(Editor's note: To read a Spanish version of this article, click here. To read it in Japanese, click here.)
This article will provide you with an overview of advancements in the adoption of a standardized item alignment process in the supply chain, an explanation of growth in GDSN activity and functionality in 2006, and a look at what is likely to occur in 2007. It's based on information from GS1 GDSN, 1SYNC, CABASnet, Agentrics, GS1 France, and others.
Last year was a big year for item data synchronization, the Global Data Synchronization Network (GDSN), and the world's certified data pools. This year looks like it will be even bigger, judging from the changes in the GDSN, price synchronization, and the major data pools.
Retailers are moving beyond standards to meet more of their business needs, and data pools are doing whatever is needed to support them. This is best exemplified by retailer-specific requirements such as the Lowe's specific attributes, the Home Depot Hardlines Marketing Data Pool, the National Alcohol Beverage Control Association Alcohol Beverage Industry (NABCA) ABI extension, and the GS1 France-Carrefour requirements.
Meeting these needs has become more realistic with processes, such as 1SYNC's attribute-value pair (AVP), that allow the rapid creation of technologies to support retailer- and market-specific requirements. The key market participants want consistency in all the attributes needed to run their business.
More than ever, there is a focus on data accuracy. Moving data more efficiently than in the past has benefits, but the more significant benefits of item alignment are achieved only when the information passed between supply chain participants is absolutely aligned or accurate with what is in the warehouses, on the trucks, and on the shelves.
The initiative that started in the United States spread significantly in 2006. Some new participants seem to have learned the lessons the early adopters in the U.S. learned the hard way. Several newer participants are more effectively coordinating the on-boarding and adoption processes for their markets. Colombia and the Netherlands fit in this category. Both saw major growth in 2006 with item alignment using GDSN certified data pools.
Considerable steps forward in France and Japan make me believe 2007 could be significant years for them. I see some evidence that 2007 could be important for Switzerland and Spain as well.
Figures 1 and 2 show the changes in GDSN adoption from 2006 to 2007.
Figure 1: The countries shown in blue actively participated in the GDSN in 2006. (Click images to enlarge.)
Figure 2: Countries where GDSN is spreading in 2007.
Global Data Synchronization Network (GDSN) '06 Update
2006 brought solid growth for the GDSN, as shown in the table below. For the first time, the majority of registered users reside outside of North America. As of December 2006, there were 20 certified data pools.
Sally Herbert, president of GS1 GDSN, Inc., said, "The GDSN has more than 10,000 members and over 1,000,000 GTINs registered today. As we look ahead, we see 2007 as a year of focus on implementation locally and globally, further building the foundation for retailers and suppliers of all sizes to truly leverage the GDSN."
GDSN Network Participants
Trading Partner GLNs (Retailers/Suppliers)
GDSN, Inc. Data Quality Initiatives
GS1 GDSN, Inc. (GS1) announced the launch of the Data Quality Management Protocol in 2006. The protocol includes a best practices guide for manufacturers, retailers, and distributors to establish, implement, maintain, and improve data quality management programs.
GS1 will work with the Global Commerce Initiative (GCI), retailers, suppliers, and data pools, supporting them in their efforts to fully migrate their item data synchronization to the GDSN. Findings of the initiative will yield case studies and implementation guides to accelerate adoption of GDSN across the globe.
GS1 will introduce price synchronization to the network. Industry reports and leading users indicate that this will provide significantly greater financial return because the majority of poor quality orders and invoice deductions are due to inaccurate pricing information.
The Data Quality Framework (DQF) was developed in response to evidence of poor data quality in internal catalogues and databases within user companies. For example, a user entering incorrect width data could lead to a product being incorrectly displayed, affecting product sales. Central to the DQF is the Data Quality Protocol. The protocol has two components:
- A data quality management system to validate the existence and effectiveness of key data management business processes
- An inspection procedure to physically validate product attributes
A steering committee consisting of global suppliers, retailers, and GS1 Member Organizations (MOs) has been formed to act as the advisory body to GDSN on the rollout of the DQF.
Price Synchronization Nears Reality
When you see representatives from PepsiCo, Procter & Gamble, Dean Foods, Coca-Cola, Wal-Mart, Carrefour, SUPERVALU, Ahold, and most Consumer Packaged Goods (CPG) and Fast Moving Consumer Goods (FMCG) companies working together to bring something to fruition, it has to be important. That is the case with price synchronization.
