Global Data Synchronisation (GDS) Business case FAQ
By: Version Dated
GS1 UK Data Synchronisation Group Release 1.1 September 2007
Staple Court, 11 Staple Inn Buildings London WC1V 7QH T +44 (0)20 7092 3500 F +44 (0)20 7681 2290 E info@gs1uk.org Service Team (Freefone) 0808 178 8799
GS1 UK is a company limited by guarantee and registered in England and Wales under company number 1256140. Registered office Staple Court, 11 Staple Inn Buildings, London WC1V 7QH. VAT number 287940215.
www.gs1uk.org
Executive summary
The purpose of this document is to help retailers and suppliers who are intending to move to Global Data Synchronisation (GDS) by providing the answers to a series of typical business questions that an organisation may face when setting out a business case for GDS. It is assumed that the reader has a reasonable knowledge about GDS and its underlying technologies and processes. If this is not the case then a wealth of background information is available from the GDS section of the GS1 UK website at www.gs1uk.org/gds.
About the GS1 UK Data Synchronisation Group
This document was put together by the GS1 UK Data Synchronisation Group (DSG). The DSG is an established GS1 UK expert group. Its members include many representatives from major UK manufacturers, wholesalers, distributors, retailers and some main service providers. The group aims to: • • Create a common understanding about the information exchanged between all the different parties Develop a standard that can be used by data pools so that GDS occurs in the UK
For more information
For more information about the work of GS1 UK and for help about implementing GDS please contact: GS1 UK T +44 (0)20 7092 3500 F +44 (0)20 7681 2290 E info@gs1uk.org Service Team (Freefone) 0808 178 8799 www.gs1uk.org/gds
About GS1 UK
GS1 UK is part of the global GS1 organisation, dedicated to the development and implementation of global data standards and solutions for the supply chain. GS1 standards are the most widely used in the world. GS1 UK helps industry to implement these data standards through the use of bar codes, RFID, Global Data Synchronisation (GDS) and electronic business messaging.
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Contents
Part one: General questions .............................................................................................4
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. In what business areas will GDS assist most?........................................................................................ 4 What are the typical qualitative benefits that can be achieved with the adoption of GDS? .................... 4 What are the typical quantitative benefits that can be achieved with the adoption of GDS?.................. 5 Typically, what is included or excluded from a GDS project? ................................................................. 5 What are the common key deliverables and milestones?....................................................................... 5 What is the impact of not implementing GDS? ....................................................................................... 6 Which business functions will be impacted by GDS adoption? .............................................................. 6 How does GDS affect sales, margins and costs? ................................................................................... 6 What resources will be required when adopting GDS? .......................................................................... 7 What are the typical cost areas when adopting GDS?............................................................................ 7 What key dependencies are there when adopting GDS? ....................................................................... 7 What key assumptions can I make when developing a GDS business case? ....................................... 8 What are the key GDS project risks and what are their likely frequency, severity, impact and mitigation? ............................................................................................................................................... 8
Part two: Key commercial questions ...............................................................................9
1. 2. 3. 4. 5. 6. How will GDS affect my trading partners? .............................................................................................. 9 Will this affect the price I pay or charge for the goods? .......................................................................... 9 How are retailers implementing GDS; is it by category or trading partner and are particular categories easier than others?.................................................................................................................................. 9 How does GDS impact the private label process?.................................................................................. 9 If I supply on an international basis, how will GDS enable me to manage the variants of my product, for example, a local language product name? ...................................................................................... 10 What impact does GDS have on a small seasonal supplier ................................................................. 10
Part three: Key IT questions ...........................................................................................11
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. What are the systems requirements to link to a GDS-certified data pool? ........................................... 11 How does the GDS messaging mechanism work? ............................................................................... 11 What is the significance to the retailer of core data, standard attributes and extended attributes? ..... 12 Do data pool service providers provide service level agreements for the service? .............................. 12 What criteria do I use for choosing a data pool?................................................................................... 12 Where can I find a list of all GDS-certified data pools?......................................................................... 13 How does GDS sit with the existing systems? ...................................................................................... 13 What, if any, security areas should I be aware of as part of the business case? ................................. 13 How long does a typical GDS implementation take? ............................................................................ 13 Which business areas are typically impacted during the implementation process? ............................. 14
