Wal-Mart leads charge for US supply chain standard

Major retail chains in the US, including Wal-Mart, have been working to implement a single data synchronisation standard between...

Major retail chains in the US, including Wal-Mart, have been working to implement a single data synchronisation standard between trading partners for product definitions and item data.

The standard, based on XML messaging, was created and is being developed by UCCnet, a division of the Uniform Code Council (UCC), a global standards organisation responsible for designing and managing the UPC code used by all retailers.

Wal-Mart notified all of its suppliers in a letter sent last April that it would like its suppliers to implement the UCCnet SYNCtrack product.

"By subscribing to UCCnet, you will help to ensure the rapid implementation of a more efficient supply chain," the letter said.

Other major retailers sending out similar letters include Ahold USA, Shaw's Supermarkets, Star Market, and Food Lion.

The letter to suppliers from Ahold USA, a company that boasts 7,000 supermarkets worldwide with 30 million customers, was a bit more direct and demanding.

"Ahold is testing and implementing UCCnet's EAN.UCC-compliant item registry and global data synchronisation services. These efforts will require changes in the way you will do business with Ahold and require your use of UCCnet's services..." the letter read in part.

The data exchanged between any two trading partners has always been paper intensive, according to Gene Alvarez, vice-president for the Electronic Business Strategies division, at Meta Group.

The goal of the retail giants is to reduce paperwork and the incidence of human error. The SYNCtrack product will enable a supplier to post product data, making it available to retailers electronically rather than manually.

"It's similar to RosettaNet [a non-profit organisation that seeks to implement standards for supply-chain transactions on the Internet], but with UCC, the standard was in existence so both retailers and manufacturers are used to dealing with it, while with RosettaNet, the industry is still dealing with collaboration issues," said Alvarez.

Beyond reducing the cost of doing business by making the order and billing process less error prone, a reduction in time to market is also forecast by the UCCnet proponents.

"Today if you have a new product you have to make visits to each retail chain, bring all the forms and do all the paper work and then the retailer has to put it in their system. Now when the retailer meets with the supplier they can talk about strategy instead," said Jennifer Roberts, a UCCnet spokesperson.

While the most significant benefits will accrue to the retailers, according to Alvarez, Roberts said that the system also gives market visibility to small suppliers, giving them the same presence online as a larger supplier.

But there are implementation challenges for both suppliers and retailers especially for smaller suppliers, according to Alvarez.

Suppliers have to create a digitised product catalogue to be able to use the UCCnet SYNCtrack product. Also, companies will need to create an integration strategy to allow them to communicate using UCCnet with other trading exchanges.

From a CTO perspective it touches a significant portion of a company's portfolio, according to Alvarez.

"They have to deal with multiple databases with product information, enabling application integration and major changes to business processes are also possible," said Alvarez.

While the larger suppliers have deep enough pockets to support even multiple standards, mid-market and small companies will face an IT challenge to keep up with the bigger companies, Alvarez notes.

The repercussions for those smaller companies may be profound, according to one industry analyst who notes that technology often doesn't change a trend line but rather accelerates it.

Read more on IT for small and medium-sized enterprises (SME)

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