© 2006 Accenture. All rights reserved.

Collaboration in a Multi-polar World – Global Data SynchronizationChina ECR, June 2008Michael YeeExecutive Partner

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Agenda

The rise of the multi-polar worldSupply Chain implications of the multi-polar worldCollaboration in the multi-polar worldGlobal Data SynchronizationProduct Life ManagementConclusion

3

Real GDP at 1996 prices and at PPP, US$ trillion

Share of global GDP World’s biggest economies

Emerging

5.8%

0

20

40

60

80

100

120

1980 1990 2005 2015 2025

61%

57%

49%

39%51% 43% 39%

61%71%

29%

Real GDP at 2005 prices and PPP

Emerging World

Developed World

2025

1

2

3

4

5

6

7

8

9

10

20071990

US

China

India

Japan

Germany

US

Japan

China

Russia

Germany

China

US

India

Japan

Germany

Economic power is becoming more dispersed

CAGR 2005-2025

Developed

2.7% UK

France

Russia

Brazil

Italy

India

France

UK

Italy

Brazil

Russia

UK

Brazil

France

South KoreaSource: EIU

Source: EIU

4

Three key factors are driving the rise of the multi-polar world This is driven by three mutually-reinforcing trends

• Economic and political opening• 2005: 164 out of 205 regulatory changes in investment regimes globally

positive for FDI• Trade liberalization: WTO, NAFTA, ASEAN, EU

• Disaggregation of business functions across geographies• Globalization of supply chains• Synchronization of information flow• Inclusion of services in global tradables

• Increasing scale of multinationals as catalyst for multi-polar world• Increased foreign assets, revenues, and employment

Economic openness

Increasing power of information & communication technology

Size and reach of multinationals

5

Five key dimensions demonstrate the increased economic interdependence of the multi-polar world

War for talent

The battle for resources & sustainabilityThe new map of innovation

Emerging consumers The flow of capital

Economic openness

Size & reach of multinationals

Technology

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GLOBAL OPERATIONS

In this multi-polar world supply chains and operating models are open to new ways of collaborating.

DemandOpportunities

Supply-side Requirements

Global Operations Strategy

PerformanceObjectives

GlobalOperations

Components

Global Operating Model

FIT

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Whilst the multi-polar world is driving new supply chain models some of the same issues remain

Global Operations- Extended Supply Chains need

new capabilities and improved visibility

- Finished Goods and time-to-market are drivers for competition in short lifecycle markets

- Sustainability

Error-prone and inefficient P-2-P

process- Dependence on manual data

processing- Non standardised workflows for

Sales & Operations Planning and materials ordering

Single truth across Supply Chain

- Capturing accurate data across all supply chain, by making use of data beyond single organisation

- Making sense of huge volumes of data is like drinking from a fire hydrant

Reduction in out-of-stocks

- Companies realise that to effectively reduce out-of-stocks and obsolescence across the entire supply chain they collaborate with their trading partners

• Excessive inventory throughout the supply chain

• Inadequate fill rates, low customer service performance, and critical stock outs

The Result:

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What is Supply Chain Collaboration?Supply Chain Collaboration can be split between upstream and downstream - in both, it involves exchanging supply chain data between trading partners to improve performance across entire Supply Chain

Supplier Managed Inventory

Integrated Suppliers

Enabling Technologies

Reliable Operations

Efficient Replenishment Joint Planning

Vendor Managed Inventory

Order Forecast

Sales ForecastSupplier Manufacturer Customer Distribution

Centre or retailer

DownstreamUpstream

Category Management

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Where are the benefits of Supply Chain Collaboration?… which typically bring substantial improvements across the whole supply chain

Manufacturer Benefits Typical Improvement

Lower Inventory Levels 30%

Lower Transportation Costs 10%

Lower Warehousing Costs 13%

Lower Lead-Times 50%

Retailer Benefits Typical Improvement

Better Customer Service >10%

Better Store Shelf Stock Rate 5% to 8% 2%

Lower Inventory Levels 10% NA

Lower Logistics Costs 3% to 4% NA

Source: AMR Research, VICS, Accenture

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Collaboration projects often face a number of setbacksA recent study* identified collaboration projects fail to scale for 3 main reasons

Insufficient organizational/process enablement from partner or internalData accuracy and communicationNegotiation process in hands of commercial and procurement organizations with no “end-to-end” view of total-cost of ownership

Process and Data

Unclear value propositionInability to measure value therefore it requires a leap of faith

Value

Lack of trust (eg. due to long history of arms length negotiation culture and/or contradictory propositions coming from different parties within single company)

Trust

Source: ECR Collaborative supply chain efforts – Are they really working? Accenture Survey, 2005

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Levels of Supplier Collaboration

Foundational

Mission Critical

Value Add Collaboration

S

Logistic & Distribution

Demand Planning

Procurement

Replenishment

Supply Chain Optimization

Price Synchronization

Data accuracy

Data Synchronization

Global Registry

Catalogue

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Accenture believes in this new world integrated solutions will create differentiated performance

Assets that Accenture re-uses to deliver a Customer Integration Solution

Retailer X

Inventory ReportPOS data

CSV/ XML formats(any structure)