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Part one: General questions
1. In what business areas will GDS assist most?
There are a number of reports which detail the areas that will benefit most from GDS. From the recent 1SYNC/Accenture report “Synchronisation – the next generation of business partnering” the key areas identified were: • • • • Transportation: The product information is more accurate as it is not subject to manual intervention Distribution: The product information is made available in a timelier manner. One example quoted a manual process being reduced from a five to six day cycle to just 48 hours Administration: Improved productivity within order and item administration. This allows both the supplier and retailer representatives to spend more time on evaluating customer needs and developing merchandising plans to grow sales revenue Increased revenue: The improved efficiency in the exchange of product information resulting from GDS reduces the time from item entry to on-shelf availability
In addition to the above there are also a number of qualitative benefits such as: • • • Improved relationships between supplier and retailer, with less time spent on discussing administrative issues A common and agreed understanding of product attributes assisting in the agreed understanding of sales and logistics information The on-going provision of accurate product information by the supplier, not just with new lines during the initial data alignment phase
The report is available from www.gs1.org/docs/gdsn/gdsn_SynchronizationNextGenofBizPartnering.pdf. The following resources all provide further information about GDS business benefits: • • • GDS retailer benefits GDS supplier benefits GDS testimonials www.gs1.org/docs/gdsn/gdsn_flyer_Retailer_Benefits.pdf www.gs1.org/docs/gdsn/gdsn_flyer_Supplier_Benefits.pdf www.gs1.org/productssolutions/gdsn/implementation/testimonials.html
In addition, Deloitte’s GDS LaunchPad model provides information and tools to help identify the areas that benefit from the adoption of GDS. This is available from www.gdslaunchpad.com.
2.
What are the typical qualitative benefits that can be achieved with the adoption of GDS?
Analyst reports highlight some of the qualitative benefits resulting from the adoption of GDS. These qualitative benefits will depend on whether you are a supplier or a retailer. Some common examples are: • • • • • • Increased awareness of data quality and accuracy Improved service to the customer Improved trading relationships due to increased focus on product merchandising Reduction of non-scans at point-of-sale Improved on-shelf availability A platform for adoption of more collaborative initiatives such as RFID (Radio Frequency Identification) and EPC (Electronic Product Code)
Further GDS qualitative benefits can be found at www.gs1uk.org/GDS/why_use_GDS.asp.
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3.
What are the typical quantitative benefits that can be achieved with the adoption of GDS?
There have been many studies to quantify the benefits of GDS. Again, these will vary depending on whether you are a supplier or a retailer, but typical benefits are stated as:
Benefit from adopting GDS Inventory reduction Out of stock Cost of reconciliation errors Logistics costs Receiving times Speed to market
Retailer benefit Reduced by 0.5 to 1 per cent Reduced by 2 to 4 per cent Reduced by 5 to 10 per cent Reduced by 1 per cent or more Reduced by 1000+ hours Increased by 2 weeks
Supplier benefit Reduced by 0.5 to 1 per cent Reduced by 2 to 4 per cent Reduced by 10 to 20 per cent Reduced by 1 per cent or more Reduced by 1000+ hours Increased by 2 weeks
4.
Typically, what is included or excluded from a GDS project?
The particular business issue that you seek to address with the adoption of GDS drives the elements to be included or excluded in your project business case. Typically, the GDS component of the project would include the collection, management and distribution of product information with the key stakeholders and their business applications. Excluded from the GDS component are the systems and processes directly supporting the business transactions, for example, order invoicing.
5.
What are the common key deliverables and milestones?
The key deliverable of a GDS project is the electronic delivery and/or receipt of product information. The milestones and timelines leading to this point will of course depend on a number of specific issues faced by your organisation. However, a number of reports have outlined a series of typical milestones and timelines as part of a GDS deployment in a wider project. Deloitte’s GDS LaunchPad lists a seven point plan for delivering a GDS business case: 1. 2. 3. 4. 5. 6. 7. Build GDS knowledge Define the business areas that you wish to enhance/improve Define the GDS scope related to the targeted area(s) Identify and gain the support of both external and internal stakeholders including a sponsoring senior manager Estimate the GDS benefits based on existing processes and external reports Determine cost estimates Development and approval of a feasibility business case
A full description of this plan can be found at www.gdslaunchpad.com. Following the approval of a business case, the following is a suggested approach to implementing GDS within your organisation: 1. 2. 3. 4. Establish a core business implementation team Gather implementation information Choose a GDSN-certified data pool Prepare your data
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5. 6.
Synchronise your data Maintain your data
A full explanation of this plan can be found at www.gs1uk.org/GDS/implementing_GDS.asp.
