GDS Return on Investment Tip #2:

Many people ask "What is the Return on Investment (ROI) for GDS"? I will create a series of areas to look for savings in order to help you calculate what your return may be. In 2004, the Global Commerce Initiative did a study with Cap Gemini, called Project Jury. For basic product data, the ROI for GDS was approximately for every 1 billion in sales would return 1 million in savings. From most of my studies and projects, this is an accurate number. This does not include processes like price sync, or some of the newer GDS capabilities. Link to Project Jury Study

Tip #2 Out of Stocks at the Shelf:
Why does synchronizing inner pack quantities reduce your out of stocks at the shelf and how do you measure this? Approximately 2.5% of all out of stocks are driven by bad data.

Old Process of New Item Introduction:
Step 1: Sales person sells a case of a new product GTIN Case - 24 pieces, it will contain 4 inner packs GTIN Pack which will contain 6 eaches of GTIN A

Step 2: Retailer creates inventory for stores and warehouse based upon this information
Step 3: Supplier begins production and ships.
Step 4: Retailer use the packs to distribute to stores.

Step 5: Item is selling well and some retailers ask the supplier to change the inner pack configuration to 3 inner packs GTIN Pack, of 8 eaches GTIN A
Or
Step 3: Supplier gets request from retailers to change the pack configuration prior to ship to 3 inner packs GTIN Pack, of 8 eaches GTIN A
Step 4: Some retailers never get the notified of the change.

What went wrong?

1) Retailer may never received the change notification from sales.
2) Their Supply chain distribution from a warehouse to store could be to ship packs
3) False Negative Inventory of GTIN A for some stores getting the packs, For stores not getting a pack of GTIN A, out of stocks at the shelf.  

Why does GDSN help?
Step 1: Sales person sells a case of a new product GTIN Case - 24 pieces, it will contain 4 inner packs GTIN Pack which will contain 6 eaches of GTIN A
Step 2: Retailer creates inventory for stores and warehouse based upon this information
Step 3: Supplier begins production and ships.
Step 4: Retailer use the packs to distribute to stores.
Step 5: Item is selling well and some retailers ask the supplier to change the inner pack configuration to 3 inner packs GTIN Pack, of 8 eaches GTIN A
New Step: Supplier synchronizes the new case and pack GTIN, allowing the store to have visibility to both configurations and ship properly to their stores.
Or
Step 3: Supplier gets request from retailers to change the pack configuration prior to ship to 3 inner packs GTIN Pack, of 8 eaches GTIN A
New Step:
Step 4: Some retailers never get the notified of the change.

How do you measure?
1) You need to be able to obtain EDI data from the retailer of Warehouse movement based upon stores or store level POS movement.
2) You need to create a base line and examine each and every out of stock by coding them in a system. You need an analyst to review and collaborate with retailer to determine each out of stock and causes. For example: Product Supply issue, Shipping Issue, Data Issue, etc. Analyst will need to keep track of all causes per out of stock.
3) Begin synchronization
4) Run report and Measure for 6 months for improvements of data errors.

I have seen the data errors reduced by 95% due to synchronization. So the 2.5% error I mentioned for data, you should be able to get that down to 0.13%

Feel free to contact me if you would like to discuss,
Steve  srobba@sa2worldsync