Data sharing: A broken river?

The constant flow of data up and down the supply chain is an essential part of doing business, so where is it being blocked between trade partners? The answer lies in out-dated methods and a lack of trust.

Few office products companies, wherever they are in the supply chain, would disagree that accurate and efficient data sharing with their trade partners would be beneficial to how they do business. 

And few suppliers and resellers would disagree that communicating information with each other to their mutual agreement would improve category management. 

However, this is a challenge for any industry, let alone an industry with the sheer number of SKUs that OP can comprise, and is often done rather badly. In the case of transactional data, out-dated systems lead to errors and delays, while when it comes to information about how a product sells, a lack of trust is causing money to be wasted and opportunities to be missed. There are those in the industry who believe it’s time to address these problems. 

A noisy supply chain

Let’s start with the challenges posed by transactional data, the information about a product – such as size, materials, price and packaging – that has to be shared for a sale to take place between a supplier and a reseller. 

According to Kevin McGirl, CEO of Sales-i, “data sharing is going on, but in a crude way”. Historically, information has been shared manually, perhaps through the exchange of spreadsheets that have been created, item-by-item, by an administrator. Reports are drawn up individually, as each reseller requires different data with no standard way of reporting. 

Manual workarounds to source missing data and correct errors cost the UK £235 million ($376 million) a year, according to research carried out by GS1 UK, part of the Global Data Synchronisation Network (GDSN). And according to research firm Ovum, bad data in the US costs businesses a staggering $700 billion a year due to inefficiency and lost customers. Problems includes:

  • Missing information
  • Errors
  • Inconsistency, which make product comparisons and gap analyses near impossible
  • Out of date data due to the time it takes to compile
  • Unsecure – sending spreadsheets via email, for example, is not secure
  • Repetition of effort – for a vendor as large as ACCO or 3M, for example, with a vast array of products, supplying information to their customers in several different formats can take days or weeks
  • Reworking, as often the recipient will have to enter the data into their own system before it can be used. 

Despite these problems, until now many people have been of the opinion that if it’s not broken, why fix it? Data is shared out of necessity, whether it’s being done well or not. Now conversations are happening all over the world about getting to the root of the problem. 

Speaking about the need to standardise an efficient way to share data, Philippa Morrell, General Manager of UK trade body BOSS Federation, says: “This is becoming a necessity, more than it used to be, and it’s directly related to the industry becoming increasingly global and stocking more products than it used to.”

The BOSS Federation has for some time published a set of codes called the Industry Standard Product Classification (ISPC). The codes create a standardised way of categorising products which, if used by all suppliers, should simplify the system. But this is becoming insufficient as the problem grows, and the organisation is starting to look globally, perhaps in the future working with global body the United Nations Standard Products and Services Code (UNSPSC).

“We’re experts in stationery and office products, but for standards like the ISPC to remain relevant for the industry, they need to be organic. Because the product mix is changing too rapidly and we don’t know what types of products will suddenly appear in catalogues we’re often 12 to 18 months behind creating codes. The UNSPSC cycle is much faster and they often already have a sector classified – I’m a firm believer of not reinventing the wheel.” 

One project on the point of launching is by GS1 Australia. GS1 already has data pools around the world containing information about a number of sectors; the grocery sector, for example, has used it for years and superstores such as Tesco and Walmart subscribe. The idea is that suppliers that subscribe to the not-for-profit service electronically enter their data, which goes through a validation process, and then resellers subscribe to a vendor’s catalogue. GS1 Australia has been working for the past three years at getting the office products industry involved.  

Bonnie Ryan, Industry Manager at GS1 Australia, explains: “If we have an industry service where suppliers can all provide information in the same format, agree what set of attributes is required for trade and publish it electronically, then data will be far more immediate, timely and accurate because information goes through a validation process.” 

Distributor Alpha International has used GS1 in the Netherlands for about 12 months. The company initially joined because of a new customer in the non-food market, as involvement in the data pool was a clause to do business. 

Roland Fransen, Sales Manager Retail Benelux at Alpha, says that the investment is very fair, looking at the efficiency savings. “It’s a more efficient way of sharing data, but also an extra way to help us improve our logistical performance to customers,” he says.

However, not everyone agrees that this type of universal standardised data sharing could be possible. “Everyone would want to have it because it makes the lives of many much simpler,” says Ronny van Rossem, VP Merchandising at Staples Europe, “but the question is how realistic is it to get there in the short term? There are many partners in trade and even more ERP, warehouse, inventory and other systems requiring different data elements. Many partners already try to have their systems unified within their own business. But even when the systems are aligned, legal, language and other elements come in to play which makes the data model pretty complex. Once a standard were found it would still take time and, especially, money to adapt all systems towards that standard.”

Some vendors, such as 3M, are working to align data internally rather than externally. Maurizio Beolchi, Business Manager Europe at 3M, says: “While the industry is not as automated as it should be, I see big strides towards this. We are investing heavily in a specific project on our side that we call the global product information management system, which we will use across the whole of 3M.”