6.
What is the impact of not implementing GDS?
If GDS is not adopted as the methodology of exchanging product information with your trading partners, then existing methods for gathering this information will remain. The impact on your organisation will be significant: • • • • Inaccurate product information will lead to order and invoice errors and a resulting administration overhead Delays in on-shelf product availability Increased time to market for new products Inconsistent information delivery, leading to delays in availability of the information with the resulting impact on supply chain and distribution processes
GDS allows suppliers to clean and standardise their product information for all retailers rather than for each retailer individually. If GDS is not adopted by both parties, then the supplier will have multiple processes for each partner which will definitely lead to errors.
7.
Which business functions will be impacted by GDS adoption?
Business functions that require accurate and consistent product information will be impacted by the adoption of GDS and will typically include: • • • • • • • • Customer relationships: More time will be available for the supplier and retailer to focus on joint merchandising activities Differentiated customer service: Accurate product information ensures accurate orders with less exceptions and a better order to delivery ratio, leading to resulting improvement in on-shelf availability. Improved new product availability also enables improved customer service Store optimisation: Accurate and current product information enables better shelf utilisation Supply chain costs: Accurate and current product information is a foundation to effectively managing supply chain costs Head office implications: GDS reduces the number of product information related issues so reduces the staff time devoted to these. It also reduces the time needed to manage the product information within your organisation Performance management: Less involvement in correcting errors resulting from poor product information enables staff to focus more effectively on the core purpose of their role, thus improving their overall performance Change management: Inevitably GDS implementation provides the opportunity for the improvement of existing processes and procedures. Thus GDS can be a catalyst for change Correct in-store offers: The provision of accurate product information coupled with price information ensures that in-store offers are correct, consistent and reflective of the current position
8.
How does GDS affect sales, margins and costs?
There are a number of reports, the most recent being the 1SYNC/Accenture report “Synchronisation – the next generation of business partnering”, which provide information on the commercial benefits of the
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adoption of GDS based on real-life examples. The report is available from www.gs1.org/docs/gdsn/gdsn_SynchronizationNextGenofBizPartnering.pdf. In addition, Deloitte’s GDS LaunchPad provides a tool to enable you to identify the benefit areas associated with GDS and to put cost savings against these areas. The costs associated with the adoption of GDS will depend on your approach and the level of automation you would like to adopt in the management of product information. The GDS LaunchPad will help you understand some of the benefits in these areas. It is available at www.gdslaunchpad.com.
9.
What resources will be required when adopting GDS?
In our experience the adoption of GDS requires a senior business manager to sponsor and support the project. As GDS is likely to impact a number of different operational groups e.g. supplier/buyer representatives, marketing, product development, logistics, order/invoice management, IT, there will need to be representation from these groups at varying levels. The amount of time required by these teams will depend on your approach to the adoption of GDS and the technology impact. Our recommendation is that you initially implement GDS within your existing processes rather than create a change project which will delay the accelerated gain of the benefits resulting from accurate and timely product information.
10. What are the typical cost areas when adopting GDS?
The cost areas will depend on: • • • What you have today to enable the capture and distribution of product information How you wish to manage the aggregation and approval of product information prior to its delivery to your chosen GDS-certified home data pool How you wish to manage the aggregation and approval of product information prior to its integration in your back-office applications
Assuming that today the creation and receipting of product information is undertaken using manual processes, the typical cost areas will be: • • • • Procurement of a software tool to aggregate and approve the product attributes prior to delivery to your chosen GDS-certified home data pool Procurement of a software tool to aggregate and approve the product attributes prior to delivery to your back office applications These tool will also provide the audit information resulting from the synchronisation process Subscription to a GDS compliant data pool service, e.g. the GS1 UK Data Pool service
11. What key dependencies are there when adopting GDS?
Key dependencies include: • • An understanding of GDS and the product data attributes required by the buying company’s back office applications and the supplier’s trading partners Correctly using and complying with Global Location Number (GLN) and Global Trade Item Numbers (GTINs) rules as these are one of the basic components of the GDS standards
For a supplier there is an additional dependency on understanding where the relevant information is held and the accuracy of the information.
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For the retailer there is an additional dependency concerning how the information is approved and the relationships between back office applications and product attributes and how these are to be maintained.
