© 2006 Accenture. All rights reserved.
Collaboration in a Multi-polar World – Global Data SynchronizationChina ECR, June 2008Michael YeeExecutive Partner
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Agenda
The rise of the multi-polar worldSupply Chain implications of the multi-polar worldCollaboration in the multi-polar worldGlobal Data SynchronizationProduct Life ManagementConclusion
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Real GDP at 1996 prices and at PPP, US$ trillion
Share of global GDP World’s biggest economies
Emerging
5.8%
0
20
40
60
80
100
120
1980 1990 2005 2015 2025
61%
57%
49%
39%51% 43% 39%
61%71%
29%
Real GDP at 2005 prices and PPP
Emerging World
Developed World
2025
1
2
3
4
5
6
7
8
9
10
20071990
US
China
India
Japan
Germany
US
Japan
China
Russia
Germany
China
US
India
Japan
Germany
Economic power is becoming more dispersed
CAGR 2005-2025
Developed
2.7% UK
France
Russia
Brazil
Italy
India
France
UK
Italy
Brazil
Russia
UK
Brazil
France
South KoreaSource: EIU
Source: EIU
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Three key factors are driving the rise of the multi-polar world This is driven by three mutually-reinforcing trends
• Economic and political opening• 2005: 164 out of 205 regulatory changes in investment regimes globally
positive for FDI• Trade liberalization: WTO, NAFTA, ASEAN, EU
• Disaggregation of business functions across geographies• Globalization of supply chains• Synchronization of information flow• Inclusion of services in global tradables
• Increasing scale of multinationals as catalyst for multi-polar world• Increased foreign assets, revenues, and employment
Economic openness
Increasing power of information & communication technology
Size and reach of multinationals
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Five key dimensions demonstrate the increased economic interdependence of the multi-polar world
War for talent
The battle for resources & sustainabilityThe new map of innovation
Emerging consumers The flow of capital
Economic openness
Size & reach of multinationals
Technology
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GLOBAL OPERATIONS
In this multi-polar world supply chains and operating models are open to new ways of collaborating.
DemandOpportunities
Supply-side Requirements
Global Operations Strategy
PerformanceObjectives
GlobalOperations
Components
Global Operating Model
FIT
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Whilst the multi-polar world is driving new supply chain models some of the same issues remain
Global Operations- Extended Supply Chains need
new capabilities and improved visibility
- Finished Goods and time-to-market are drivers for competition in short lifecycle markets
- Sustainability
Error-prone and inefficient P-2-P
process- Dependence on manual data
processing- Non standardised workflows for
Sales & Operations Planning and materials ordering
Single truth across Supply Chain
- Capturing accurate data across all supply chain, by making use of data beyond single organisation
- Making sense of huge volumes of data is like drinking from a fire hydrant
Reduction in out-of-stocks
- Companies realise that to effectively reduce out-of-stocks and obsolescence across the entire supply chain they collaborate with their trading partners
• Excessive inventory throughout the supply chain
• Inadequate fill rates, low customer service performance, and critical stock outs
The Result:
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What is Supply Chain Collaboration?Supply Chain Collaboration can be split between upstream and downstream - in both, it involves exchanging supply chain data between trading partners to improve performance across entire Supply Chain
Supplier Managed Inventory
Integrated Suppliers
Enabling Technologies
Reliable Operations
Efficient Replenishment Joint Planning
Vendor Managed Inventory
Order Forecast
Sales ForecastSupplier Manufacturer Customer Distribution
Centre or retailer
DownstreamUpstream
Category Management
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Where are the benefits of Supply Chain Collaboration?… which typically bring substantial improvements across the whole supply chain
Manufacturer Benefits Typical Improvement
Lower Inventory Levels 30%
Lower Transportation Costs 10%
Lower Warehousing Costs 13%
Lower Lead-Times 50%
Retailer Benefits Typical Improvement
Better Customer Service >10%
Better Store Shelf Stock Rate 5% to 8% 2%
Lower Inventory Levels 10% NA
Lower Logistics Costs 3% to 4% NA
Source: AMR Research, VICS, Accenture
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Collaboration projects often face a number of setbacksA recent study* identified collaboration projects fail to scale for 3 main reasons
Insufficient organizational/process enablement from partner or internalData accuracy and communicationNegotiation process in hands of commercial and procurement organizations with no “end-to-end” view of total-cost of ownership
Process and Data
Unclear value propositionInability to measure value therefore it requires a leap of faith
Value
Lack of trust (eg. due to long history of arms length negotiation culture and/or contradictory propositions coming from different parties within single company)
Trust
Source: ECR Collaborative supply chain efforts – Are they really working? Accenture Survey, 2005
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Levels of Supplier Collaboration
Foundational
Mission Critical
Value Add Collaboration
S
Logistic & Distribution
Demand Planning
Procurement
Replenishment
Supply Chain Optimization
Price Synchronization
Data accuracy
Data Synchronization
Global Registry
Catalogue
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Accenture believes in this new world integrated solutions will create differentiated performance
