The pressure is increasing for tighter data synchronisation as a first step in improving the relationship between retailers and their suppliers, according to a new report, 'Data Synchronisation Has Simply Become A Cost Of Doing Business', from AMR Research.
As trade promotions in the US have become more closely scrutinised due to the new Financial Accounting Standards Board (FASB) regulations and the Sarbanes-Oxley Act, the new AMR report highlights the need for data synchronisation to be the top priority over all other projects involving collaboration or interoperability because it provides a crucial foundation for these business-to-business (B2B) initiatives.
According to AMR, companies that embark on these B2B projects without the necessary data synchronisation platform will collectively waste a predicted total of around US$2.1 billion by 2008.
A first step
Data synchronisation is a first step toward building a consumer-connected supply network, and boasts several benefits including the potential streamlining of the entire consumer packaged goods (CPG) supply chain and the reduction of invoicing errors by as much as 40%.
It also acts as an enabler for true collaboration and emerging technologies (such as ePC and RFID), and can serve as the foundation layer for any successful product lifecycle management (PLM) initiative, as it produces clean product data and can produce improvements in direct materials sourcing.
"Those who take a more proactive approach will gain a competitive advantage over those who wait for their business partners to drive them to participate," said Kara Romanow, senior research analyst for AMR Research. "The fact that other industries have been synchronising data between trading partners for many years also helps justify the investment."
For example, Romanow cites the fact that Wal-Mart has already mandated that all of its suppliers must send item data electronically through UCCnet by January 2004, and that many others in the CPG and pharmaceutical industries are expected to follow suit in the near future.
According to the report, the average amount of money spent on internal preparation will be four times the amount spent on external connectivity efforts. Most companies have underestimated the amount of internal effort required for suppliers to cleanse their data, and for retailers to build the capabilities to use the data.
Time scale is a major factor in planning any data synchronisation project. Most projects start with a six-month estimate and continue well past one year.
There are three categories of vendors that provide data synchronisation solutions:
- Exchanges and data pools (including Transora, WWRE, and EAN country-specific data pools);
- Data repository vendors (such as Velosel, HAHT Commerce, and Trigo);
- Connectivity vendors (including Sterling Commerce, Commerce One, IBM WebSphere, and Invois).
Technology may enable industries to advance but its success always depends on the quality of the data involved. Data synchronisation is viewed by some as the most comprehensive data-cleansing project possible and, when executed correctly, the results and savings speak for themselves.
According to AMR, if businesses are to move ahead with RFID, PLM, collaboration, and other e-commerce initiatives, data synchronisation is a necessary foundational requirement.