After three calendar years and I would guess 50–100 person years of effort, price sync is close to being a reality. This will significantly change how data is exchanged. With the new price message standard, item and price information can be communicated via one medium—GDSN—as opposed to item via GDSN and price via EDI, physical or electronic forms, portals, etc. This capability improves, in a fundamental way, the value proposition for GDSN-based item alignment.
GDSN and Price Sync in 2006
In 2006, the GDSN Price Synchronization Work Group completed the business requirements for enabling price synchronization to support the full range of pricing business practices—from simple transactional pricing to component-based pricing. Component-based pricing includes partner/relationship-dependent conditions such as allowances, charges, and promotions.
From these requirements and business process scenarios, the GS1 Business Message Standard was designed, reviewed, and approved for pilot testing. The Work Group then established subgroups to address the additional needs for pilot testing and adoption. Subteams were formed for validation rules, pilot test planning, implementation guidance, and security.
The validation rules were compiled and submitted to the GDSN Validation Rules Work Group for final review and approval. The validation rules have been approved and are in place for the pilot test. The pilot test team has developed a pilot test plan that will permit the testing of all scenarios and business requirements.
By the end of last year, test pairs representing manufacturers, data pools, and retailers had been created. Testing will occur in North America, Europe, Colombia, and Australia to assure that the standard supports global applications.
The implementation guide team has completed a working draft of a Price Synchronization Implementation Guide. This guide will go through a public review and be edited based on pilot test feedback to assure conformance with changes required by pilot test results.
The price synchronization security team has compiled its security requirements and is working directly with the GDSN Security Work Group to develop security requirements for GDSN.
Goals and Timelines for Price Sync
The goal is to be production-ready by May 28, 2007. To reach this goal, the pilot test must be completed; the GS1 Business Message Standard, the validation rules, and the Implementation Guide must be adjusted as necessary; approval must be attained for the standard; and the Global Data Dictionary must be functional for price synchronization. Also, the data pools must complete the GDSN certification event. Once everything is in production, the GDSN Business Requirement Group will address any change requests for maintenance, enhancement, and future development.
Data Pool Update
As the table below shows, 1SYNC continues to be the dominant player in the GDSN. The bulk of the GTINs, retail GLNs, and subscriptions by item come from 1SYNC.
Note: Some of the listed data pools provide services to manufacturers and retailers in multiple countries (e.g., 1Sync operates in the United States, Canada, and the Netherlands).
A Comparison of Data Pools Within the GDSN
(6 out of 19+)
Subscriptions by item (Total: 1,723,602)
1SYNC USA Update
1SYNC significantly increased its U.S. retail penetration with meaningful advancements in the mid-tier retail and wholesale distribution sectors (from $500 million to $5 billion annual sales). Industry expansion occurred in the tobacco, alcohol beverage, healthcare, and government sectors.
Functionally, 1SYNC significantly improved its ability to adjust to the requirements of the industry- and customer-specific needs with the addition of attribute-value pair (AVP) technology. AVP enables rapid adoption of the specific customer needs to the 1SYNC network.
Ruben Castano, director of business development at 1SYNC, says, "2006 was a very busy year for 1SYNC in the USA. We merged our UCCnet and Transora business units, enhanced our customer service operations, moved into new industry sectors, such as healthcare, and created many new on-boarding programs. 2007 should be equally positive. We are rolling out our new and improved data pool platform and working with existing industries and customers to reach 100 percent supply- and demand-side integration."
1SYNC devoted its efforts in 2006 to co-sponsoring the first-ever business study with financial results on the impact of synchronizing accurate data with trading partners. Titled Synchronization—The Next Generation of Business Partnering, this study was conducted by Accenture and sponsored by GMA, FMI, 1SYNC, and Wegmans. Study participants were Coca-Cola Company, General Mills, Hershey, PepsiCo, Wegmans, Procter & Gamble, the J.M. Smucker Co. and Nestlè. The study shows the clear financial benefit (reduced cost and increased sales) of item alignment via GDSN participation (Figure 3).
1SYNC also focused on improving data accuracy, improving the efficiency and effectiveness of the on-boarding process for its demand-side customers, and creating a Retail Center of Expertise (RCE) to study and define the strategic business value of data synchronization via GDSN in a specific demand-side environment.
Figure 3: Retailers and suppliers can see immediate ROI when implementing item alignment.
The following are a few of 1SYNC's specific account advances:
The company re-energized its data sync initiative in October 2006 and will continue to strongly encourage participation in 2007.