Assets that Accenture re-uses to deliver a Customer Integration Solution
Retailer X
Inventory ReportPOS data
CSV/ XML formats(any structure)
HTTP(S)/ VPN
Trading Networks/ Manugistics
Retailer adoption:Accenture establish
technical connectivity with retailers
ASCSconnectivity
ASCS Business
Intelligence
Replenishment calculations
Web portal providing Business Intelligence:
Customised reports
Sell-in dataMaster data
Proprietary ERP X
Database X
1
2
3
Central MappingConverting from retailer to xml
ASCS
Supply Chain Workflow management4
Service Centre
Manufacturer
Proprietary ERP
WebMethodsTechnical
Integration Tools and Team
Local Project Mgmt
Trading Partner on-boarding
Trading NetworksWorkflow
governance
Trading Networks
Data cleansing/ validating Client Integration
TeamSingle point of
integration for client
Service TeamMulti-lingual service
centre to support workflow
Powerful web reporting capability with pre-configured
templates
Supply Chain Integration Systems• Integration with upstream suppliers• Provide Replenishment triggers• Enable VMI
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What does downstream integration look like?For downstream collaboration with retailers, Accenture provides clients with a scalable service, capturing data from retailers and transforming to
Retailer X
HTTP(S)/ VPN
Inventory ReportPOS data
CSV/ XML formats(any structure)
Trading Networks/ Manugistics
Retailer adoption:Accenture establish
technical connectivity with retailers
ASCSconnectivity
ASCS Business
Intelligence
Replenishment calculations
Web portal providing Business Intelligence:
Customised reports
Sell-in dataMaster data
Proprietary ERP X
Database X
1
2
3
Central MappingConverting from retailer to xml
ASCS
Supply Chain Workflow management4
Service Centre
Manufacturer
Proprietary ERP
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Foundation - Global Data Synchronisation
Overview of the Business Problem
“Retailers and manufacturers can reduce their current supply chain costs by 1 to 3 percent depending
upon their current state.”
“Global Data Synchronisation is a boringsubject with exciting consequences.“
Sir Terry Leahy CEO Tesco
• 30%+ of retailer product data is inaccurate• 60%+ of invoices have errors• new product lead time up to 12 weeksGMA : 2004
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What is driving Global Data Synchronization (GDS)
DemandOpportunities
Supply-side Requirements
Multi-Polar World
ECR
Single global item registry
Global standards
Inter-operable data pools
Secure communication
protocolsAffordable technology
Enterprise data
management capabilities
GDS
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Current business processes are expensive, error-prone, and unmanaged, and unlikely to support all customer touch points
Promotions
ReturnsNew
Productintro
PricingMerchandising
Productsourcing
End of life
Images,DocsExcel
LegacySystems
ERP & CRMSystems
DocumentManagement
Systems
New Item Form
Contracts Authorize /Reject
Category Managers
Vendor Managers
Logistics
Price Update
Regional Managers
Brand Managers Customer
Support
Promotion Mgrs
Category Managers IT
Replenishment Customer touch points
Product data
inputsFlyers, Inserts,
Catalogs
Email,eCommerce
Info-Stations,Kiosks
Shelf Tags,Signage
Point of Sale
RFID
Catalogues
Phone
Fax
UDEX
Excel
EDI &Manual Entry
Source IBM Software Group
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Bad Product Data Results in InefficiencyDisruption in the Back Office
Sales Productivity Invoice Deductions– Gathering Information from
Internal Stakeholders– Communicating Product
Information to Customers
– More write offs and deductions– More invoice adjustments– Longer Days Sales Outstanding– Returns Reconciliation
CustomerSupport
Warehouse &Back Room– Processing Returns at Loading
Dock and in Warehouse– Higher Safety Stock Required
– Basic Item Inquiries– Order & Invoice
Discrepancies– Billing Errors
Product Management– Slower Item Updates and New
Product Introductions– Fines imposed on suppliers for
changes to specifications– Manual Processes for
Managing Product Data
Transportation &Logistics Functions– Higher Return Rate and
therefore higher shipping costs– Expedited Shipments to Correct
Order Errors
Source : GXS
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Challenges inside the Enterprise…Three Root Causes for Bad Product Data
People– Ownership of Data is Unclear– Business Employees do not take responsibility for it– People who do care about data quality don’t get rewarded for it
Process– Managing accurate and consistent product information has cross-functional impact– Supply Chain; Buying/Merchandising; Sales/Marketing must be involved– No true cross-functional processes defined
Technology– Product Information currently resides in various systems– Data is in different formats– Different rules and standards used by different parts of the organization
Source : GXS
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… the solution lies in enforcing the GDS Industry Standards using Product Information Management (PIM) solutions within the Business
Data Translation
End to EndBusiness Process
Management
DataPool
Internet
Data Pool Houses Copy of Data
Data Pool Synchronizes through GDSN
ERP &BackOffice
ProductInformation
Management
EnterpriseApplicationIntegration
PIM
RepositoryWorkflow
Search & ReportsSource
Systems
have worked together with Retailers and Suppliers to develop thefirst fully standards compliant UK Data Pool
A ‘typical’ GDS/ PIM project would save 2500 man days annually, and have a 25% ROI
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Net ContentNet WeightGross WeightHeight, WidthLengthLinear UnitsVolume
Special Package -Opening CodeHaz Material CodeTamper Resistant Ind.Not for Resale Ind.
