings of this research is that high-performing companies need to make accurate data synchronization a business priority, not just an IT priority," added Marco Ziegler, senior executive, Accenture's Consumer Goods & Services practice. "Global data synchronization can be an effective catalyst for transforming business processes and delivering significantly improved results throughout the supply chain."
"We are confident that the competitive advantage achieved by leading companies through synchronizing accurate data will encourage and inspire other companies that have been waiting for the right time to get started. As companies expand item data synchronization to all product lines and geographies, the pace of change in the industry will accelerate and enable widespread synchronizing of accurate price data to achieve even greater returns," said Steve Vazzano, senior director, market development, 1SYNC.
In March and April 2006, researchers interviewed over 120 employees in departments such as sales, customer service, logistics, and accounting at Wegmans and seven suppliers.
The study was sponsored by FMI, GMA, Wegmans, and 1SYNC and conducted by Accenture. Copies of the report are available on the GMA Web site at www.gmabrands.com/publications/index.cfm.