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The Trend Toward GDSN: How It May Affect Your Business

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An interview with GS1 executives reveals what the future holds for the supply chain.


Editor's Note: On January 9, 2008, LANSA's Jeff Holzman (JH) interviewed GS1 US Chief Operating Officer Charles E. "Chip" Lloyd (CL). Additional comments were provided by GS1/1SYNC Vice President, Business Development, Dan Wilkinson (DW) and GS1 Director of External Affairs Robert Thibault (RT).


JH: Please tell us a bit about your background.


CL: My corporate life has been spent in CPG [Consumer Packaged Goods]. I started my career at Lipton, went to PepsiCo and then Best Foods, which was acquired by Unilever. I started in finance and then went into marketing and general management. Prior to leading GS1 US, I was in Asia, heading up the second-largest subsidiary for Best Foods/Unilever.


What I bring to the party is my experience managing complex international manufacturing organizations across 16 countries. I've used technology to enable competitive advantage. My breadth of supply chain experience ranges from local customers in Pakistan delivering product with an oxcart to Carrefour and Ahold and Wal-Mart in terms of their highly advanced supply chains and category management operations.


JH: Please give us your views on GS1's role in facilitating commerce and e-commerce.


CL: One is a foundational dimension where at the core we provide a common language for commerce. This includes common data, common ways of defining objects, processes, and products. Once that definition is identified and established, we also provide and identify things, put them on data carriers, and allow that information to be exchanged amongst trading partners. This is very much about a win-win, what's-best-for-all-trading-partners environment.


JH: Are you saying GS1 provides the standards that provide companies a common language for business worldwide, and the processes enable communication for the benefit of all the partners in the supply chain?


CL: Right. This notion of what works with one partner and one country will work with another is back into this common language of business. We're trying to achieve scalability across countries and industry verticals. GS1 is all about driving the effectiveness and the efficiency of global commerce.


JH: Could you provide an overview of the GS1 US divisions and what each does?

CL: GS1 US is one of the 108 Member Organizations (MOs) of GS1. GS1 US Inc. is a not-for-profit organization dedicated to the adoption and implementation of standards-based, global supply chain solutions. GS1 US has multiple subsidiaries: 1SYNC [Data Pool], EPCglobal North America [EPC-RFID], RosettaNet, and BarCodes eComm.


Barcodes and e-commerce, started in 1969, is the genesis of our business. It comes from the desire for a uniform product code. It was to facilitate throughput through the check-out counter. There are now over 10 trillion barcodes across the world on a daily basis.


The 1SYNC business is the world's largest Data Pool. 1SYNC is in 30 countries, has 4500+ customers and about 1.7 million GTINs, about a 60 percent increase over the last year in terms of connections.


EPCglobal [Electronic Product Code] is the third-millennium play to the barcodes. We're spearheading the global initiative. There are close to 1,000 customers globally. Within the U.S., we've got about 700 customers.


JH: Would it be fair for the readers to think of 1SYNC as the piece that clearly defines what a product is in the global supply chain and EPCglobal as the piece that defines where a product is?


CL: Right. First of all, in terms of where we stand with that business, we've created a suite of 11 standards. We're at the stage now where we are trying to drive adoption of the standards. Our current strengths and presence are mostly CPG. We're migrating into chemical, healthcare, aerospace, and other verticals.


JH: Are there any examples you'd like to give for about where RFID can improve the quality of goods and services delivered to the consumers?


CL and RT: Two examples: 1) Pharmaceuticals can be tracked from manufacturer to the time it is dispensed to the consumer. It has that pedigree on the chip. As a consumer, the chip lets you know the product's entire history in the supply chain. It ensures that the products consumers are using are authentic and correctly dispensed. 2) A hospital is doing a pilot with blood transfusions in which patients are chipped on their ID tag that has their blood type on it. The blood bags are chipped with EPC with the blood type, so that has led to a dramatic reduction in the number of accidents where the person with AB- blood receives O+. That is a very successful example.


JH: Can you talk about specific advances of adoption of 1SYNC/GDSN-based item data synchronization and RFID/EPC in the healthcare industry?


