Slow To Sync

Jun 06, 2004 (08:06 PM EDT)

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About 150 years ago, Church & Dwight Co. had just one product: sodium bicarbonate, now known as Arm & Hammer baking soda. Today, the $1.1 billion-a-year company makes around 600 products, from at-home pregnancy tests to cat litter. That's a lot of products and a lot of product data.

So it was no small task when Church & Dwight received a letter from Wal-Mart Stores Inc. last year asking it to pick one product category, clean up all the data about those products, and then collaborate with Wal-Mart so the two companies' electronic product names, descriptions, and attributes match. The IT department had to locate the data spread across departments and systems, look for redundancies and errors, double-check item information by reweighing and remeasuring each product, manually input the changes, and then electronically publish it.

The goal of all this is to ensure that when Wal-Mart electronically orders 200 cases of a product, Church & Dwight's information systems know exactly what Wal-Mart wants. And when Church & Dwight sends an advanced shipping notice alerting Wal-Mart that the 200 cases are arriving tomorrow, the retailer's systems get the exact message the vendor intended.

Such data-synchronization efforts are common throughout the retail and packaged-goods industries these days, spearheaded by UCCnet, a nonprofit unit of the Uniform Code Council standards organization formed six years ago to establish a global online registry of product information. UCCnet members include Church & Dwight, Home Depot, Procter & Gamble, Wal-Mart, and about 3,500 other companies, of which more than 30 are retailers and 3,200 are suppliers. A year ago, there were only about 600 UCCnet members. That shot up, thanks to letters from Ace Hardware, Ahold USA, Lowe's, Target, Wal-Mart, and other weighty retailers telling their suppliers to get on board. In just the first three months of this year, 566 companies joined UCCnet. To date, more than 239,000 products are registered, and more than 1,100 members actively exchange information via UCCnet.

Manufacturers submit their product information to the registry using UCCnet standards, and retailers then download the product descriptions and share the data with their back-office systems. That way, retailers and suppliers can easily share consistent product data, a must for driving down supply-chain costs, speeding new product launches, maintaining more accurate inventory data, and reducing invoice errors.

Radio-frequency identification technology, and the fast-approaching deadlines that require suppliers to use RFID tags on goods they ship to retailers, also make better data synchronization more important. RFID's promise--the ability to exchange item-level product information in real time up and down the supply chain--depends on accurate data and consistent product descriptions.

Just having clean data is a benefit, Church & Dwight'ssenior manager of sales systems Pierre Bonura says.

Just having clean data is a benefit, Church & Dwight's Bonura says.
"The industry is transforming, and retailers are looking for a commitment," says Pierre Bonura, senior manager of sales systems at Church & Dwight. "The goal to synchronization is to gain data accuracy and communicate that information from machine to machine using the same language."

The energy behind data synchronization is impressive, but a worldwide registry that holds accurate product data about millions of consumer goods is a long way off. "Data synchronization is a messy job," says Bernie Hogan, senior VP and chief technology officer at UCC. Many companies still operate their different business lines autonomously, creating silos of data that are scattered throughout their organizations. Some, like $9.9 billion-a-year tool manufacturer Ingersoll-Rand Co., have grown and diversified through acquisitions, accumulating a mountain of disconnected product data along the way. And for companies that sell and buy internationally, there are product-data cataloging standards that vary from country to country.

When 3M Co., as part of its UCC effort, started looking at all the ways it stored and sent product-attribute data, it found information was transmitted by phone, E-mail, fax, CDs, EDI, PDFs, spreadsheets, Web sites, and printed price pages. 3M isn't unusual in that regard. If the company could publish all that data once to the single UCC registry, which could be accessed by many retailers, that alone would cut costs out of a manual and fragmented process, said Peggy Spofford, 3M's UCCnet/RFID project manager, at a recent Retail Systems conference. Greater savings could come from using the effort to make processes such as new-product introductions more efficient.

