If the title of the latest Cap Gemini report has got you nodding off at your desk, don’t be fooled. Dull acronyms aside, ‘The case for global standards: Creating the business case for global data synchronisation,’ is both a call to arms and a stark warning that if squabbles over standards are not resolved now, the ultimate prize - seamless data flow across the globe - will slip through the industry’s fingers.
More to the point, adopting a single standard for the electronic classification and transfer of product data could shave billions off global supply chain costs, and completely transform the way people do business.
Take a can of shaving foam, which probably has eight different languages on it and as many different product codes depending on the country it’s sold in. Imagine how much easier, cheaper, and accurate it would be for everyone involved in buying, selling and shipping that product if there were just one code.
This code, or GTIN (Global Trade Item Number) would be a single, unique number assigned to all products and services, so that they could be immediately identified, by anyone, anywhere in the world.
In addition, GLNs (Global Location Numbers) would give businesses a globally accepted method of identifying other pieces of information relevant to the movement of that can, such as the trading partners’ plants, offices, stores or shipping points.
Retailers could search for products through a central registry by GTIN and then get referred to the data pool or catalogue where the original data is stored.
All data pools would be registered and compliant with these global standards and the seamless flow of data across companies and continents could begin.
Logistics, order management, catalogue maintenance and category management would be quicker, easier and virtually error free. Simple.
The only problem is, there is no central registry and there are literally hundreds of data pools, catalogue providers and standards bodies across the globe, simply ploughing down their diverging paths and trying to drive enough traffic to become the default standard.
Cap Gemini Ernst & Young global head of consumer products, retail and distribution, Charles Bayless, says the current system is fraught with problems.
“At the moment, some companies are maintaining perhaps 20 or 30 different ways of talking about exactly the same product,” ie eight identical bottles of shampoo sold in different places could be identified as 30 or 40 different SKUs. “That’s an awful lot of data moving across an awful lot of fragmented information systems.”
Unilever boss Antony Burgmans is more blunt: “The risk of not adopting global standards now is that the industry will soon be faced with a multitude of conflicting ways of working.”
The Global Commerce Initiative (GCI), a voluntary body of industry leaders and standards bodies set up in 1999 to develop and push one set of rules, is trying to rise above the multiplicity of local standards, says Bayless.
After years of transatlantic squabbling between European standards bodies EAN International and US equivalent UCCnet, the two have finally agreed to bury respective hatchets and jointly set up the promised registry. All sides agree one set of rules makes sense, says Bayless. However, if you have already invested large sums in developing common platforms for your EDI systems across the globe, or paid to publish your data in a catalogue adopting a particular set of standards, the costs of switching yet again to another set could be considerable, and unless all your trading partners are definitely on board,it could also seem pretty risky.
The new understanding between EAN and UCCnet is great news, but it will take a group of key retailers and manufacturers to act as anchor sponsors, communicating through the new GCI standards, before it really gets off the ground, says Bayless.
But the rewards are worth waiting for. Even the most conservative estimates factor in a 3-4% saving on supply chain costs through synchronising basic data, although the true potential could be far greater, speculates Bayless: “A bit like Queen Isabella asking Columbus to calculate the return on income for his trip.”