- SUPERVALU and Albertson's will combine their data synchronization efforts as announced in a letter entitled New SUPERVALU Enterprise to Use the Legacy SUPERVALU Data Sync Platform available on SUPERVALU's retailer page.
- SUPERVALU has over 500 suppliers in production with 54 in testing, representing 60% of sales synchronized with the "new item process" fully integrated in production.
- SUPERVALU is participating in the GDSN Price Pilot, which began on January 15, 2007.
- The company is currently synchronizing with over 800 suppliers.
- Lowe's is focusing on on-boarding all of its suppliers, with the expectation to have its vendors synchronizing 100% of its product catalog.
McLane (Advancing Tobacco Industry)
- In Q4 2006, McLane requested that its tobacco suppliers join a data pool and begin synchronizing data with McLane by the end of 2006.
- Its connections increased by more than 62% since mid-November (from 37 to 60)
Associated Wholesale Grocers (Kansas City)
AWG, KC continues with a phased rollout to its supplier community. At the end of 2006, the company had 149 vendors engaged in data synchronization with at least one item synchronized. Of these suppliers, 50 have completed synchronization of all their items that AWG, KC carries.
1SYNC International Update
1SYNC is very active internationally. It supports major international suppliers and is the technology platform for GS1 Netherlands and GS1 Chile's data pools.
Luiz Martins, general manager of 1SYNC's international operations, says, "The global adoption of GDSN is becoming a reality through the implementation and progress of large players in Europe. Today, companies understand the internal requirements necessary to successfully deploy Item Alignment using GDSN as an important tool to enable sophisticated collaborative projects with their trading partners. They have invested significant resources in building these requirements, and for these reasons we expect 2007 to be a GDSN roll-out year for several large organizations across Europe."
I view the Netherlands as the most advanced item alignment and GDSN implementation in Europe. It uses 1SYNC as its technology platform and has about 20 demand-side and 580 supply-side participants.
In 2007, GS1 Netherlands will pilot a completely paperless supply chain process that will run from product introduction through electronic payment.
GS1 Colombia and CABASnet
CABASnet is the GS1 GDSN certified data pool (CDP) owned and run by GS1 Colombia. After working with CABASnet's staff and witnessing the impressive event they managed for Cecral 2006 (logistics congress for Latin America), I believe they have earned their reputation as the best and most advanced GS1 MO in the world. They do an incredible amount with limited resources for their members—and at a very reasonable cost. This CDP has more than 4,400 user companies that have loaded more than 500,000 products. CABASnet supports Colombia, Guatemala, El Salvador, Peru, Costa Rica, Nicaragua, and Honduras.
GS1 Colombia and CABASnet programs go beyond the movement of data. They turn data into information and help their members use it to better run their businesses. CABASnet is committed to advancing the supply chain integration of companies using electronic commerce. This includes item and inventory sync with CABASnet. Colombia's largest supermarket chains have been using this service for the last several years and report significant savings in business operations and improved customer service levels as a result.
Here are some 2006 highlights from CABASnet:
- All major supermarket chains in Colombia mandated supplier participation in item data synchronization via CABASnet.
- Immersion events were held in the major Colombian cities to introduce and explain item sync via CABASnet to suppliers.
- CABASnet added 5,000 companies and 180,000 products to the Global Registry.
GS1 Colombia developed a study that demonstrated the impact of data synchronization on service indicators, such as percentage of perfect purchase orders, accuracy of sales forecasts, sold-out percentage, lost sales percentage, etc.
- CABASnet introduced the DDVI (Sales and Inventory Data) product/service to leverage item data with the Accurate Sales and Inventory data critical to business decision-making and true supply chain integration beyond steps 1–3 of the Action Plan to Accelerate Trading Partner Electronic Collaboration.
- CABASnet started database synchronization work with the pharmaceutical sector, working with Pfizer, Wyeth Consumer Health Care, and GlaxoSmithKline. CABASnet also has experience in other sectors, such as Automotive Replacement Parts and Government.
This is what CABASnet anticipates for 2007:
- CABASnet expects to take its successful model for advancement, developed for Colombia, to the other countries it supports. Advances are likely for Peru, El Salvador, Guatemala, and Costa Rica.
- CABASnet expects that the five key supermarket chains in Colombia will have almost 100% of their suppliers synchronized by December 2007. CABASnet hopes to include seven new supermarket chains in the project.
