Why should all companies in retail sector analyze its product data management process?
Jan 24, 2019
More and more companies in retail sector are looking for smart technological solutions to automate manual tasks and to ensure smooth processes. We believe that the difference product data management can make in boosting business growth is much underestimated.
Products move along the supply chain, and before reaching the end consumer they pass many supply chain links. The path begins at the producer, moving on to the importer and retailer, and finally to the end consumer. However, for the end consumer to be able to grab his or her favorite cheese from the shop shelf, physical movement of goods is not enough. Product data has to move as well, everything from the product code and description to the best-before date and ingredients.
Smooth and error-free flow of product data from one supply chain link to another is crucial. One could even say that a product without data is not worth anything: retailer cannot accept it into its warehouse system or sell it to the end consumer.
The product may physically be in the shop already for days, but due to missing product data it is impossible to sell it. Delays in product data flow cause potential revenue loss for all links in the supply chain.
What is causing this problem?
Parties involved in the supply chain are often interested in different attributes of the product. The logistics company wants to know product volume, weight and storage conditions, while the retailer is interested in its colour and size, among other attributes. Therefore, the producer of the product needs to describe several dozen or even hundreds of different attributes for any single product.
More and more goods are sold each year. In addition, society is paying more attention to different health and environmental issues. Therefore, the extent of product data needed is constantly increasing. As a result, there is no good overview of which attributes and how should be described.
Different retail chains require different product data, which makes the situation for suppliers particularly difficult. Let’s take an example of a wine distributor. One retail chain requires that wines are divided into following groups: fresh; aromatic; light; intense; fruity. Another chain uses different groups, such as: light and fresh; soft and fruity; light and berry; strong and spicy white wine; strong and spicy red wine; sweet and aromatic. Therefore, supplier must group the attributes of the same product in several ways. The more partners a supplier has, the more complex the management of product data will get.
Situation in Estonian companies: two startling conclusions
We asked from more than a hundred biggest FMCG suppliers in Estonia how do they manage their product data. The problem is even bigger than we expected. Based on the interviews, we can make two startling conclusions.
Firstly, around 85% of the suppliers we talked to fill the retailers’ data tables by a simple copy-paste method. This means moving hundreds of data fields manually from one Excel table to another. One can only imagine how much time it takes to complete those tables in a company whose assortment consists of 50 different products. Or 500. Not to mention that this copy-paste method can lead to many careless mistakes.
Secondly, we found out that less than half of Estonian biggest suppliers have a “single truth” product data database. In English this is sometimes also called a “Golden Record”. “Single truth” means that product data is systematically kept in a specific source, which is then used by other applications for reference. Unfortunately, the reality is that in many companies product data is scattered between different databases. The data is kept in different formats and there are no specific rules on what and where should be updated. Thus, there is no clear understanding of which data version is the latest and most accurate. That is also one of the main reasons why suppliers cannot automate their product data flow.
Technology and money: could product data flow 4x faster?
The more scattered the data is, the more complex and expensive it is to manage it. As already mentioned, the trend is that the amount of collected attributes per product is growing. Also, the input of resources has to increase in order to assure integrity, timeliness, accuracy and availability of data in a secure manner. It is not possible to catch up with the growth by simply doing the things in the same old way.
There are several technological solutions in the world which make collecting and managing product data easier. Those are called Product Data Management (PDM) or Product Information Management (PIM) solutions. According to the studies, the best product data management systems have a remarkable effect on revenues, as well as profits. Several studies have shown that with modern PDM systems, new products could be launched even four times faster.
Nevertheless, using fancy technology, in itself, does not boost business growth. Business processes have to support the growth as well. It does not matter whether data collection happens in a modern data management system, in ERP or simply in Excel – it is inevitable to enter it at least once. That is why each company should consider its product data management process thoroughly. How, where and by whom the product data is collected, and is it comprehensible for all the parties involved? Only after these basics have been settled, technological solutions come in handy. PDM systems will take your data management to a whole new level. Product data will flow to your partners faster and without negligent mistakes. At the same time you will save money on product data management process as well as increase your sales.