Global data synchronization: economic survival mandates near real-time, synchronized, industry-standard item content among trading partners – Mandates 2005
Despite hopeful signs, the economy is still experiencing some of the worst conditions seen in years. In response to this, companies are scrambling to find ways to optimize their operations and cut costs. For many industry leaders, one solution is global data synchronization (GDS), a mechanism that ensures product information, represented in a standardized form (e.g., electronic data interchange, or EDI), can be shared by manufacturers, distributors and retailers–with a potential industry savings of $40 billion.
The imperative to adopt GDS is being driven by mandates from some of the major players in the industry.
“If you supply to Wal-Mart or Lowes, among others, expect to be asked to participate in GDS with them through UCCnet within the next 12 to 18 months. No manufacturer is too small to have to become compliant. Increasingly, this will become a mandate to do business in this industry,” says Indianapolis-based Oxford Consulting Group Inc.
In fact, many of these same retailers have also asked their partners to start sending data to them through EDI over the Internet, using the AS2 standard.
“Data synchronization is fast becoming a top priority for manufacturers and retailers because of the resulting benefits of reducing order, invoice and shipment errors,” says Kosin Huang, senior analyst at the Yankee Group.
For GDS to work, trading partners must agree on, and have access to, key data (e.g., pricing and product numbers) via a neutral data repository. The UCCnet, a not-for-profit organization set up by the Uniform Code Council, provides services that address the retail industry mandate for near-real-time, synchronized, industry-standard item content.
“The logic is that, by agreeing ahead of time to the data elements, less ongoing time is required to manually fix erroneous data. Both parties then agree upon a schedule to sync their data so that changes can be transferred systematically before the new item or price shows up as a failed EDI invoice,” says the Oxford Consulting Group.
At the core of UCCnet’s services is its GLOBALregistry, which acts as an industry checkpoint, ensuring that all product information passed through it is synchronized and standards-compliant.
A number of data repository vendors, connectivity providers and data exchanges have come up with products and services to help companies link up with UCCnet. Trigo, HAHT Commerce, FullTilt, Sterling Commerce, Lansa, Prescient Systems, and others have made a big push into the market, with services to help set up central data repositories and format data specifically for UCCnet.
“Data synchronization is much more than just moving data, and you need to ensure that your provider provides for full synch capabilities, including message handling,” says Kara Romanow, analyst at AMR Research Inc.
“Using the UCCnet’s data synchronization and item registry services, all trading partners are using the same, current item information. UCCnet facilitated trade not only allows for data transactions to be standardized while in transport, but it also allows compliant systems to understand the data once it has reached its destination,” says the UCCnet.
The bottom line is that the UCCnet’s services reduce or eliminate losses resulting from data errors that occur in transactions among trading partners in the supply chain. And the cost of these errors is significant.
“Industry experts say that annual losses due to data integrity issues throughout the supply chain are tens of billions of dollars in the CPG industry alone. One study reports that 60% of all invoices generated have errors, with the cost to correct them $40 to $400 per incident,” says the Oxford Consulting Group. A.T. Kearney estimates that the benefits equal $700,000 to $1.2 million per $1 billion in sales.
The time to move is now
Even if your company hasn’t been called on to participate in UCCnet, you should begin the process now. As with so many of the other mandates facing your company in the coming year, it will take a lot of time and resources to make data synchronization work–which is why so few of the companies currently signed up for UCCnet actually have gone live with synchronization on a wide scale.
Be that as it may, data synchronization will eventually be the cost of doing business, and it will provide the foundation for other technologies, such as RFID.
“It’s the right thing to do, but it’s a hard thing to do,” says Romanov.
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