HTTP(S)/ VPN

Trading Networks/ Manugistics

Retailer adoption:Accenture establish

technical connectivity with retailers

ASCSconnectivity

ASCS Business

Intelligence

Replenishment calculations

Web portal providing Business Intelligence:

Customised reports

Sell-in dataMaster data

Proprietary ERP X

Database X

1

2

3

Central MappingConverting from retailer to xml

ASCS

Supply Chain Workflow management4

Service Centre

Manufacturer

Proprietary ERP

WebMethodsTechnical

Integration Tools and Team

Local Project Mgmt

Trading Partner on-boarding

Trading NetworksWorkflow

governance

Trading Networks

Data cleansing/ validating Client Integration

TeamSingle point of

integration for client

Service TeamMulti-lingual service

centre to support workflow

Powerful web reporting capability with pre-configured

templates

Supply Chain Integration Systems• Integration with upstream suppliers• Provide Replenishment triggers• Enable VMI

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What does downstream integration look like?For downstream collaboration with retailers, Accenture provides clients with a scalable service, capturing data from retailers and transforming to

Retailer X

HTTP(S)/ VPN

Inventory ReportPOS data

CSV/ XML formats(any structure)

Trading Networks/ Manugistics

Retailer adoption:Accenture establish

technical connectivity with retailers

ASCSconnectivity

ASCS Business

Intelligence

Replenishment calculations

Web portal providing Business Intelligence:

Customised reports

Sell-in dataMaster data

Proprietary ERP X

Database X

1

2

3

Central MappingConverting from retailer to xml

ASCS

Supply Chain Workflow management4

Service Centre

Manufacturer

Proprietary ERP

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Foundation - Global Data Synchronisation

Overview of the Business Problem

“Retailers and manufacturers can reduce their current supply chain costs by 1 to 3 percent depending

upon their current state.”

“Global Data Synchronisation is a boringsubject with exciting consequences.“

Sir Terry Leahy CEO Tesco

• 30%+ of retailer product data is inaccurate• 60%+ of invoices have errors• new product lead time up to 12 weeksGMA : 2004

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What is driving Global Data Synchronization (GDS)

DemandOpportunities

Supply-side Requirements

Multi-Polar World

ECR

Single global item registry

Global standards

Inter-operable data pools

Secure communication

protocolsAffordable technology

Enterprise data

management capabilities

GDS

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Current business processes are expensive, error-prone, and unmanaged, and unlikely to support all customer touch points

Promotions

ReturnsNew

Productintro

PricingMerchandising

Productsourcing

End of life

Images,DocsExcel

LegacySystems

ERP & CRMSystems

DocumentManagement

Systems

New Item Form

Contracts Authorize /Reject

Category Managers

Vendor Managers

Logistics

Price Update

Regional Managers

Brand Managers Customer

Support

Promotion Mgrs

Category Managers IT

Replenishment Customer touch points

Product data

inputsFlyers, Inserts,

Catalogs

Email,eCommerce

Info-Stations,Kiosks

Shelf Tags,Signage

Point of Sale

RFID

Catalogues

Phone

Fax

UDEX

E-Mail

Excel

EDI &Manual Entry

Source IBM Software Group

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Bad Product Data Results in InefficiencyDisruption in the Back Office

Sales Productivity Invoice Deductions– Gathering Information from

Internal Stakeholders– Communicating Product

Information to Customers

– More write offs and deductions– More invoice adjustments– Longer Days Sales Outstanding– Returns Reconciliation

CustomerSupport

Warehouse &Back Room– Processing Returns at Loading

Dock and in Warehouse– Higher Safety Stock Required

– Basic Item Inquiries– Order & Invoice

Discrepancies– Billing Errors

Product Management– Slower Item Updates and New

Product Introductions– Fines imposed on suppliers for

changes to specifications– Manual Processes for

Managing Product Data

Transportation &Logistics Functions– Higher Return Rate and

therefore higher shipping costs– Expedited Shipments to Correct

Order Errors

Source : GXS

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Challenges inside the Enterprise…Three Root Causes for Bad Product Data

People– Ownership of Data is Unclear– Business Employees do not take responsibility for it– People who do care about data quality don’t get rewarded for it

Process– Managing accurate and consistent product information has cross-functional impact– Supply Chain; Buying/Merchandising; Sales/Marketing must be involved– No true cross-functional processes defined

Technology– Product Information currently resides in various systems– Data is in different formats– Different rules and standards used by different parts of the organization

Source : GXS

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… the solution lies in enforcing the GDS Industry Standards using Product Information Management (PIM) solutions within the Business

Data Translation

End to EndBusiness Process

Management

DataPool

Internet

Data Pool Houses Copy of Data

Data Pool Synchronizes through GDSN

ERP &BackOffice

ProductInformation

Management

EnterpriseApplicationIntegration

PIM

RepositoryWorkflow

Search & ReportsSource

Systems

have worked together with Retailers and Suppliers to develop thefirst fully standards compliant UK Data Pool

A ‘typical’ GDS/ PIM project would save 2500 man days annually, and have a 25% ROI

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Net ContentNet WeightGross WeightHeight, WidthLengthLinear UnitsVolume

Special Package -Opening CodeHaz Material CodeTamper Resistant Ind.Not for Resale Ind.

