BOSTON, APRIL 28, 2003 – As trade promotions have become more closely scrutinized due to the new Financial Accounting Standards Board (FASB) regulations and the Sarbanes-Oxley Act, the pressure has increased for tighter synchronization as a first step in improving the relationship between retailers and their suppliers. A new AMR Research report emphasizes the need for Data Synchronization to be the top priority over all other projects involving collaboration or interoperability because it provides a crucial foundation for these B2B initiatives. Furthermore, companies that embark on these B2B projects without this necessary platform in place will waste $2.1 Billion by 2008, according to the report.

Data Synchronization is the first step towards building a consumer connected supply network and boasts several benefits, including the potential streamlining of the entire CPG supply chain and the reduction of current invoice errors by more than 40 percent. It also acts as an enabler for true collaboration and emerging technologies like ePC and RFID, and can serve as the foundation layer for any successful Product Lifecycle Management (PLM) initiative because it produces clean product data and produces better 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. The fact that other industries have been synchronizing data between trading partners for many years also helps justify the investment,” said Kara Romanow, senior research analyst, AMR Research. “Wal-Mart is leading the pack by mandating that all of its suppliers send item data electronically through UCCnet by January 2004, and many others in the CPG and pharmaceutical industries will soon follow suit.”

KEY FINDINGS:

• Report findings reveal that the average 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 the data and for retailers to build the capabilities to use the data.
• A large factor to consider when planning a Data Synchronization project is time. Most projects start with a six-month estimate and continue well past the year checkpoint. Companies must proactively take on these challenges of time and internal effort and plan accordingly.
• There are three categories of vendors that provide Data Synchronization solutions: Exchanges and data pools (including Transora, WWRE, and EAN country-specific data pools), Data repository vendors (like Velosel, HAHT Commerce, and Trigo), and Connectivity vendors (including Sterling Commerce, Commerce One, IBM WebSphere, and Invois).

Technology enables industries to advance, but its success depends on the quality of the data. Data Synchronization may be viewed as the largest data-cleansing project ever to hit the industry, but its results and savings speak for themselves. If the industry is to move ahead with RFID, PLM, collaboration, and other e-commerce initiatives, Data Synchronization is a necessary foundational requirement.

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