Author: Chad Symens

A recent shared strategy study titled “The State of Collaboration 2005”, by Consumer Goods Technology, RIS, and Forrester, sited some encouraging results our team felt needed to be shared.  read the study

Finding #1: almost two-thirds of retailers and manufacturers feel they suffer adverse business effects when they do not collaborate.

Finding #2: EDI 852 is still the primary tool most firms use to collaborate.

Our conversations with manufacturers indicates they are having a hard time dealing with the EDI 852 data provided by retailers.  Plus many retailers have developed web portals which provide data files in even different formats.  There are simply too many different formats, and too much data to wade through on a weekly basis.  This points to the need for a tool to make the most of the opportunity.

Still, this is good news to see momentum continues to grow.

As a marathon runner, McDonald’s is not typically on my list of places to eat.  I have a tough time finding anything there that fits my preferred diet and still tastes good.  But I’ve been reading about their WiFi deployment and I needed to do a few things on the Internet the other day, so I thought I’d give it a try.  It was a pretty typical WiFi experience on WayPort infrastructure.  I’ve logged on to their network many times in the past at airports, and other locations.  The service is fairly reliable, and the speed is acceptable.

What I was disappointed with was the $2.95 for two hours price tag.  McDonald’s is smart to get into WiFi.  But I tend to align myself with the concept that WiFi used as a differentiation strategy should be free. (one of the only gripes I have against Starbucks is that they charge outrageous fees for WiFi) Especially when McDonald’s has so prominently promoted their new network as the backbone for corporate e-biz including eLearning, POS transactions, franchisee communications, and appliance status monitoring.  As I sat there and clicked through my email, I could not help but smirk at the irony I was helping to subsidize McDonald’s business communications.

Here’s an idea… print a code on a customers receipt that is good for 30 minutes of free WiFi.  That way, for the windshield warriors, you create an incentive to visit the store and get lunch while you also discourage people that would come and just hang out all day and not make a purchase.  Or create a frequent visitor club where you can earn free WiFi minutes for some number of burgers purchased.  Just a thought…. they are on the right track, but I think McDonald’s could improve upon their strategy just a bit.

When you spend as much time as we do involved in ‘missionary’ conversations educating senior retail and consumer goods executives, it is a breath of fresh air when a research report is published which directly supports your business case.  That is why we were celebrating in November 2005 when the “2005 Shared Strategy Study: The State of Collaboration” was released as a joint project by Forrester Research, Consumer Goods Technology and RIS News.

One of the important findings of the report – 70% of retailers and 82% of manufacturers agree they suffer adverse business effects when they do not collaborate.  Based on this finding alone, one would expect a ground-swell of interest in collaborative technologies.  Right?

As we approach the one year anniversary, we can report the following based on our many, many conversations.  Only a handful of retailers are making a serious investment into collaborative technologies.  Instead, most retailers are taking a wait and see approach, or they are simply using existing EDI or worse yet, spreadsheets as a stop-gap.  Most manufacturers we talk to are suffering through the expense and difficulty of dealing with what retailers are sending to them.  Imagine getting a dozen different files each week from your customers.  And these are not small files.

The technology to collaborate effectively is pretty straight forward.  It can even be implemented in a managed service model so you don’t have to spend a lot of money up front, or hire a bunch of IT guys.  Hopefully another 12 months will see big changes.

I have been reading Sun Tzu over the holiday weekend.  Very interesting reading.  It’s the type of reading where you cover a few lines and then take an hour to reflect on what it means to your business.

One passage stuck me:
“Therefore, determine the enemy’s plans and you will know which strategy will be successful and which will not.”

I often find myself in conversations with senior executives debating the merits of expanding their vendor collaboration program.  Typically they already have a program in place, but I am advocating an expansion of that program and the application of new technology.  In these conversations, there is tremendous inertia to maintain the status quo.  After all, why fix a program that’s not broken.  At their level in the organization they don’t hear the day to day challenges of the EDI manager who is fielding vendor support calls. In fact, most of the time they hear just the opposite from the middle level manager, “Oh, everything is fine Mr. Executive, no need to come and visit me, just keep on moving.”

But, if one critically evaluates where the most successful retailers (e.g. enemies) are making investments, one cannot espace the conclusion they are moving to more and more sophisticated vendor collaboration programs.  They are making investments before a problem occurs because they want to enjoy the corresponding lift of competitive advantage.

So, here is what I encourage all executives to do:  create two columns on a piece of paper and write your top five competitors down the left column.  Then on the other side for each competitor write down everything you know about their supply chain initiatives at this moment.  If you are coming up blank, that is your first clue there is a problem.  Now consider what your organization is doing.  What threats or opportunities are evident?  Every time I have gone through this exercise with an executive, we have both been surprised at the results.

We were recently referred to check out a great new association for category management professionals.  We spent some time on their web site and joined the organization.  I must say, so far we’ve been impressed.

