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Data synchronization isn't a new a concept for grocers. Yet while its potential benefits are well known, the real impact of data synchronization has been disappointing so far. Indeed, some grocers have pursued data synchronization for more than three years without realizing the promised benefits, according to research from Infosys Technologies.
Grocers that believe external data synchronization with trading partners is the be-all and end-all won't fully realize the returns on their data sync investments. To truly unlock the benefits, grocers must ensure the accuracy and integrity of their master data. Any errors in master data will be magnified many times over, further complicating supply chain collaboration efforts.
In addition, grocers must understand how their data synchronization and data management efforts align and support their own strategic business initiatives. Many retailers tend to pursue these two areas independently, when in fact accurate master data is an essential component to any grocer's strategic initiatives.
For example, supply chain effectiveness requires accurate item data with respect to case weights, and accurate vendor data in terms of standardized shipping addresses. Therefore, any supply chain initiative needs to consider the current state of item and vendor data accuracy.
Micromerchandizing is more effective when accurate and comprehensive data about customers in the store catchments area is available. Today's grocer must be capable of rapidly changing item-store allocations to keep up with the dynamic tastes of customers.
Price optimization depends on accurate cost data. Eliminating duplicate customer identities will enable loyalty programs to yield significantly better insights into consumer behavior. Similarly, market-basket analysis can yield richer insights after minimizing duplicates in items, and once substitution data for items is accurate.
Finally, vendor collaboration becomes more effective after accurately establishing the multiple entities related to one vendor, even after the vendor may have gone through a merger-and-acquisition scenario.
Following are some key actions to ensure that your master data is accurate:
--Identify all the strategic initiatives being pursued, and outline dependencies with data synchronization and master data capabilities. For example, any merchandizing initiative to reduce time-to-market has to eliminate inefficiencies related to new product introductions. This kind of approach helps establish the foundational role of data synchronization and master data, and helps get buy-in from a broad spectrum of cross-functional stakeholders.
--Establish a single version of truth for master data across the enterprise, including item, vendor, and store data. Several grocers face the challenge of multiple versions of conflicting data. A single master data repository will also facilitate internal synchronization, as data will no longer be stored in multiple applications.
--Perform data cleanup, because many grocers are attempting to manage legacy-related data integrity issues.
--Streamline and automate all processes related to the lifecycle of items and vendors. Lifecycle processes will include creation, updating, deletion, and change of status.
--Define data ownership and governance so that roles and responsibilities are clarified. An important question for a store manager to ask is, "Who is going to be accountable for accuracy of the height and weight data of an item?"
--Define a comprehensive strategy for electronic synchronization with trading partners. Global data synchronization provides a limited set of attributes for items; however, if a grocer needs additional attributes like price information, what should be the approach to get them electronically?
--Undertake global data synchronization only after a master data repository is in place that offers a single version of truth.
--Create a win-win proposition with trading partners to ensure a high rate of partner adoption once the global data synchronization platforms are in place.
Grocers that followed these steps have seen significant impacts to their businesses. One operator pursuing supply chain effectiveness and price optimization initiatives realized the dependence of these initiatives on data synchronization and master data. The grocer established one version of truth for item and vendor data, including cost data. Accurate cost data enabled profit optimization. Accurate item and vendor data helped reduce logistics inefficiencies caused by wrong data. Processes related to item and vendor data were streamlined. Significant changes were made to the roles and responsibilities to clearly establish data governance and ownership. Once the internal house was in order, the retailer focused on the global data synchronization.
In another case, a grocer that was focused on enhancing supplier collaboration created a workflow that spanned across organizational boundaries to minimize duplication of work related to item management and vendor data. Open discussions with vendors helped clarify vendor needs, to enhance adoption of a vendor portal and other data synchronization initiatives. Vendors realized the benefits of participating in data synchronization -- such as better compliance with new item introductions -- and its adoption rate accelerated.
Best practices for realizing the value of data synchronization efforts include structuring the program into smaller and achievable segments. Delivering some quick hits by performing parallel activities relating to data quality also helps in gaining organizational credibility with the program.
Accurate data is a foundation for the success of all strategic initiatives. Grocers should focus first on understanding nuanced dependencies among data synchronization, master data management, and strategic initiatives, and then create a program that can deliver organizational impact.
Prasad Vuyyuru is senior principal and group solution manager, Retail and CPG practice at Infosys Technologies, Ltd., a provider of business consulting and IT services and strategic offshore outsourcing.