But it also requires changes to 3M's data-management processes, such as requiring data owners to enter data to meet UCCnet standards, making them accountable for the data's integrity, and adding data fields needed to support data synchronization. For the time being, 3M is focused on tactical compliance with retailers' deadlines--it expects to be connected to several retailers this year--before tackling more-strategic internal changes the system might allow, Spofford said.

Technical challenges aside, data synchronization also requires fundamental cultural shifts. "Historically, it's an adversarial relationship between suppliers and retailers," says Paula Rosenblum, director of retail research at the Aberdeen Group. Manufacturers like to keep detailed pricing data to themselves, Rosenblum says, particularly if they've negotiated special deals with certain customers.

Technical and cultural strains can take a toll. Wal-Mart had asked that all its suppliers comply with UCCnet by the end of last year. But like several other retailers that had set deadlines, Wal-Mart is now working with suppliers on a phased implementation schedule to accommodate the extra time they need to clean up their internal data stores, implement UCCnet standards and practices, and begin publishing to the registry.

Meanwhile, Wal-Mart is pushing ahead internationally. Late last month, it began a data-synchronization test with Procter & Gamble in England. A test in Mexico is scheduled for August, and tests in Argentina, Brazil, Canada. China, Germany, Japan, and South Korea will follow a month later.

Home-improvement retailer Lowe's, which several manufacturers say originally wanted suppliers to publish product data to the UCCnet registry by this month, is now asking them to be fully compliant by the end of this year.

As early as mid-2002, Magla Products LLC began receiving letters from retailers requesting that it begin data-sync efforts by cleaning up item-level data and joining UCCnet. Magla, which manufactures work gloves and disposable gloves under various brands, immediately began investigating the technology and services required to comply. But the process wasn't easy. After all, the company produces more than 25 million household gloves and more than 200 million disposable gloves annually and has products in just about every major retailer in the United States, reaching 150,000 stores nationwide.

Since the first request, as many as eight of Magla's customers have sent letters calling for data synchronization. The biggest challenge initially for Magla was understanding specifically what UCCnet requires. The registry requires that product data include as many as 151 attributes, or descriptors; about 40 are mandatory. For Magla, also a supplier to Ace Hardware and Lowe's, there are about 10 additional mandatory attributes. What proved even more challenging was finding all the product data within Magla's four walls.

Connie Brendle, IS manager, Magla Products LLC

Data accuracy was a big issue in Magla's synchronization efforts, IS manager Brendle says.
"Is it in your [enterprise-resource-planning system], is it on someone's desktop?" says Connie Brendle, Magla's IS manager.

To pull off such a massive data project, the company decided in January 2003 to employ data-synchronization and hosting services provider TR2 Consulting Enterprises Inc. to help audit all its product data. TR2 has since been acquired by Sterling Commerce Inc., a wholly owned subsidiary of SBC Communications Inc. that provides business-integration software and services.

Once the data is located and centralized, it has to be checked for accuracy. "Little changes not readily visible get pushed to the side and forgotten," Brendle says. "The product's package might have changed, and you didn't think about communicating that change back to the person managing the data. Or the product comes in from another manufacturer and the carton size or weight is different."

To ensure that case weights and dimensions were correct, Magla sent teams of people into its plants, armed with rulers and scales, to measure and weigh every case. Now the company measures and weighs individual products, something it had never done before. "In our systems, it didn't matter what space those gloves would take up, so we didn't have the measurements at consumer-unit level," Brendle says. "But retailers want that, so they can plan their shelf space." The process is time consuming, but Magla is investigating a new tool that can measure products using infrared technology.

chart About 80% of the information required to synchronize data with its retailers resides in Magla's ERP system; the rest is found in Excel spreadsheets and other desktop applications. In April, nearly two years after starting on the project, Magla published its first certified data to Ace Hardware, which Brendle says is one of the few retailers to have completed its data-synchronization project. To date, Magla is only about 30% finished with its data-synchronization work and has spent more than $10,000 just on TR2's services and a subscription to UCCnet. The company may have to hire a full-time employee to manage the UCCnet effort, Brendle says.