PackInnSAPackPalletTi, HiConsumer UnitOrderable UnitShipping Unit

PricingWarrantyOrder Increment

Source of ReferencePerfect Order

Time-to-market (NPI)

Foundation for Electronic Commerce

Single version of the truth (Across Supply Chain)

Global Data Synchronization – what data is involved?Global Data Synchronization – what data is involved?

10700300000123

20700300000127

30700300000122

00700300000125

Source : GXS

Each/Item

Carton

Pallet

Inner Pack

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External and Internal Data Synchronization provide accurate product information across businesses, channels and customer segments

– Store item, vendor and location information and relationships insingle repository

– Staging and workflow for item approval, maintenance, and Retailer specific attributes

– Provide one place to go for information and management– Publish product information to front and back office systems– Automate product information processes, such as New Product

Introduction, within one system– Store vendor entire catalog for analysis on all vendor products

including product concepts

Automate product introduction and changes between Retailer and SupplierCleanse, validate, cross-reference, review and approve product attributes On-board GDSN and non-GDSN suppliers– Connect to GDSN data pools– Provide a portal for web entry by suppliers– Accept product files directly from suppliersStaging area for un-authorized supplier items for later retrieval and action

ExternalData

SynchronizationGlobal Data Synchronization

(GDS)

InternalData

SynchronizationProduct Information Management

(PIM) Tool

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What is the Global Data Synchronization Network (GDSN)? – many more data pools !

Source: http://www.mcpressonline.com/mc/PrintArticle@99.jmxPcr1CoTe.0@.6b1b5455!loc=.6b1b5455

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Product Information Management (PIM)

In order to implement internal Data Synchronisation, a PIM tool is used.

It provides a company with one place to go for information and management – it is the method used to provide “the single version of the truth” for a company’s information that it sends out and receives.

It has the ability to:

• Send, receive, and interpret multiple GDSN standard messages• Transform externally provided data into internal formats• Add new attributes easily as they are approved• Provide ongoing updates to conform to changing GDS standards • Automate product information work flow processes, such as New Product Introduction, within one system

Failure to make manage these processes can result in the loss of the benefits provided by GDS.

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Even with clean data from GDS, the internal workflow needs to bemanaged……..

Promotions

ReturnsNew

Productintro

PricingMerchandising

Productsourcing

End of life

Images,DocsExcel

LegacySystems

ERP & CRMSystems

DocumentManagement

Systems

New Item Form

Contracts Authorize /Reject

Category Managers

Vendor Managers

Logistics

Price Update

Regional Managers

Brand Managers Customer

Support

Promotion Mgrs

Category Managers IT

Replenishment Customer touch points

Product data

inputsFlyers, Inserts,

Catalogs

Email,eCommerce

Info-Stations,Kiosks

Shelf Tags,Signage

Point of Sale

RFID

UCCnet

TRANSORA

WWRE

UDEX

QRS

SINFOS

EDI &Manual Entry

PRODUCT INFORMATION MANAGEMENT

Source IBM Software Group

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Benefits

In 2003 the Grocery Manufacturer’s Association (GMA) and Food Marketing Institute (FMI) published a study detailing the benefits of GDS and PIM:

3 to 5 percent reduction in out-of-stocks2-week reduction in speed to market for new items – i.e., 14 extra days’ sales of faster-moving items10,000-30,000 hours saved in store labor costs resulting from shelf-tag and scan errors5,000-10,000 hours saved in merchandising and data entry time dealing with new item introductions and

updates1,000-2,000 hours saved in finance time dealing with invoice disputes related to basic item informationReduction in invoice auditor fees0.5 - 1 percent reduction in inbound freight costs1,000-2,000 hours saved in warehouse and DSD time dealing with item discrepancies1 percent reduction in inventory

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GDS + PIM = More Benefits

The key to benefit realisation is not just receiving accurate data, but ensuring its consistent use throughout the organisation.

Realized through:

Reduce of out of stock volume due to improved forecasting X X

Benefit GDS PIM

Reduce effort spent entering and maintaining new product records X

Decrease effort spent handling invoice disputes X X

Reduce quantity of returned orders due to increased shipping accuracy X X

Reduction in call center and website queries regarding basic item information X X

Eliminate IT system redundancy – lowering TCO X

Reduce shelf tag, scan errors and processing time X X

Decrease amount of safety stock X X

Provide a foundation to support pre-allocation of items, Advanced Shipping Notice item accuracy, and track and trace (RFID)

X

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Conclusion

The multi-polar world provides new battlegrounds.Therefore, the optimization of global supply chains plays a central role in driving profitable growth.Collaboration is an important differentiating factor against this backdropOrganizations, both well established and new players, now need to master new capabilities to play in global value chains.

Leading organisations will drive high performance by exploiting collaboration in their Value Chain

Need to build the foundation from data synchronization to product information management

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Thank You

Q&Amichael.yee@accenture.com