CL and DW: Healthcare in the USA is a four-tier model: manufacturers/suppliers, distributors, Group Purchasing Organizations (GPOs), and healthcare providers (hospitals, clinics, doctors...).


In 2006, the Department of Defense started a pilot to prove the viability and benefits of GS1/1SYNC/GDSN-based item data synchronization in the U.S. healthcare supply chain. The pilot includes major participants for all four tiers. Over the last 1.5 years, phase 1 of the pilot tested the viability of GDSN in supporting the data requirements in the healthcare industry, specifically supporting the requirements of the DoD. It has been completed and deemed successful.


Deliverables of phase 1 include 1) a white paper, which documented the findings from the DoD participants, and 2) an endorsement of the GDSN as a viable solution able today to meet the daily requirements for medical/surgical devices which the DoD is buying in the market and using the GDSN to provide standardized and global item data for their operations.


Phase 2 is an expansion of the participant base to 28 participants, which span over many of the largest participants at each level. Phase 2 is to be completed in the middle of 2008. We will then be able to move into a production environment.


The Healthcare Supply Chain Coalition, HSCC, has publicly endorsed the use of GS1 standards. This includes the endorsement of the global trade item number (GTIN), global location number (GLN), and GDSN. [You] can learn more from the following resources: GS1 Healthcare US, the Healthcare Supply Chain Standards Coalition news release announcing endorsement of GS1 standards, and the Department of Defense Data Synchronization Pilot Report.


JH: It sounds as if healthcare is an area of great focus for GS1 at this time.


CL: When I look at where healthcare is vis-à-vis CPG, we're in the position of leveraging our 30 years of CPG experience into the healthcare environment across virtually our entire platform of standards. This is a sweet spot for us. We can add value to an industry that is in dire need of getting into the 21st century. So this is a major initiative for us.


JH: Do you see any other industry that deserves more GS1 focus for expansion than healthcare?


CL: Another area we talk about internally is "the Internet of things." We look at Google and things like Google Maps. These technologies create tremendous opportunities in terms of our GTINs and GLNs. After 10 years of my career in Asia, I'm very aware of where Japan is in terms of mobile technology. In Japan, mobile phones are scanners, they interact with PayPal. You can order things over the phone.


We're in discussions with companies like Google to understand where they're coming from. We have a foundational presence in identification and numbering systems, and we're trying to participate across the platform where we feel that our standards are relevant.


JH: What are the most significant achievements at 1SYNC over the past year?


CL: 1) The integration of Transora and UCCnet, 2) understanding how to accelerate adoption of this technology, and 3) developing targeted programs to increase adoption and bring new industries on board.


DW: Specific achievements: 1) 85 percent increase in number of items processed through the GDSN, 2) USA's first group effort of eight major industry-leading retailers working together, driving the adoption and implementation of 1SYNC/GDSN-based item data sync with their supplier base, category by category, 3) in Hardlines, Lowe's is synching in excess of 80 percent of their purchase orders volume.


JH: Could you discuss specific achievements for RFID and EPCglobal for 2007?

CL: We need to put this in the context of what an ambitious undertaking it is to spearhead a new technology. We've done a great job to identify a core group of users who have participated in creating a set of standards. We've created global standards. We've brought customers and solution providers together to make this happen. We're poised now for the adoption phase.


The biggest retail adopter for us has been Wal-Mart. Proctor & Gamble (P&G), the former head of which is on our EPCglobal board, has been a strong proponent and user. Using the example of P&G, they will say that a major usage application for them has been sales promotion. But they've also looked in the portfolio to identify what items make the most sense for the EPC. They have detergents and grocery items on one end of the cost/pace continuum and on the other end of the continuum, Gillette Fusion razor blades. A pallet of Fusion razor blades is worth maybe $150,000 dollars. Tracking/tracing is of different value in different examples.