12. What key assumptions can I make when developing a GDS business case?
The key assumption upon which the business case should be developed is that there is an issue with the availability and quality of product information as it relates to the area you are investigating. The other key assumption is that the adoption of GDS to enhance the exchange of product information is becoming “the accepted way of doing business”. Details on the level of adoption of GDS on a global basis are available from the GS1 web site at www.gs1.org/productssolutions/gdsn/implementation/adoption_stats.html.
13. What are the key GDS project risks and what are their likely frequency, severity, impact and mitigation?
The key risk area in the adoption of GDS is the availability of accurate and approved information. From a supplier’s viewpoint, this may require going back to the completed product and confirming some of the key attributes such as dimensions and weight. From a retailer’s viewpoint, the area that delays the full production adoption of GDS is the validation of GDS data with existing information and resolving exceptions. There is also a requirement to understand the GDS attributes for the buying organisation to ensure that the information required to trade is available within the standards. GS1 UK can assist in this validation activity as it has extensive experience in the mapping of corporate requirements to GDS standards.
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Part two: Key commercial questions
1. How will GDS affect my trading partners?
Overall, while the commercial impact on a supplier that adopts GDS should be positive, there will be some additional costs incurred by subscribing to a GDS-certified data pool. On the positive side, the ability to aggregate product information into a single service from where the information is distributed to all chosen retailers will eliminate the administration incurred in delivering the same information via different methodologies, e.g. paper, spreadsheets and custom web sites. Depending on how the supplier collects this product information, there may also be savings in information aggregation.
2.
Will this affect the price I pay or charge for the goods?
This is subject to the commercial relationship between the buying and supplying companies. Experience from organisations that have adopted GDS is that there is no impact on the cost of product as there are savings on both the supply and buy side through the adoption of GDS.
3.
How are retailers implementing GDS; is it by category or trading partner and are particular categories easier than others?
Each individual retailer can take a different approach in their GDS roll-out plans. In order to minimise the delay during the initial stages of GDS adoption, it is recommended that the retailer identifies a number of suppliers that have already adopted GDS with other retailers and who have been identified as strategic suppliers. This minimises any delay during the initial implementation phase as well as assisting in the ongoing development of the strategic relationship. Following this initial adoption phase, a category approach is better suited as the retailer is able to work with a specific group of buyers. However, this approach should not prevent the retailer from accepting GDS data from other category suppliers if they are ready and able.
4.
How does GDS impact the private label process?
Many retailers today allocate Global Trade Item Numbers (GTINs) to private label product information after the information has been provided by the private label supplier. In GDS, the GTIN is a fundamental key in publishing data. Therefore if a retailer wants to use GDS for their private label suppliers then the current process needs to be re-engineered so the retailer can allocate their GTIN to the private label supplier before they publish product information within GDS. Note that when the private label supplier is publishing product information within GDS, the Global Location Number (GLN) of the information provider is the supplier and the GLN of the manufacturer and brand owner is the retailer.
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5.
If I supply on an international basis, how will GDS enable me to manage the variants of my product, for example, a local language product name?
GDS supports the exchange of product information on an international basis. The target market attribute defines the market in which the information is to be used and therefore enables a supplier to code local language information for a Global Trade Item Number (GTIN) to be used in multiple markets.
6.
What impact does GDS have on a small seasonal supplier
There will be an impact, the level of which will depend on the number of retailers with which they trade. GDS supports seasonality of products through the use of availability start and end dates.
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Part three: Key IT questions
1. What are the systems requirements to link to a GDS-certified data pool?
The systems required to connect to a GDS-certified data pool, such as the GS1 UK Data Pool, will depend on how you manage your product information today, and the particular services provided by your chosen data pool provider. From the supply side you will need an application to create and manage the product attributes. (Although, if you have a low number of products that are subject to little or no change it may be possible to manually consolidate the required information and enter via a user interface provided by your chosen data pool provider.)
2.
How does the GDS messaging mechanism work?
The five-step GDS messaging mechanism is summarised in the diagram below:
Global Data Synchronisation
2. Register data
GS1 Global Registry
3. Subscription request
3. Subscription request
Source data pool
4. Publish data 5. Recipient confirmation
1. Load data
Recipient data pool
3. Subscription request
Supplier /seller
5. Recipient confirmation
4. Publish data 5. Recipient confirmation
Retailer /buyer
1. 2. 3.
The suppler registers product and company information in its chosen data pool (this is known as Load Data). A subset of this data is automatically sent to the GS1 Global Registry (Register Data). Using the GS1 Global Registry to locate where the product information is held, the retailer, via its chosen data pool, requests access to a specific supplier's product or a product category (Subscription Request).
