UK suppliers could increase sales by 3% with better data management
- 40% of invoices currently not matching deliveries
- Speed-to-shelf also suffering
- Poor data management inflating distribution costs
London, 06 February 2018 - Suppliers could increase their sales by between 1% and 3% according to research conducted by barcode standards agency GS1 UK.
But its major new report, How Suppliers Can Drive Profits by Addressing Problems with Product Data analyses the costs to manufacturers in the grocery business and the potential upsides to bringing the UK grocery sector’s product data management into line with the best countries in the world.
The report highlights, for instance, when suppliers and retailers in Sweden worked together to create a common platform to share high quality data across the supply chain, their collaboration improved data quality, enabled timely exchange of information, and supported the elimination of non-value-added activity.
It has been estimated that suppliers using these data sharing services were able to increase their sales figures by 1-3%. Their cost of sales decreased by 5%. A total financial benefit across the grocery market equivalent to over £3bn was achieved.
Given the comparative size of the UK’s economy and population, this could represent a benefit of between £17bn and £21bn if the retail grocery industry has the energy, interest and impetus to work together to create a common platform to share high-quality data across the supply chain.
Among other things, the report shows that, in the UK, 40% of invoices do not match with deliveries – causing delivery rejection, manual investigations, repeat journeys and wasted effort on behalf of suppliers (and their customers).
Speed to shelf is also being affected with some suppliers in the US seeing a 67% improvement in speed to shelf (from 4-8 weeks to 2 weeks) with the introduction of superior data management.
Poor data management is also costing suppliers in terms of transport operations. In the US, suppliers using an improved data solution achieved 2-8% annual cost savings in terms of inbound and outbound operations. The IBM global report indicated a drop of 6% in distribution costs between 2006 and 2010.
Jim Dickson, Head of Retail at GS1 UK, said: “The UK’s grocery sector clearly has a massive problem with product data. Previous research from GS1 UK has shown that 80% of product content is inconsistent. It’s costing the entire industry dearly in terms of cash, in terms of lost sales, and even in terms of the fees suppliers are currently paying for existing product data and image management. But there are other costs, too – delivery delays can do quick and lasting damage to a company’s reputation with customers and we’ve come across on-time deliveries increasing by 3% with the adoption of better data sharing solutions in different territories.
“This is why GS1 UK has been working with grocery retailers and suppliers to create an industry standard for the management of product information and images. The industry group has specified and launched a new service, productDNA:hub, which providers a single catalogue of high quality, independently verified product information. It will allow suppliers to accurately state the sugar percentage of their products so that consumers can make more confident buying decisions. It grasps the grocery industry’s product data nettle.”
GS1 UK’s research also looked at other intangible benefits including intellectual property. All of the suppliers that were interviewed as part of the report said they would prefer to own the IP of their product imagery and data. Currently, they do not – but with the launch of productDNA:hub, they will.
While productDNA:hub will tackle these problems, GS1 UK says it will also have a more immediate impact for small suppliers. While GS1 UK has been developing the new product data management solution alongside FMCG giants such as Mondelez, Nestle, P&G and Unilever, small suppliers stand to reap the benefits. Approximately two-thirds (60-70%) of suppliers who subscribe to the new data management solution will not pay for productDNA:hub in the first three years.
Jim Dickson added: “While small suppliers will benefit most from the lower fees for listing product images and data, the most important change that productDNA:hubcan bring about for large suppliers is being match fit for the future of retail. The truth is that even the multinationals know that they can’t thrive in the brave new world of smart integrated ecommerce in the grocery sector without better product data. Data – reliable data – has become a fundamental element for the sector. For suppliers but also for retailers and consumers. productDNA:hub is the first step on that path – a step that could unlock the future. A journey of a thousand miles begins with a single step. Without productDNA:hub, there can be no first step.”
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Notes to editors
For further information or requests for interviews, please contact Tim Haidar: 020 7092 3584 / Tim.Haidar@gs1uk.org.
About GS1 UK
GS1 UK is a community of over 33,000 members working in retail, foodservice, healthcare and more. GS1 UK is one of 112 independent, not-for-profit GS1 organisations operating across 150 countries worldwide. GS1 UK helps everyone involved in making, moving and trading goods, automate and standardise their supply chain processes using the common language of GS1 global standards.