There is a settling out of usage applications where some companies have seen tremendous benefits within four walls. Johnson & Johnson (J&J) is a case in point where they've seen a lot of that. H-P has seen a lot of benefits of this four-wall application. Kimberly-Clark is an interesting case in point. A pallet of diapers isn't going to go for $150,000, but they've spearheaded the technology. They've seen tremendous benefits in terms of sales promotion, execution. You take for granted that with technology where it is nowadays, you wonder why a pallet can't get off the store floor when the TV ads are breaking, but they don't. The reality is that out-of-stocks are still very persistent.


I think there's been a lot of very good, deep analysis of the applications of this technology, and the challenge now is to apply that to come up with the case studies that come to grips with the ROI, the real benefits, the totality of the investment for a prospective customer to review and say, "What's the price tag? How much pain will it cost me? What are the real benefits?" We're at the stage, now that the standards have been created, we need to translate the business success stories out into the marketplace.


JH: When you say "within the four walls," are you are talking about closed, non-EPCglobal implementation of RFID? When you say "within the network," are you referring to RFID adoption using the EPCglobal network? You're saying the key adopter so far has been Wal-Mart?


CL: Yes on the definitions, and the retailer leading the charge has been Wal-Mart.


JH: Any idea how many suppliers are going through EPCglobal with Wal-Mart and what their goals are for 2008?


CL: There are 600 EPC customers spread throughout. The preponderant number of customers is Wal-Mart-related. As it relates to pure play, Wal-Mart is the guy stepping up to make this happen. They dominate the CPG vertical, but they also dominate the total customer base for us.


JH: Are these at the pallet level, the case level?


CL: It's across the board, though the item level is a bit spotty. 


Kimberly-Clark is far down the path to pursuing this technology, so I think that where we are right now with Wal-Mart is trying to profile their universe of suppliers into some case studies. As I mentioned before, sales promotion is a major application for a lot of the customers. We're trying to take those learnings and condense it down in terms of what is the incremental investment, the incremental return, the business case study that we can use to be able to then propagate it out for further adoption.


JH: Are there any goals that you know of for Wal-Mart, for companies to be participating in EPCglobal for '08 as well as goals for EPCglobal itself for '08?


CL: Everybody is looking at the technology and saying, "What do we have and how do we apply it?" At Wal-Mart, their phase is bringing Sam's Club on board.


RT: They want to bring 300 new suppliers for Sam's Club.


CL: Dealing broader, as we look at this technology and our business system throughout 150 countries, we're looking at this global supply chain and we're doing a range of pilots.


RT: There are specific pilots I would like to discuss using EPCglobal: 1) container tracking from time of shipment in Asia to reaching the transload docks (dock-to-dock) and then pallet-level tagging to trace the individual goods from manufacturer through delivery to customer.


JH: You're saying that you tag pallets at the manufacturer in Asia, tag the containers at the port in Asia, and track it from manufacturer to departure port to arrival port through crossdock and then inland to the distribution center, retail site, or manufacturing site using components of the original manufactured products at the factory in Asia?


RT: Participants in the transportation and logistics pilot include Alien Technology, DHL, iControl, Oracle, Lockheed Martin - Savi Technology Division, Schenker, Schneider National, Symbol/Motorola, UPM RAFLATAC, and WhereNet. What they're doing is tracing the cargo that's associated with the container. The container comes off the ship, is loaded onto a truck, goes to a transdock where it's taken out of the container and loaded onto other trucks. Then it goes to a corporate distribution center or manufacturing plant, in this case. Then the trailer is tagged, and that freight is associated with that container. So you are able to watch your goods from the time of manufacture until it shows up on your line. The benefit is that you used to know that a shipment was coming but didn't necessarily know exactly what was on the truck. Now they know that it's a shipment of Part A, and they can do things like when demand goes up, instead of going to a transdock, the container truck goes directly to the manufacturing plant.


JH: Are there any time frames for this pilot to occur?

RT: It's happening now. We were down in Long Beach at the transdock last week, where they broke up the container and it headed to the manufacturer. A couple of benefits: In addition to giving visibility and transparency to the supply chain, we expect it to help with new import regulations in terms of security. DHS has been involved as well as Homeland Security so that inspection of containers can go faster and be easier and cheaper with EPC on the container and individual pallets within.