However, GS1’s Ryan is confident that an industry-wide standardised set of data is achievable, despite the significant effort from suppliers that would be necessary. 

“It’s not the sort of thing that you could plug in and go, as suppliers have to tidy up data and find out where information is held – some might not even exist,” she says. “But once they’ve done that it’s a matter of publishing it once to everyone. One company took six months to do it the first time, but 20 minutes the next. It’s worth it because it takes all the noise out of the supply chain by reducing errors.”

A matter of trust

Transactional data aside, also being lost between vendors and resellers is all the data associated with category management. This includes point of sale information, price points, which presentation methods work in a store, what customers are attracted to and which product mixes are most successful. Resellers take a huge amount of time collecting this information, but this is not always shared with vendors. 

Sales-i’s McGirl says: “It’s typical for a vendor to see data aggregated down to a product level, but not who products are sold to and so on. Data is quite protected and though we definitely see more sharing going on, the historical paranoia is still there. One of our objectives is to break down the barriers in the supply chain and take data directly from source to share automatically with vendors on a daily basis, not every six weeks. This is still some way off, although the intent is there. Unless vendors know their customer they can’t really help in the selling process – you can’t ask a partner to help blindly.”

Unlike the inaccuracies and out-dated methods that affect transactional data, the cause of this lack of communication is often down to more than just crude formats. It’s down to relationships, and not everyone feels it is possible to remove the brick wall. 

Staples’ van Rossem says: “Whether we share information really depends on the vendor. There are several key drivers in the decision about whether to share data or not: capability, capacity and trust. For a start we have many vendors and you can’t share information with them all. In each category you identify a ‘category captain’, which is not always the ‘biggest’ brand but is one that you believe has capability, and that you can rely on to look at category performance.

“The biggest challenge for vendors or brands is that we’re all human beings and their interest is in selling their own products. But vendors need to have an attitude whereby they don’t use the information as a way to spread as many of their own SKUs as possible. They need to see how they can optimise, for the customer, the total profitability and growth of the category, which will lead to benefits for themselves. It should be a driver to learn from: gaps in an assortment, the way products are presented and so on.”

This understandable problem has always existed; of course a vendor’s focus is on selling its own products. But if the opportunity exists to develop a category by understanding customers’ needs and creating solutions to meet these needs, surely the industry as a whole would benefit? 

The trust element is hard to ignore, however, and according to van Rossem can affect negotiations. “I call it the brick wall between sourcing and category management,” he says. 

“One cannot go entirely without the other but what can happen is that you start working together, share information and then vendors use all they learned  against you in negotiations. That ruins trust immediately. 

“It’s about doing the right thing to drive the overall business together, so the objectives of all parties are met.”

All about the customer

Adding to the “historical paranoia” about sharing data between resellers and vendors is a lack of trust between resellers, other resellers and wholesalers. According to McGirl, however, this situation is loosening up. 

“We are seeing dealers sharing data with their groups, and sharing data with their wholesaler,” he says. “There’s probably a little bit more trust now, as some of the historical concerns about wholesalers going direct, for example, never happened. There’s more belief that the lines are defined.”

Illustrating his words, Canadian dealer group Basics Office Products is midway through a project to create a central data pool. The project began in mid-2011 and the idea is that vendor partners and dealers can keep it up to date, including a product database, marketing material and web content. The dealer group says it is almost halfway towards its target goal in terms of content. 

So projects are getting people talking and technology is being used to simplify the stream of data up and down the supply chain. 

And as Ryan from GS1 Australia says, when the vendor as the source of data creates accurate data and communicates this properly, the whole supply chain will benefit, and at the top of the supply chain resellers will be able to share usable data with end-users (see box ‘End-user demands’.  

But perhaps this article has started the wrong way around by first considering transactional product data as it passes up the supply chain. As van Rossem says, “rather than starting at the vendor and working up, we should have more of an attitude that we start from the customer and build the system in such a way that it responds to their needs”. Perhaps then the data will start meeting the industry’s needs. 

End-user demands

While those in the industry trade data up and down the supply chain, end-users themselves are asking for more information. 

McGirl says: “We’re seeing [data sharing] as an increasing theme, not just in OP but in other industries. End-users are demanding more from suppliers, such as to do their own usage reports; for example, a hospital board may want to understand exactly what each department is buying and want self-serve solutions.”

The big boxes offer this self-accountability as a matter of course, and contract customers can check their usage levels at any point by generating their own reports online. As a result, dealers are being prompted to offer this facility. 

“There’s a natural drive now for people to be more self-sufficient,” adds McGirl. “Rather than depend on the supplier for information customers want to get it for themselves.”

Sales-i is currently working with United Stationers on a project with the State of Texas, which is a huge buyer comprising hundreds of departments. The state wants to roll up data to see what’s bought over all departments, and the challenge is to provide this in an easy-to-access format. 

“To distribute a spreadsheet each month would be quite a task,” says McGirl. “To be able to do this online daily takes a lot of hassle out so it becomes more agile and feasible. It was historically quite a painful process.”

What’s your view? Is data sharing a challenge at your business? Have your say by contacting Felicity.Francis@opi.net