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More than anything else, Wegmans is renowned for outstanding customer service. The chain spends much time and effort on providing just the right mix of products and services for its shoppers -- which includes ensuring that its associates have the knowledge and skill needed to attend to shoppers as effectively as possible.
Perhaps surprisingly, however, a key to Wegmans' ability to deliver such a high level of service lies within its IT department. Technology is critical to the retailer's capacity to enhance operational efficiency so its employees can spend their time doing what they do best: retailing by interacting with shoppers.
But the system breaks down if Wegmans' buyers are locked in negotiations with suppliers over the delivery of wrong products because of mismatched purchase orders, or if its merchandisers can't set up a display properly because the wrong product dimensions were in the item database.
To eliminate such problems, Wegmans embarked on a data synchronization initiative in 2003, with the goal of getting its buyers and suppliers all on the same page when it comes to item information.
"The vision is to have all product information 100 percent aligned and electronically shared between Wegmans and its supplier-partners," says Marianne Timmons, the Rochester, N.Y.-based grocer's director of e-commerce. "This will ensure the accuracy of ongoing practices such as new items and authorizations, product changes and updates, and the inclusion of special packs and modules." (Timmons outlined the challenge and Wegmans' execution in a presentation she gave at the latest FMI Marketechnics conference in March.)
The objectives of the initiative are to realize improved transaction accuracy; accuracy of invoices, payments, and orders; improved speed to market of new items; and better customer value. Ultimately the goal is complete supply chain visibility.
Data synchronization in simple terms is the ability of business partners, such as retailers and suppliers, to keep the data in their respective databases up to date so that each repository contains the same, most current information.
That sounds simple, but it can't be done without clean data at the outset. "Without accurate data, data synchronization will only enable the rapid, seamless transfer of bad data," notes Timmons. Data synchronization can't be accomplished properly with bad data, yet it's a constant challenge for retailers to maintain accurate data.
Such data accuracy is the key to achieving savings. Timmons separates data accuracy into two categories: static data accuracy and dynamic data accuracy. Static data accuracy refers to the accuracy of the data used for initial sharing with suppliers. Dynamic accuracy is the process of keeping the data accurate over time as products change, new items are introduced, and promotions come and go.
Both types of accuracy are important because a retailer's item data touches so many systems and processes throughout the retail enterprise, including logistics, warehouse management systems, planogram management, outbound shipping efficiency, efficient new-item introduction, efficient financial processes, EPC, and customer service.
The benefits of accurate data and data synchronization to Wegmans are apparent in the numbers: Since launching its data sync initiative in 2003, the number of vendors actively participating has climbed to more than 935, and 412 have fully completed synchronization. Wegmans has seen savings equal to approximately $1 million for every $1 billion in sales. Its suppliers have seen similar benefits, according to Timmons.
Following is Timmons' breakdown of where these savings come from, and how:
Merchandising benefits, 23 percent
Accurate and synchronized data eliminates many manual processes in the item setup and maintenance process, leading to improvements such as:
--New-item processes are reduced by approximately 14 days.
--Former merchant administrative time can be reinvested in building sales.
--Better visibility to more supplier catalogs will allow more options for assortment and negotiation.
Sales representative value add
--There's no need to fill out new-item forms for all customers.
--Neither is there a need to communicate changes and corrections.
--More time can be spent building sales.
--No more data entry of new-item forms
--No more administration of changes and corrections
--Key entry errors are eliminated.
--The paper trail from merchandising to pricing to logistics to accounting is done away with.
Logistics and distribution, 33 percent
Synchronized and accurate cube and weight data will allow the following:
--Inbound truckloads to be better employed, reducing freight expense.
--Flow-through distribution, without the frequent stops and starts of an unsynchronized supply chain.
--Inbound truckloads are received and put away more efficiently, reducing time, handling, and cost, and improving shelf-service levels.
--More efficient use of outbound trucks, reducing cost and improving efficiency.
Store operations, 34 percent
Accurate and synchronized data will improve store operations efficiency and the customer shopping experience, through:
Front end efficiency
--Reduced number of items that don't scan, improving efficiency and increasing sales.
--Improved coupon-scanning efficiency, eliminating double checks on customer orders.
Improved shopping experience
--Error-free scanning at the front end.
--Improved planograms for ease in shopping.
--Improved shelf-tag accuracy for price comparisons.
--Improved shelf-service levels, resulting in more of the products Wegmans customers want.
Improved back-door management (DSD)
--Reduced "not on file" discrepancies, which stop product from flowing onto the shelves.
--Reduced invoice discrepancies.
Accounting, 10 percent
Accurate and synchronized data will improve invoice accuracy and associated reconciliation processes, due to:
--More invoices will be accurate.
--More streamlined/timely processes for resolving invoice discrepancies.
--Reduced out-of-period adjustments, which will make financial information more actionable.
--Reduced receiving-quantity errors to be reconciled.
--Reduced time spent reconciling coupons.
--Reduced time fixing family code discrepancies.
--Improved reimbursement processes and accuracy.
How is Wegmans improving the quality of its data? By working closely with its trading partners, setting clear expectations, and clarifying its data standards.
"We're striving for accuracy across the entire network of trading partners, not just at Wegmans," explains Timmons. "We continually conduct audits and provide feedback to them."
To achieve its data accuracy goals, Wegmans worked closely with a variety of suppliers, selecting a representative grouping of items from each. It then took a snapshot of its data, and a third party measured Wegmans' products. Results of these measurements were compared with the product data, and feedback was provided to its suppliers.
Attributes studied in the process included retail and case UPCs, haz-mat indicators, net content, and unit of measure, as well as packs. Acceptable tolerances were as follows:
Zero tolerance: retail UPC, case UPC, pack, net content, unit of measure
One-quarter-inch tolerance: unit height, width, depth
One-half-inch tolerance: case height, width, depth
One-half-pound tolerance: case weight
Through this initiative Wegmans learned that data accuracy indeed is an achievable goal. While this requires a tremendous amount of discipline and commitment on both the retailer and supplier side, it has been clearly shown to yield benefits to all parties involved in the process, says Timmons.
However, there are opportunities for improvement in the clarity of standards for package measurement, she adds. "The industry needs to come up with acceptable tolerances and processes for product measurement and weight variation," observes Timmons. "This is an industry problem; it requires an industry solution."