JH: Can you tell us about structural and business focus changes at GS1 and how they help GS1 meet its objectives and better serve its customers?


CL: Part of it is in building the GS1 brand. Our foundation of brand awareness is UCC. We're trying to build this GS1 brand and have it stand for something. Secondly, it's to be technology-agnostic.


We need to understand our clients' business needs, understand the totality of the clients' value chain and where we can help. First, listen to where your pain points are. Secondly, to be able to take that insight back to the ranch and have cross-collaboration teams that have a grip on technology, have a grip on business processes, customer segments, and be able to weave it all together to provide a tailor-made solution for what ails you and notches into a fuller solution.


In the old days, it was four discussions with a small sliver of the pie, and we'll let you sort it out. In the future, it will be a value chain. Part of our reorganization is to say that... where today one person will push data sync, one will push EPC, and another will sell you GTINs, we want one face to a customer.


JH: I'm hearing a major change here. Instead of having three, four, or five AEs represent GS1 in major accounts in the market, you'll have account reps that will be responsible for understanding the overall need of a client and bringing together solutions for those accounts.


CL: I want to create a bias for action. We're going to talk to anybody about business issues and try to identify common ground. The phrase I use is "coopetition." I'm relaxed in being a competitor but also want to cooperate with you, for us to have a common understanding of where the areas of opportunity are. My challenge with this company is that we have great people, great products, lots of great stuff. I want to create an environment that creates a lot more business opportunities that we'll be chasing. We'll be more relaxed in defining ourselves and have a certain area of overlap in terms of our skill sets and have a better peripheral knowledge of what each person is capable of doing-a flat organization that is customer facing. That is where the buzz is coming from when we talk about reorganization.


JH: That brings up an interesting point. What is the role of business partners at each GS1 operating area?


CL: At a broad level, we have to have a better comfort factor in looking at the marketplace for multiple angles. Until now, we've been executing a given platform of things. We've integrated the organizations; we're in a qualitatively different stage now. When I look at apparel as a case in point, they've taken a pragmatic approach to data synchronization. It doesn't involve a lot of 1SYNC. We need to have an ability to challenge ourselves to say, "If we want to have 1SYNC be the pervasive provider of anything having to do with data synchronization, we need to understand how to build better mousetraps and be pragmatic in challenging the status quo with our go-to-market strategy." Dan would bear that out. We're having internal discussions about how to work the synergies of 1SYNC and EPC and laying that out with barcodes and weaving it all together. What does that do for the small business guy for getting to the on-ramp of cool commerce and supply chain initiatives? I think it's going to be a little bit of an iterative process to say with solution partners, "Where do we partner up?" Will it be purely to execute something to get faster to where we want to go quickly? Or will it be to define territorial boundaries-no-fly zones? Dan, where do you see the challenges that blur some boundaries but define others?


DW: You take our core competency and look at 1SYNC specifically around data management with global data standards, and then what we do with our expertise and knowledge [is] work with partners to leverage their expertise and existing business relationships to ensure successful implementations for all the community...whether that's helping to enable the particular suppliers to retailers or it's focused on business partners to take what we have to offer the community and have those business partners integrate that data into back-office applications for that retailer so it becomes part of their production systems. So it's leveraging the best of both worlds. That's one step. The other step is data is the foundation levelment of supply chain. If we're the source of the data, or say, the facilitator or repository of the data of the global community, we have to work with those business partners who have solutions and services and applications that make use of the data, whether that's replenishment tools, point of sales, analytics, or wherever it might be. I think a good piece of the business partnership is working together in an alliance to enhance the value to the customer by using our hardcore data and using their respected and reliable and much-needed solutions that are in the marketplace today.


JH: In summary, you're saying, work with the business partners, leveraging their relationships to help GS1 get into industries for industry expansion and using the partners to deliver actual working solutions using the GS1 model.


CL: Also the point is the product development things we've been working on, managing small businesses. If you're an IT guy, you have 15 things on your list and data synchronization isn't one of those. We're motoring through a recession now; we're trying to meet people where they're at rather than telling them what they have to do. We're doing whatever we can to take the pain out of implementing this technology. This is where we have to be. We're approaching it from a more holistic approach.