- CABASnet is participating in the price synchronization pilot project with Dean Foods in the United States.
- A project will be developed with the government sector, which seeks to work with all its suppliers through CABASnet, that will represent a significant impulse for database synchronization (the government is the largest consumer of goods and services in Colombia).
Last year was a busy one for Agentrics, and 2007 looks similarly promising. In 2006, Agentrics experienced geographic advances in Japan, Switzerland, and Spain and industry advances in the electronics vertical.
Agentrics was selected to build the Japan National Registry (JNR). Phase 1 of this project will provide for the exchange of needed item attributes for the Japanese supply chain. A pilot project involving major Japanese retailers, distributors, and suppliers has started. Phase 1 will not be GDSN-compliant, although plans have the JNR participating in GDSN at a later date. This seems a logical path for Japan, as most trade here is domestic and there are significant country-specific attribute requirements for this market. Details may be referenced on the Agentrics Web site.
Agentrics has been awarded a contract from 2007 to 2010 to develop and manage the Certified Data Pool for GS1 Switzerland. There are currently multiple suppliers actively registering data to the CDP. Four Swiss retailers are members of Agentrics, two of which are expected to move to production in 2007. Retailers supporting GDSN in Switzerland include Manor, Migros, Coop Switzerland, and Carrefour.
Data sync is in the early stages here. Agentrics believes the government will set aside some funds that suppliers can use to help with the costs of data synchronization and is working directly with retailers to onboard their suppliers on GDSN-compliant data pools. Agentrics Spanish retail members that expect to move to production with item alignment in 2007 are El Corte Inglés and El Campo.
Electronics Industry Advances
Agentrics has a strong specialization in the electronics industry, having pulled together most of the major supply chain participants relative to the Electronic Games, Film Publications, and Music Recording supply chain to establish the attributes and processes needed for item alignment. Agentrics is the RDP for Best Buy; together, they are driving item alignment in this industry vertical.
The GS1 France data pool is called Le Parangon. Here, the four largest retailers—Carrefour, Auchan, Provera, and Leclerc—are working as a team to determine the direction of item alignment via GDSN in their country.
France is critical to item alignment and the GDSN effort if for no other reason than it is home to Carrefour, the world's second-largest retailer. Carrefour has been working on the item alignment issue for several years. The company is taking a methodical and studied approach to the issue, in the hope that when it implements, it will have the most advanced and beneficial item alignment experience.
Carrefour has already completed a successful pilot using 1SYNC as an RDP. According to Pierre Georget, CEO of GS1 France, that organization is working on a project to on-board 2,000 suppliers for Carrefour.
From my conversations and meetings with GS1 France employees, Carrefour, and the data pools working with them, I believe they have done a great deal of careful planning in this area and are poised for a big year in 2007. Luiz Martins, general manager of international for 1SYNC, tells me, "France will be the most advanced Item Data Sync and integrated supply chain implementation in the world."
The Best Is Yet to Come
2006 was an event-filled year for item alignment. We have seen the capabilities of GDSN increase. Customers demanded increased functionality, and data pools were adapted to their needs. Participation in item alignment, as measured by participation in GDSN, has increased by industry, company, product, and country.
Price sync looks to finally be a reality, thus positioning us to gain some of the much-discussed 200–300 basis points of benefits so enticingly promised in Action Plan to Accelerate Trading Partner Electronic Collaboration.
Several major industrialized countries seem ready to participate in a meaningful way. When we total the addition of Carrefour and its 2,000 suppliers; meaningful advances by other French retailers; potential advances by Japan, Switzerland, and possibly China (Hong Kong), and South Korea; and further vertical expansion in the United States, 2007 and 2008 could be the years when item alignment really starts to fulfill its original promise.
A Guide to Online References
• Trade Efficiently and Globally Via the Global Data Synchronization Network
• Global Data Synchronization Network—An Update
• Action Plan to Accelerate Trading Partner Electronic Collaboration
• Synchronization—The Next Generation of Business Partnering: How Leading Companies are Delivering Actual Results
• New SUPERVALU Enterprise to Use the Legacy SUPERVALU Data Sync Platform
• Agentrics Teams with Nomura Research Institute to Build Japanese National Registry for Retailer-Supplier Data Synchronization
Author’s note: Item Alignment activity via the GDSN activity may be expanding in other parts of the world as well, and as a result, this article is not all-encompassing. It includes country specific details for only those GS1 offices that responded to the author's requests for information.