Check out CPG Cat Net.  http://www.cpgcatnet.org/

Call to action: what other category management resources do you find beneficial?

In the June issue of Consumer Goods Technology, there is a terrific success story on how data sharing and collaboration between a retailer and vendor should work.  This is a must read for any retail or vendor operations, sales, or supply chain professional.

Here is a clip from the article:

Smart & Final offers the same service to its key vendor partners. “We can filter the information by product line so we can tell Coca-Cola or Pepsi, or the Ice Man, what they are selling in real time by item and by store,” he says. “By sharing real-time sales information with the ice vendor, the vendor now manages its own sell-through on the ice,” says Duge. As a result, Smart & Final’s ice sales increased 40 percent in the first year.

Did you catch the bottom line – 40% increase in sales on ice!  I can’t think of too many strategies that are this simple, and can drive a double-digit increase in sales.  OK, everyone, lets collaborate.

We have been contacted by many vendors to major retailers in the past two weeks, looking for a solution to EDI 852 reporting.  It’s not surprising since many major retailers send the EDI data out and simply hope vendors are able to use the data in some beneficial manor.  The fact is, most vendors are not in a good position to make this happen.  Especially since most vendors have many retail customers, all of which have different EDI templates and reporting requirements.  What a mess.

What is the point of making sales and inventory data available to suppliers if the data is unusuable, or inaccurate?

To make sense out of EDI 852 data requires a reporting tool capable of presenting summarized views (e.g. sales by month for each SKU and store) and then drill down capability to investigate problems.  In addition, a solid reporting tool needs to provide exception based management of the data.  This provides the vendor the ability to ingrain business logic like min and mix inventory turns and then be notified when something is out of whack. 

If you are struggling with EDI 852 data reporting, take solice.  You are not alone. 

Our President and CEO will be a featured speaker at the upcoming Trade Promotion Association event in Chicago.  If your organization is concerned about trade promotion, this is a must attend event.

The Trade Promotion Management Association (TPMA), is a non-profit trade association for professionals and organizations involved with trade promotion. TPMA provides members with information, education and research on the dynamic world of trade promotion, including co-op advertising, market development funds, slotting fees, off-invoice deductions, channel promotions and more.

Mark your calendars today for TPMA’s Annual Conference, September 24th – 27th, 2006 in Chicago, IL. This will prove to be a watershed event, raising the bar for all trade promotion programs and their measurable results. New strategies, identifiable metrics, new media, and the supporting analytics to continuously improve results will be presented.

Our Accelerated Analytics product was recently highlighted in the retail blog ShiSh List.  We recommend taking a look at their posting as well as looking around the blog.  Lots of good content on retail collaboration.

Accelerated Analytics was designed and built using Microsoft SQL 2005 and ProClarity (for the non-geek that means latest great technology) for business users to perform category management analysis, POS data analysis, and to support collaboration between retailers and their vendors.

A surprisingly large number of organizations are still using spreadsheets as the backbone of core business processes like POS data analysis, category management, and vendor collaboration.  There are many reasons for this, and even for a business intelligence professional like myself, I cannot simply dismiss their use altogether.  Although, it would be good for business 😉  Spreadsheets are an incredibly useful tool in many situations.  However, they are also terribly overextended and misapplied.

I cannot tell you how many times in the past month I’ve heard some form of this statement; “Our spreadsheets work just fine, I don’t see any reason for us to change.”

I am going to take a few deep breaths and be as diplomatic as possible in answering that statement.  So here are a few reasons not to use spreadsheets for POS data analysis, category management, or vendor collaboration. 

Spreadsheets are inefficient for most complex data analysis.  Spreadsheets were designed to be a presentation layer for data and allow a user to perform some limited high level math.  Unfortunately, in many offices, spreadsheets have become complex programming environments where power users spend hour after hour manipulating data.   Because they are on the very edge of what a spreadsheet was designed to do, they spend 80% of their time fetching and manipulating data and only 20% performing analysis.

No single version of the truth.  Each spreadsheet has its own business logic, calculations, and definitions, so each user must spend time simply familiarizing themselves with the information.  In some cases they will have a different definition, so then the spreadsheet must be recreated to suit their needs.  One client of mine comes to each meeting, distributes his spreadsheet, and then leaves to refill his coffee cup and use the restroom while all the other attendees just figure out his math. 15 minutes on the front of every meeting multiplied times a dozen senior managers!

Lack of data quality and consistency.  Any time data is manually inserted into a spreadsheet, an opportunity exists to make a mistake.  The mistake could be inserting the wrong set of data or not applying the correct unit of measure.

Spreadsheets create a single point of failure.  Almost every office I have ever visited has a power user with an Access database and an Excel spreadsheet.  The rest of the office lives in fear of the day this power user might choke on a chicken bone at lunch, or decide they would rather live in Tahiti.

No auditability or verification.  In the post-SOX business world, this is a key concern for any public company or large private company with ambitions of an IPO.