Editor's Note: Efficiency Leads To Lower Costs - InformationWeek

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6/13/2003
06:20 PM
Stephanie Stahl
Stephanie Stahl
Commentary
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Editor's Note: Efficiency Leads To Lower Costs

I had to check my notes several times. Did I misunderstand what he was talking about? Those thoughts kept going through my mind following a chat in Procter & Gamble CIO Steve David's office about six months ago. That's when he told me and one of my colleagues that retailer returns and refusals of products cost the company some $50 million a year.

Incorrect orders, damaged products, and other inaccuracies all contribute to its detergents, toothpastes, diapers, shampoos, and other products getting sent back. Sure, that's a drop in the bucket to a $40 billion company, but think of what you could do with $50 million. I'm not criticizing P&G--its competitors have similar issues.

In fact, speaking of $40 billion, that's about what the consumer-goods industry could save if there weren't so many inefficiencies between retailers' and manufacturers' product data. That's according to a report issued last year by A.T. Kearney (see informationweek.com/895/shop.htm). Imagine what could be done with an extra $40 billion!

New collaboration standards and technologies aim to change all that, thanks in large part to the services of UCCnet, a standards body whose goal is to provide a central registry of product information to retailers and wholesalers. The registry includes things such as manufacturer and part number. Imagine Wal-Mart ordering diapers to stock up for a big sale but getting toothbrushes instead. Though hypothetical, the chances of such mistakes will decrease significantly as retailers such as Wal-Mart raise the bar for doing business with them--"participate in UCCnet and deploy RFID tags on your product pallets or don't do business with us" will soon become the new mandate (see stories on pp. 18 and 30)--and as product makers aggressively commit to a new level of collaboration.

Stephanie Stahl
Editor
[email protected]


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