Earth Day and the Green Movement 

We will celebrate Earth Day later this week.  Unfortunately, I wasn’t able to enjoy much of the outside world today as we have been inundated with thunderstorms here in Washington DC.  Nothing like a good dose of acid rain to remind you of the need to proactively attack the environmental problems we are facing.  The customer service manager at the car dealership I purchased my last vehicle from told me that the Washington DC area suffers from some of the worst acid rain in the world.  I believe everything she said was truthful and in no way influenced by the desire to sell me an exterior paint sealant package…

Source: US Environmental Protection Agency 

Nonetheless there has been a tremendous groundswell of environmentalism sweeping the globe in the past 24 months.  What is fascinating to me is that the environmental problems such as the global warming and ozone depletion have been documented and publicized for over three decades.  Why in 2006 did we see such a surge in environmental responsibility around the world?  From my perspective, it was really the consumer population, not big business or national government, which is responsible for driving the change.  These days consumers are really the driving forces behind more and more policy initiatives particularly the recent wave of corporate social responsibility sweeping the Western hemisphere.  The green movement led me to start thinking about the challenges facing some of the supply chain initiatives being pursued around the world.  There are a number of noteworthy supply chain initiatives with strong business benefits that have yet to achieve significant adoption.  Some were created years ago, but still struggle to gain visibility and investment from corporate leaders.  Data synchronization is one that comes to mind.

Data Sync Movement 

For almost ten years now there has been a movement in the retail industry to standardize the process for exchanging product data between retailers and their suppliers.  Recent efforts have focused on utilizing XML and Internet based standards for product catalog exchange.  There are older EDI standards such as the ANSI X12 832 document and the EDIFACT PRICAT document, which provide a simple, cost-effective process for exchanging item and price information.  But like any process associated with EDI, these standards were deemed inadequate and the search for a new data sync standards framework was initiated.  Unfortunately, despite hundreds of millions of dollars in invested capital and hundreds of thousands of invested manhours, the industry still struggles with a lack of adoption.  Even in the most highly penetrated countries such as the UK and Australia, data sync adoption levels are between 10-20% of the overall retail community. 

Catalysts for Data Sync

Extensive business benefit studies have been conducted for data synchronization by the Grocery Manufacturers of America (GMA), Kurt Salmon Associates (KSA), AT Kearney, Accenture and other highly respected thought leaders.  Benefits such as accelerated new product introductions, fewer expected invoice deductions and higher perfect order fulfillment rates have been well established and quantified.  Furthermore, there have been several market forces in the recent years, which were believed to be catalysts that would drive data sync to a critical inflection point yielding mass adoption:

·  Standards efforts were unified at a global level by the GS1 organization which created a global product registry and Global Data Synchronization Network.

·  RFID technology, which depends upon clean and accurate product data, was mandated by large channel masters such as Wal-Mart and the US Department of Defense.

·  IBM, Oracle and SAP - three of the largest software vendors– have developed or acquired master data management suites, which require synchronization to populate product data repositories.

·  Several of the largest data pool providers have merged or consolidated including UCCnet and Transora, SINFOS and Agentrics as well as UDEX and GXS.

However, none of these catalysts has resulted in substantially higher adoption rates amongst retailers.  I believe that, much like in the environmental movement, it will be consumers and not businesses that will ultimately drive demand for data synchronization.  Retailers will be driven to data synchronization, not by back office efficiencies in accounting or receiving, but instead by the need to differentiate themselves to an increasingly information-driven consumer population.  More on this topic to follow shortly in an upcoming post…

Steve Keifer

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