I Sync, Therefore I Am
SuperValu derives super value from a product data synchronization initiative.
Picture the countless products that fill a typical supermarket's shelves. Now think of the details a retailer must get from the manufacturer about each product to efficiently ship, price, and display them all. Next, imagine the opportunities for error without a way to keep that information accurate and up to date.
A retailer might learn too late, for instance, that a supplier's new product has turned out wider and heavier than expected. That can throw off plans for building truckloads when it's time to ship the product or create store displays.
"Errors in both these areas occur when companies don't work with exact information," says Greg Zwanziger, senior business strategy consultant for SuperValu, a nationwide grocery retailer headquartered in Eden Prairie, Minn.
SuperValu operates 2,500 grocery stores and pharmacies under names such as Acme, Albertson's, Jewel-Osco, Shaw's Star, Shop 'n Save, and Sunflower Market. It also provides distribution and logistics services to more than 5,000 independent grocery stores.
In 2001, SuperValu was one of six companies to pilot a technology solution called Global Data Synchronization (GDS). The aim was to create a data-sharing standard to ensure that suppliers and retailers have exactly the same information, all the time, about product attributes and pricing.
Hitting Critical Mass
After those early tests, SuperValu started rolling out the system to suppliers in 2003. This spring, the company announced that it has 500 of its largest suppliers on-board, representing 60 percent of the non-perishable volume moving through its distribution centers.
Having reached that milestone, "the system is moving from pilot into true rollout," Zwanziger says. "Because we're hitting critical mass, SuperValu—and the grocery industry in general—can see the benefits of data synchronization."
"By leveraging data synchronization we are removing friction from every step in the supply chain, creating internal efficiencies as well as benefiting our suppliers, retail customers, and the end consumer," adds Mike Jackson, SuperValu's president and COO.
"GDS has rapidly become the standard way we do business with these suppliers. By integrating new item notifications from the GDS with our SuperValu portal, SVHarbor, we have improved the accuracy of information entering our network, while decreasing the time to get new items to market."
Staying in Sync
The seeds of GDS were sown in the early 1990s, as part of the Efficient Consumer Response initiative. "Industry report after industry report highlighted the fact that suppliers and their retailers and distributors weren't working with the same information," Zwanziger says.
At the core of the problem were databases that weren't staying synchronized. When a supplier changed some aspect of a product, information about that change would wend its way slowly through a paper-based process into the retailer's database. Human error obstructed the flow, so by the time the data arrived it wasn't always correct or complete.
Three retail companies—SuperValu, Wegman's, and Kroger—and three manufacturers—Procter & Gamble, Frito Lay, and Nestle Purina—started working with the standards-setting organization then called the Uniform Code Council (UCC) to develop data synchronization standards. During the pilot, the three manufacturers transmitted product information to the three retailers.
The UCC evolved into GS1. That global organization's U.S. affiliate, GS1 US, created the entity, UCCnet, which offered data pool services. Later, UCCnet merged with another GDS data pool provider, Transora, to form 1SYNC. That's the company today serving SuperValu, along with more than 45 other major retailers.
1SYNC is one of several companies that offer a data pool solution—a series of hosted applications that store product data for suppliers and retailers.
"The source and recipient data pools play what I call 'data catch,'" says David Garcia, vice president of strategic marketing at 1SYNC, Lawrenceville, N.J. "The purpose of the game is to make sure the right data is constantly synchronized with the recipient data pool."
GS1 US operates the Global Data Synchronization Network (GDSN), a standards-based environment that governs how pools exchange data. GDSN operates as a "data umpire in the sky," certifying that the data pools operated by 1SYNC and similar companies comply with standards, so data can flow easily among pools hosted by different technology vendors.
1SYNC's data pool solution is designed to synchronize information about product attributes and pricing, and retail locations.
The attributes for a can of soda, for example, include physical details such as height, width, and weight as they apply to the consumer unit—possibly a six-pack—as well as to a case and a pallet. Pricing information includes the regular price and any special promotions.
Currently, location data generally includes a "global location number" identifying the supplier's headquarters, which helps distinguish between suppliers with similar names.
In time, 1SYNC expects to add more location details. "We hope to drill down to stores and docks, maybe even locations within a store," Garcia says.
Each time there's a change to a product, or the supplier introduces a new one, 1SYNC automatically pushes that information from the supplier's data pool to the retailer's, where it immediately becomes available to the retailer's management system.
"1SYNC reduces the administrative time it takes to get new products on the shelves and into the point-of-sale system," Garcia says.
To get up and running on the system, SuperValu had to perform one major task: expand its internal management system to record product attributes at more than just the consumer unit level. The company also worked with 1SYNC and other retailers to define what product information they would ask suppliers to publish.
"We didn't want to become a one-off, where we asked suppliers to do something out of the ordinary," Zwanziger says.
After the initial tests, SuperValu started recruiting suppliers to subscribe to 1SYNC. The company first targeted suppliers that represent a large part of its business and stockkeeping units (SKUs).
Suppliers must pay to maintain their data pools, but it wasn't hard to sell most of them on the concept, Zwanziger says. A bigger challenge lay in the fact that "suppliers had never looked at managing item data this way before, as a common function within an organization," he notes.
1SYNC currently maintains 150 core attributes and another 300 or more "extended attributes," Zwanziger says. Often, different departments—packaging, marketing, and others—are responsible for different portions of that attribute information, and they manage it in different ways.
"Some of our top manufacturers have up to five major systems that store different item information," he says. "They also have spreadsheets and expertise within the company on other attributes that aren't shared on any of the major systems."
Many SuperValu suppliers are implementing product item management solutions to consolidate all that data. The most successful ones have appointed an "item management czar who is responsible for coordinating that effort across all functional silos," Zwanziger says.
1SYNC has formed partnerships with about 25 companies that offer item management software and other tools that make it easier for suppliers to operate a data pool.
Once SuperValu's data pool "catches" a new piece of information from a supplier, that data becomes available to its internal management systems. Those systems also make product information available to the independent grocers that use SuperValu's distribution services.
Since making the transition from GDS pilot to full implementation, SuperValu has netted improvements in its logistics operations.
"We now receive more accurate weight information, so when we generate an order for suppliers, it meets their parameters," Zwanziger explains. "We know we're building full truckloads to those parameters."
SuperValu and its suppliers now spend less time communicating back and forth about orders that contain errors. Also, "we've improved our truck utilization because we get more accurate cube, dimension, and weight information," Zwanziger says.
The data pool solution also provides some data SuperValu couldn't obtain at all when it used manual processes. "One piece of data we never tried to capture before, but we're starting to now, is coupon family codes," Zwanziger says.
These codes define the family of products covered by a single discount coupon. Capturing this data "can help facilitate better scanning of coupons, resulting in fewer 'kickouts' at the front of the store," he says.
Although 1SYNC currently synchronizes only basic location information, SuperValu is already using the system to distinguish between different portions of its nationwide retail network. "We set up an organization hierarchy, and we allow suppliers to publish to those different layers in our organization," Zwanziger says.
For example, it might assign different retailer IDs to distribution centers on the East Coast and West Coast, so that the two groups receive different kinds of information from suppliers.
SuperValu hasn't yet started synchronizing prices with its suppliers, but with more accurate attribute data, the company has gained financial benefits on the transportation side.
"When we write a purchase order for a full truckload that has a weight qualification, we now have more accurate data," Zwanziger notes. "We can be sure the truckload meets the carrier's weight requirement to earn a discount."