Capitalize on the Full Promise of the Information Supply Chain
There’s no doubt that having a single version of your information within your business is important. But in an effort to eliminate information silos across departments, too many businesses lose sight of the big picture. They’re neglecting the barriers that exist between the business and its suppliers, partners and customers. As a result, they’re failing to capitalize on some of their biggest opportunities for driving revenue, reducing costs, capturing market share and developing sustainable competitive advantage.
Addressing the Full Information Supply Chain
In addition to their physical supply chain, businesses have another critical supply chain: a parallel chain that needs to be properly managed in order for those products to be designed, built, marketed, sold and serviced cost-effectively.
It’s the information supply chain, and it consists of the complementary master information that is required at each step of the product introduction process: key conceptual features, weights and measures, product or service images, advertising copy, “green” information, hazmat information, final specifications, pricing and many other key product attributes.
When the product information supply chain is not optimized, information is often incorrect, inconsistent, incomplete or in a difficult-to-digest format. This can have a severe impact on all the internal systems that use this information.
But the challenge goes much deeper. Product information doesn’t just reside within the business. Companies must be able to share information seamlessly across this information supply chain with all stakeholders, including vendors, partners and customers.
In fact, at a time when accurate, timely and consistent information is now a core enabler, the real value to the business will come from its ability to break down these barriers across the entire information supply chain – both upstream and downstream – and not just internally.
The Upstream Challenge
Although this view has changed over the years – thanks in part to vendor managed inventory, auto replenishment and other similar initiatives – most businesses still view their suppliers as vendors, not as information-sharing partners.
Unfortunately, that approach to supplier management leads to a number of problems, including costly inefficiencies, increased customer attrition, eroding margins, shrinking market share, poor regulatory compliance, increased business risk and longer time to market.
For one, the costs and inefficiencies of sharing information via spreadsheets, electronic data interchange reports and error-prone flat files are no longer sustainable. Think about all of the steps involved in bringing on board a new supplier or a new product from an existing supplier - everything from acquiring the supplier’s profile to onboarding all product attributes, descriptions, marketing copy, images and other digital assets, regulatory information, contractual terms and much more.
The number of touchpoints involved in this process has also increased over the last few years. Merchants often have to make dozens of phone calls and exchange dozens of emails with a supplier just to be able to cobble together the necessary supply chain data, product information and digital assets needed to onboard a new product.
And because of all the departmental walls and poor integration, it’s not uncommon for multiple departments in a merchant’s organization to have to contact the supplier to get the same information – all at the same time.
Once gathered, the information is keyed into multiple systems by multiple departments, creating replicated data. From there, the data evolves independently from the other systems in the enterprise, which in turn leads to duplicate, conflicting, incomplete and erroneous information that creates a number of other problems. There are few controls, limited governance and no revision tracking that would enable the company to rollback information should it promote the wrong offer or include erroneous information in a promotion. It’s truly the Wild West.
AMR Research recently concluded that companies could potentially reduce their supplier management costs by nearly 85 percent by improving information visibility with suppliers. For a merchant managing hundreds of vendors and tens of thousands of products, the efficiency costs – not to mention the improvements in data accuracy – are staggering.
TVs That Can’t Be Sold
A major opportunity-cost component is also at play here. Recently, a large national electronics retailer found itself with a new model of flat-screen TVs across its stores and warehouses nationwide. Yet the retailer struggled to sell those TVs - not because they were defective, but because the company didn’t have the information it needed to market, sell and support the product.
This is a textbook example of an information supply chain that couldn’t keep up with a highly efficient physical supply chain. The product was in stock. But salesfloor personnel had no training to help customers buy the TVs, shelf tags lacked relevant details, the POS system had incomplete data on the TVs, the marketing department didn’t have the information and digital assets it needed to feature the product in its circular and website, and the support team couldn’t assist customers who called in with questions or issues.
It took four weeks after the TVs arrived in the stores for the retailer to get all of the necessary information from the manufacturer. The result: tens of millions of dollars in lost sales for both the retailer and the manufacturer.
If the retailer had a full-cycle information management strategy and process in place, the story could have been very different. For instance, the responsibility for supplying product information could have been transferred to the manufacturer through a supplier portal that validates product information and helps the retailer review and approve that information.
This would not only help the retailer ensure it has the product information it needs at the right time, but it would also enable buyers, merchandisers and product managers to focus on more strategic tasks, all while reducing errors and labor costs.
Integrating with New and Existing Downstream Channels
Sharing the information downstream in a more streamlined way is another key imperative. While it’s true that pushing out information to customers via catalogs, brochures, electronic data interchange and e-commerce applications is nothing new for manufacturers, distributors and retailers, multichannel retailing is growing at an unprecedented rate.
Not only are new channels continually emerging, but customer expectations are also growing faster than ever. Customers want to have a seamless buying experience. They want the ability to research the product on the Web and check its availability at any time. They want to be able to order online and pick up at the store. And they want to use new social media channels to learn more about the product, receive promotional notifications and interact with the retailer or manufacturer.
When they don’t get what they want, they go elsewhere.
This unprecedented level of customer choice is rapidly shrinking product cycles and making product information a true competitive differentiator, forcing companies to take a closer look at how they’re sharing product information with customers and prospects.
Not long ago, a leading global distributor of medical and dental equipment was successfully using a product information management application to streamline catalog publishing. The company had become very dependent on this system due to the sheer number of SKUs and catalogs it published annually in multiple languages – catalogs its customers relied on heavily as reference and buying sources.
However, as sales channels grew and expanded, it became increasingly challenging to gather accurate product information from manufacturers and to share that information with customers efficiently across its growing library of catalogs and sales channels.
This company sells highly commoditized products that carry a high degree of liability. The information must be accurate and obtaining it must be cost-efficient. As a result, management realized that having a central hub of product data was not enough. It needed a better way to manage its entire information supply chain.
Specifically, it needed to find a more efficient way of receiving information from its suppliers, moving it through internal channels faster and sharing it more visibly and more consistently with customers so that they could easily find and order what they needed, when they needed it.
By putting in place a full-cycle information management platform, which acts as a single source of master product information for the entire business, this company is changing its approach to gathering, managing and sharing product information, turning that information into a competitive advantage.
Specifically, the company is reducing the time and costs involved in creating new catalogs and pushing new information to its website. But just as important, it’s also increasing customer loyalty by becoming a trusted source for accurate product information.
Master Data Management: More Than Just a Project
Both the electronics retailer and the medical equipment distributor discussed here are perfect examples of why businesses are thinking beyond internal data-sharing challenges and moving toward a more holistic view of information management – one that addresses the upstream and downstream flow of information.
Companies are realizing that initiatives such as MDM should be used not just internally, but also to help suppliers and partners share information with them, and to help customers find more relevant, complete and accurate information faster.
At the end of the day, it’s about treating MDM as a process, not just a project. It’s about using MDM as a vehicle to drive real business value and ROI. Businesses that understand how to leverage their MDM and other data management investments stand to win big as information continues to become a source of competitive differentiation.
Thought the supply chain race was nearing the finish? Welcome to today’s newest challenge: optimizing your information supply chain.