PackInnSAPackPalletTi, HiConsumer UnitOrderable UnitShipping Unit
PricingWarrantyOrder Increment
Source of ReferencePerfect Order
Time-to-market (NPI)
Foundation for Electronic Commerce
Single version of the truth (Across Supply Chain)
Global Data Synchronization – what data is involved?Global Data Synchronization – what data is involved?
10700300000123
20700300000127
30700300000122
00700300000125
Source : GXS
Each/Item
Carton
Pallet
Inner Pack
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External and Internal Data Synchronization provide accurate product information across businesses, channels and customer segments
– Store item, vendor and location information and relationships insingle repository
– Staging and workflow for item approval, maintenance, and Retailer specific attributes
– Provide one place to go for information and management– Publish product information to front and back office systems– Automate product information processes, such as New Product
Introduction, within one system– Store vendor entire catalog for analysis on all vendor products
including product concepts
Automate product introduction and changes between Retailer and SupplierCleanse, validate, cross-reference, review and approve product attributes On-board GDSN and non-GDSN suppliers– Connect to GDSN data pools– Provide a portal for web entry by suppliers– Accept product files directly from suppliersStaging area for un-authorized supplier items for later retrieval and action
ExternalData
SynchronizationGlobal Data Synchronization
(GDS)
InternalData
SynchronizationProduct Information Management
(PIM) Tool
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What is the Global Data Synchronization Network (GDSN)? – many more data pools !
Source: http://www.mcpressonline.com/mc/[email protected]@.6b1b5455!loc=.6b1b5455
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Product Information Management (PIM)
In order to implement internal Data Synchronisation, a PIM tool is used.
It provides a company with one place to go for information and management – it is the method used to provide “the single version of the truth” for a company’s information that it sends out and receives.
It has the ability to:
• Send, receive, and interpret multiple GDSN standard messages• Transform externally provided data into internal formats• Add new attributes easily as they are approved• Provide ongoing updates to conform to changing GDS standards • Automate product information work flow processes, such as New Product Introduction, within one system
Failure to make manage these processes can result in the loss of the benefits provided by GDS.
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Even with clean data from GDS, the internal workflow needs to bemanaged……..
Promotions
ReturnsNew
Productintro
PricingMerchandising
Productsourcing
End of life
Images,DocsExcel
LegacySystems
ERP & CRMSystems
DocumentManagement
Systems
New Item Form
Contracts Authorize /Reject
Category Managers
Vendor Managers
Logistics
Price Update
Regional Managers
Brand Managers Customer
Support
Promotion Mgrs
Category Managers IT
Replenishment Customer touch points
Product data
inputsFlyers, Inserts,
Catalogs
Email,eCommerce
Info-Stations,Kiosks
Shelf Tags,Signage
Point of Sale
RFID
UCCnet
TRANSORA
WWRE
UDEX
QRS
SINFOS
EDI &Manual Entry
PRODUCT INFORMATION MANAGEMENT
Source IBM Software Group
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Benefits
In 2003 the Grocery Manufacturer’s Association (GMA) and Food Marketing Institute (FMI) published a study detailing the benefits of GDS and PIM:
3 to 5 percent reduction in out-of-stocks2-week reduction in speed to market for new items – i.e., 14 extra days’ sales of faster-moving items10,000-30,000 hours saved in store labor costs resulting from shelf-tag and scan errors5,000-10,000 hours saved in merchandising and data entry time dealing with new item introductions and
updates1,000-2,000 hours saved in finance time dealing with invoice disputes related to basic item informationReduction in invoice auditor fees0.5 - 1 percent reduction in inbound freight costs1,000-2,000 hours saved in warehouse and DSD time dealing with item discrepancies1 percent reduction in inventory
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GDS + PIM = More Benefits
The key to benefit realisation is not just receiving accurate data, but ensuring its consistent use throughout the organisation.
Realized through:
Reduce of out of stock volume due to improved forecasting X X
Benefit GDS PIM
Reduce effort spent entering and maintaining new product records X
Decrease effort spent handling invoice disputes X X
Reduce quantity of returned orders due to increased shipping accuracy X X
Reduction in call center and website queries regarding basic item information X X
Eliminate IT system redundancy – lowering TCO X
Reduce shelf tag, scan errors and processing time X X
Decrease amount of safety stock X X
Provide a foundation to support pre-allocation of items, Advanced Shipping Notice item accuracy, and track and trace (RFID)
X
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Conclusion
The multi-polar world provides new battlegrounds.Therefore, the optimization of global supply chains plays a central role in driving profitable growth.Collaboration is an important differentiating factor against this backdropOrganizations, both well established and new players, now need to master new capabilities to play in global value chains.
Leading organisations will drive high performance by exploiting collaboration in their Value Chain
Need to build the foundation from data synchronization to product information management