JH: About 20 percent of MC Press Online readers are software companies and service providers, and I'm sure some have partnered with you. We all make significant investments to tie to 1SYNC; it's important for our businesses to comply with the standards. It's not free, and it's a lot of work. Is there an aspect there that you don't want to cannibalize those businesses partners have built? Are we viewed as complementary? Will the products and services we provide be offered by 1SYNC?


CL: The name of the game is sustainability. We work with partners in creating an environment-we're a not-for-profit-and one of the interesting things that Danny Wegman talked about at the last board meeting: what are the imperatives. First, serve the community. Second, do the right things. Third, find the money to do the first two. For me, if we can cover our costs of doing business and have a little bit left over, that means we can do more cool things. For me, doing business in a sustainable way means respecting people who have competence in doing what they do and serving the customer.


JH: And invest.


CL: And invest and have a business to go forward. To take a short-term attitude, which we won't be doing, it would be to get very precise about things. We need to look at our core competence. The reality is we're a very small organization, spread very thinly, doing a lot of very cool things and a lot of very complex things. We need to narrow our field of vision, make sure we're doing a few things very well and working with the right partners to be able to do it and execute properly in the marketplace. The solution providers will be around. We need a more strategic view of ourselves and of our partners, and hopefully that creates a win-win situation for everybody.


JH: Can you please detail programs that foster adoption in 1SYNC? Personally, I've found programs that 1SYNC offers today that weren't offered five or six years ago that make getting a distributor's suppliers on board much easier. These are things that the community would benefit from knowing about as well as 1SYNC and GS1 benefit from having them more well-known. Can you talk about these programs?


CL: From a strategic marketing way: It's a bit of the tree falls in the woods and no one is there to hear it. We've created a lot of good stuff, foundational stuff, and we talk about addressing some of the limitations, but I think we have to do a much better job of marketing these programs to a broader constituent group. We've got a twofold challenge: 1) package it in a way so that the message clearly communicates what we're about and the cool stuff we're bringing to the market, and 2) get that stuff into as many media channels so that stuff can happen. We've really done a lot of things in the last seven or eight months when you think about reorganization, integration, dealing with EPC, dynamics of new technologies. So I think we're poised to getting down our value proposition, what we bring to the market; we have retrained an organization so the sales guys in the front line talk in a more coherent and bigger way to our customers. We have more marketing horsepower back at the ranch to get the message out to a broader community. We've put a lot of that into place. Dan, speak to the products.


DW: A couple of things we have in place. We realized to get these initiatives going we had to have retailers ready and willing to use the data. We've invested a significant amount of money over the last couple of years to build implementation services and support. We have a retailer center that takes best practices learned from those retailers already in production with GDSN sharing their experience with the newest retailers adopting principles, standards, and processes. We put people on site at a retailer to help them do that workload process and help them understand where that ROI will come from and what they have to do at a project level to successfully implement a data synchronization project.


JH: You have employees who can go to a retailer to help them understand how to implement data sync in their environment and understand the benefits?


DW: Best practices are shared. They learn knowledge from retailers willing to share their best practices so they can enable the larger community.


JH: I've worked closely with you folks over the last couple of years, and we've heard concerns from retailers that it's a major effort to get their suppliers on board to publish data to 1SYNC. I've heard there are specific programs that make this easier and cost-effective for the retailers. Can you talk about how this drives adoption?


DW: We've learned that we need to actively support retailers on board their suppliers. We now help the retailers and demand-side wholesale distributors create the communications to their suppliers, plan the project, and provide customer service for implementation support to train, educate, and provide necessary wherewithal to both the retailer and the supplier. We help them through the process and give them a clear and prescriptive implementation road map and then educate them so that the data they are going to sync is cleansed and accurate. That will benefit the supplier by enabling them quickly.


JH: Are you saying that 1SYNC and GS1 have a program to work with retailers to craft the message right for them to their suppliers-be it email, mail, whatever-and identify what suppliers should be synchronized at what time and a program to actually implement that-people to do the calls, write the letters, to drive adoption?