Magla isn't alone in its data-accuracy troubles. According to UDEX, a data-quality-management service provider, erroneous product data is endemic to the industry. In a study monitoring 413 suppliers that submitted information on 4,034 new consumer products to retailers in November and December 2003, there were 2,784 errors, including mistakes in product dimensions, quantities, and branding. Forty-four percent of items from suppliers were identified as having erroneous data that could have caused major problems in the supply chain.

"Marketing, procurement, sales, and engineering might all have varied descriptions for the identical item," says Richard Long, senior VP at UDEX. "Poor data quality internally has made manufacturers aware they are sending inaccurate information to retailers."

Companies are hiring outside firms for help with the technical challenges of their data-synchronization efforts, tapping a growing industry of hosting services such as TR2's that help manufacturers cleanse their data, validate it, and then publish it to the UCCnet Registry. Both Church & Dwight and Magla use TR2's services, but they aren't the only ones. TR2's growing customer list includes Black & Decker, L'Oreal, and Ocean Spray. "A year ago, the hosted-services business didn't exist, and today we have between 650 and 700 customers," says Tomas Rauh, VP of the retail practice at Sterling Commerce.

Omar Hijazi, a principal at consulting firm A.T. Kearney, estimates the software and services market for data-quality management, certification, validation, and synchronization will generate $350 million to $500 million this year.

With the help of those services firms, the retail and consumer-goods industry is knocking down some of the obstacles. One of the holdups--incompatibility and confusion among myriad international product-data cataloging standards--is easing. Standards body EAN International and the Uniform Code Council are creating the Global Data Synchronization Network, which will feature a hub that acts as a directory service for data pools around the world, including UCCnet. The first generation of the hub will launch next month. Ultimately, retailers will be able to query the global hub concerning suppliers and goods, and it will reply with product notations and information on which pool to go to for additional data.

Similarly, two competing online trading exchanges have tightened their relationships. In late May, the WorldWide Retail Exchange LLC and Transora, a manufacturer-founded exchange, disclosed that they have integrated their global data-synchronization software and services. Both exchanges can certify and upload data to the Global Data Synchronization Network and regional data pools, such as UCCnet. The two also unveiled an interoperability pilot test to share item-level information between their platforms using EAN International and UCC standards. Nine retailers and 12 manufacturers from Belgium, France, Italy, the Netherlands, Spain, and the United States are participating in the pilot.


Spurred by retailers' demands, companies are racing to get their product information compliant with data-synchronization standards through UCCnet, a data repository.

Ace Hardware, Ahold USA, Lowe's, Target, Wal-Mart, and others have all told suppliers to join.

More than 500 companies have signed up for UCCnet in just the first three months of this year, bringing the total to about 3,500.

But signing up is only the start. Cleaning up data and changing processes to make UCCnet useful is difficult.

Still, the multiyear battle to complete a companywide data-synchronization and collaboration project may be too much for some companies to bear in the near term. Especially, say some analysts, since returns on investments are unclear. "Everyone quotes the $40 billion savings in purchase-order errors, and I think there's some truth to that figure, but getting there isn't going to be easy," says Aberdeen's Rosenblum, referring to an A.T. Kearney study.

Rosenblum contends that's because data synchronization is likely to cut administrative and other overhead costs but not create new revenue. "The consumer doesn't get much from data synchronization, and I don't think retailers are going to necessarily sell more," she says. "Until we get back to a hyperhot economy, I don't know if data synchronization is going to be where people put their money."

Nonetheless, the increasing number of letters from retailers calling for data synchronization have gotten manufacturers' attention, and retailers aren't giving in. For companies like Church & Dwight, data synchronization is simply a fact of life. "Most manufacturers look at this as a cost of doing business," Bonura says. "But just having clean item data is a benefit to us."

-- with Beth Bacheldor

This story was updated on June 7, 2004