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4. 5.
If the supplier agrees to this request, then the supplier’s data pool publishes the complete product and company information to the retailer via the retailer’s data pool (Publish Data). The retailer then sends a confirmation to the supplier through the retailer’s data pool directly to the supplier’s data pool (Recipient Confirmation).
Many of the operations behind these steps are automatically undertaken by the chosen data pool, following GDS rules and standards, thereby ensuring the process of GDS is simple and efficient to both the supplier and retailer.
3.
What is the significance to the retailer of core data, standard attributes and extended attributes?
Core attributes are those which are also maintained on the GS1 Global Registry to enable item synchronisation messages to be successfully processed. These core attributes include: • • • • Supplier Global Location Number (GLN) Product Global Trade Item Number (GTIN) Target market Information provider (data pool on which the product data is stored)
Standard attributes are those that have been agreed and approved by GDSN Inc for the particular type of product, e.g. FMCG. Extended attributes are extensions to the standard attributes that have been approved at a local level and are being or have been approved by GDSN Inc and are added information.
4.
Do data pool service providers provide service level agreements for the service?
In our experience data pool service providers provide details of Service Level Measures that can be used by their customers to monitor that the defined service level criteria are achieved.
5.
What criteria do I use for choosing a data pool?
When selecting a data pool there are a number of key requirements that must be met. GS1 UK has put together a check list which covers the following areas: • • • • • • Certification and standards compliance The data pool service provider Data pool functionality Security and data protection Customer support Technical and service level agreements
The full checklist can be found at www.gs1uk.org/gds.
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6.
Where can I find a list of all GDS-certified data pools?
To utilise GDS it is necessary to sign-up to a data pool that has been certified as part of the Global Data Synchronisation Network (GDSN), such as the GS1 UK Data Pool. To become certified a data pool must pass the GDSN Interoperability Certification. A full list of GDSN-certified data pools is available from www.gs1.org/docs/gdsn/gdsn_certified_data_pools.pdf.
7.
How does GDS sit with the existing systems?
GDS typically complements rather than replaces existing systems as it simplifies the sending and receiving of product information via a single interface on a computer-to-computer basis. Depending on your approach to GDS, you may need to establish a Product Information Management (PIM) system to control and manage the data flow, content validation, and approvals of data being sent from or received into the business. A retailer may need a portal for suppliers to submit product information outside of GDS, for example in the case of a small, much specialised seasonal supplier who perhaps only trades with a single retailer, to enable them to insert and review their product information.
8.
What, if any, security areas should I be aware of as part of the business case?
Data is transmitted between GDS-certified data pools using AS2 communication protocols in a secure manner. Data can only be seen by the retailer following receipt of a subscription message and the supplier issuing a publication message. Retailers cannot see product information that suppliers do not make available to them. A retailer’s supplier base cannot be seen by anyone other than the retailer. Search of the global registry is possible but this only provides details of the core attributes, e.g. Global Location Number (GLN), Global Trade Item Number (GTIN) and product classification.
9.
How long does a typical GDS implementation take?
The implementation duration will be dependent on the tools you wish to adopt in order to take advantage of GDS. The most complex activity is related to: 1. 2. Understanding what product information is held and where it is held Product information validation and approval requirements
During the initial implementation, whilst the ideal situation is not to implement new business processes, it may be necessary to undertake some adjustment to current processes, in which case this will need to be incorporated in the plans. Following the development and acceptance of the business case, the implementation can be split into a number of subprojects: • • Product information review Technology considerations and implementation
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•
People and process change impact
From a supplier viewpoint, assuming that you already have the approved product information, creation of GDS product information via a user Interface can be achieved within a few days, depending on the volume of products to be entered. Implementation of a data management solution could take a few weeks depending on the complexity of the product chosen. From a buyer viewpoint, the implementation timescale will be dependent on the tools required and what aspects of the receipting and validation process is outsourced to the data pool service provider. Typically, the implementation for a retailer is more complex as the product information needs to be validated and approved then integrated with existing back-office applications such as logistics, order management etc. Experience to date is that this may take a number of months.
10. Which business areas are typically impacted during the implementation process?
All areas of the business within the organisation associated with the management of products from initial agreement to on-shelf availability will be impacted to some level. It is for this reason that the adoption of GDS must have a senior business manager sponsor with the necessary cross-functional authority.
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