Retailer has 800 suppliers on board with the effort but says that's not enough
Wal-Mart Stores Inc. wants suppliers to clean up product data and establish uniform product descriptions based on industry standards, all in the name of improved communications and more-efficient supply chains.
Wal-Mart hasn't issued a firm mandate and is concerned that suppliers won't budge until they get a "dear valued supplier" letter from Wal-Mart or another retailer, said Randy Salley, VP of merchandising systems in Wal-Mart's information systems division. "Don't wait for the mandate," he urged last week at the Retail Systems conference in Chicago. "If there's value for your company in that business decision, then do it."
The retailer is synchronizing product data such as packaging dimensions, color, and weight with about 800 suppliers across 2,000 product categories and 60,000 unique items. Five suppliers on average join the effort each week--a marked improvement from a total of eight suppliers in 2002.
Still, Wal-Mart says that's not enough. Consistency in product descriptions makes it easier to load delivery trucks, reduces discrepancies in orders, and increases the likelihood that the correct products get stocked on store shelves.
Wal-Mart VP Salley is concerned suppliers won't budge unless they get a specific mandate from retailers.
Photo by Bob Stefko
Wal-Mart plans to expand its data-synchronization efforts to the United Kingdom, Mexico, and Canada this year, most likely starting with multinational suppliers such as Johnson & Johnson, Procter & Gamble, and Unilever. Salley said he hopes his call to action will increase adoption, which has been slow partly because of the fragmented nature of the data-synchronization network.
The Uniform Code Council in this country and Europe's EAN International Inc. last year formed the Global Data Synchronization Network of interoperable data pools into which suppliers upload cleansed, standards-based product information. But suppliers haven't been sure which of several data pools to join. Two of them, UCCnet and Transora, merged earlier this month, and earlier this year, the Uniform Code Council and EAN International merged, creating a global organization, GS1. This should bring more clarity, Salley said.
Participating companies are making progress. Procter & Gamble estimates it saves more than $1 million annually in administrative costs by synchronizing its product data with Wal-Mart and eliminating the need for clerks to manually correct inconsistent information. It also has cut the time it takes to set up new product information in Wal-Mart's database from four days to four hours.
Johnson & Johnson began a data-synchronization project with Wal-Mart for 1,300 products in 75 categories in 2002. The goal was to improve product availability on store shelves after determining that data discrepancies with retailers accounted for up to 9% of out-of-stock products. Setting up a new product in Wal-Mart's inventory system now is an automated process taking two days instead of up to 30 days, according to a study released in March by consulting firm Capgemini.
Wal-Mart isn't the only big retailer behind the effort. "We have synchronized data with suppliers on between 12 million and 18 million products across the companies," says Tom Cole, vice chairman at Federated Department Stores Inc., which operates the Bloomingdale's and Macy's department-store chains.
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