DW: Correct. The most obvious example is the multi-retail pilot going on now with the eight industry leaders driving that from a retail perspective. That has been over the last six months.


JH: Are you also saying that since you've crafted that program to make adoption more rapid and cost-effective for the retailers that to make sure they get quality data that they can use for their enterprises that you've also created programs that help ensure the suppliers have their implementations working properly in getting the right data in and over to retailers and distributors?


DW: Correct. The strongest aspect of 1SYNC is experience in getting companies into the GDSN, all size of companies, all manner of supply side. Because of that experience and share of best practices from our members, we're very knowledgeable about where the issues reside relative to data accuracy. So being able to educate and train and bring awareness to others as part of the implementation process is very helpful. That's what's helped expand the GTIN registration and connections within the network.


CL: Dan's talking about cross-leveraging the barcode franchise; the product we're working on really takes the small business owner that is already there with barcodes and working that franchise in a more aggressive way to provide products and services that allows for them to easily engage in data synchronization. We're working on new products that will finally address the needs of the small business user and what has limited them from synchronizing data in the past. It's not forcing compliance; it's realizing that we have tools that enable the realization of data synchronization, which makes it a different ballgame than in the past.


CL: Also, we're addressing the small business person who doesn't want to get into the technical details, the guy who wants to press a button on his computer that allows him to do all this stuff. We're trying to sequence users who have big IT departments and complicated business systems as well as the one guy and his dog making chili sauce in the back of his garage. We have a full suite of solutions that allow the retailer to deal with the entire range of their supplier base.


JH: Are there any programs that incent the retailers to get a larger portion of their suppliers on board?


DW: They're able to earn credit against their 1SYNC fee by getting more and more supplier connections active. We're not-for-profit, which means we're a cost-based structure. If we can identify areas where we can eliminate costs, we can share the cost of the network across many more customers versus fewer customers, which should make it more efficient for each customer from a cost perspective to participate in the GDSN. In a sense, because we can spread the costs over more users while accelerating the time in which it takes those customers to get to the GDSN, then we're able to provide cost credits back to the retailer in subsequent years.


JH: By getting a larger percentage of their community on board, they can reduce their costs of participating.


CL: The real benefit goes back to the new ways of working together. In the absence of perceived benefits, it all comes down to price. I don't know a lot about the pricing structure details, but I can guarantee that the benefits of getting data sync right trumps anything having to do with cost. The challenge for us is to create this ecosystem that allows people to participate in this way and it takes the collective pain and barriers to entry and adoption away. For us, every retailer we've worked with, the revenue we get from them is insignificant relative to the benefits we're providing to them, and the challenge for us is to look them in the eye over the table with conviction and tell them what we're bringing to the party. We're bringing good things to the marketplace.


JH: Would you care to share any closing comments to leave with the readers?


CL: One, Jeff, I want to say that we really appreciate your time. This is part of our marketing ourselves and getting into the marketplace. We have to work a lot better with guys like you, and we appreciate the time you've spent with us. Going forward, you have my assurance that whatever you need from us, clarity of message, we welcome you. Our mission and cause is quite noble, and honestly, back to this little model, we need to get money to fund cool stuff in the marketplace, and that only happens by adding customer value in the marketplace. It's all about getting the story out, and we're appreciative of the opportunity of you stopping by and having us participate in this interview.


JH: We thank you for your time and for sharing your thoughts with our readers.



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  • Profound Logic Have you been wondering about Node.js? Our free Node.js Webinar Series takes you from total beginner to creating a fully-functional IBM i Node.js business application.

  • SB Profound WC 5536Join us for this hour-long webcast that will explore:

  • Fortra IT managers hoping to find new IBM i talent are discovering that the pool of experienced RPG programmers and operators or administrators with intimate knowledge of the operating system and the applications that run on it is small. This begs the question: How will you manage the platform that supports such a big part of your business? This guide offers strategies and software suggestions to help you plan IT staffing and resources and smooth the transition after your AS/400 talent retires. Read on to learn: