GDS Return on Investment Tip #4:

Tip #4 New Item Set Up Process Efficiency:
This is not a hard fast ROI but what is called a "Soft" ROI. Meaning it will not save money to the bottom line but will improve the process. This allows people to spend time on other more productive items adding value to the company. There are some situations when an ROI can be measured but it is difficult to capture the instances but I will point that out later in the blog.

Old Process of New Item Introduction:
Step 1: Sales person sells a new product into a buyer
Step 2: Sales person then fills out a new item form (time, errors in data transfer) (May have to gather data)
Step 3: Retailer then has a data entry person key data from form to Retailer system (time, errors in data transfer)
Step 4: Buyer approves item, item is ready

From studies done by myself, the process to set up an item can take about 10 days, from step 1 to step 4. Also, you have 2 points of potential error that exist. Sales people tend to actually put specification data or best guess data into the New Item forms. Also, retailer data entry clerks have about a 2-9% error rate in key stroke errors.

New process with GDS
Step 1: Sales person sells a new product into a buyer
Step 2: Product Sync via GDS
Step 3: Retailer Data Analyst reviews data
Step 4: Buyer approves item, item is ready

The new process now can move from a 10 day turn around to a 24 to 48 hour process.

Soft ROI's
1) Supplier Sales person does not need to fill out full new item sheet and can dedicate time to sales call.
2) Retailer can change process from Data Entry to Data Analysis which would improve their data quality and increases their ROI.

Hard ROI's
1) One real situation I saw as a supplier, a sales person put 12.0 eaches per case. The data entry clerk put 120 eaches per case.
Very quickly the retailer ran out of stock as they were selling the item but were not ordering enough pieces. For example the retailer sold 240 pieces but only re-ordered 2 cases (24). It took 2 weeks to actually find the decimal place was off. They looked in the system multiple times and it looked correct to both retailer and supplier. 12.0 or 120 ?  
2) Another situation occurs when data gets to retailer late due to old process. If the data gets to retailer when product launches, then you will miss days of sales due to the slow data entry process. With the 8 day improvement an item can get pushed through faster, should this situation arise. As I stated it is hard to say how often this occurrence happens but it does.

How do you measure?
1) Establish Baseline: a retailer would need to establish the time it takes from data entry to system completion. Supplier would need to measure amount of time sales person takes to complete form. This would include phone calls etc to gather data.
2) Actual measurement:  progress point of data sent by GDS from supplier to retailer geting into their back end system.


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


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