The State of Standards Adoption in Consumer Goods and Retail Supply Chains
Earlier this week, this author had the opportunity to speak with Kees Jacob, Global Leader, All-Channel Experience at Capgemini Consulting in Europe. Our conversation reflected on findings derived from a newly released report published by Capgemini Consulting and sponsored by standards body GS1, and The Consumer Goods Forum.
This report, The Future of Standards in the Consumer Goods & Retail Industry is somewhat unique in that it summarizes viewpoints from C-level and other senior executives, along with analysts from 20 global CPG related manufacturers, retailers and service providers. We believe this report provides important perceptions as to whether the adoption industry standards have fully lived up to the promise of more visible and transparent supply chains, especially in the light of continued incidents of product recalls and quality snafus, such as the recent horsemeat incidents in Europe.
One of the key drivers for standards adoption was a focus on providing transparency in the supply chain and standardization of information transfer that would benefit needs for traceability and insuring consumer trust. With the current global wide extension of consumer goods supply chains, a more demanding consumer, and the explosive growth of B2C and B2B electronic commerce, the needs for providing more product focused information across channels has increased. Equally, and some would argue, more important, is the need to respond to product failures within hours in order to protect consumers and the brand. However, in the report, executives point to existing information blind spots such as product promotions, hidden inventory and transportation movements. Data needed in information transfer is often missing, inaccurate or not provided in a standardized way.
In this commentary, Supply Chain Matters wishes to amplify our view of some of the important takeaways from this report. Keep in mind that the report represents the senior executive view, that which drives and influences supply chain budgets and resources.
Readers are probably aware that GS1 developed standards have established a common language among CPG focused manufacturing and retail supply chains. The use of Global Trade Identification Numbers (GTIN) and Electronic Data Interchange (EDI) standards are widely adopted by this and other industry supply chain segments. However, the purpose of this latest report was to ascertain the current and future role in the leveraging of these standards as currently viewed by executive leadership.
There were five conclusions drawn from this study, two of which we will highlight.
The consensus view was that the current standards are “fit for purpose”. In other words, industry executives do not perceive a need for additional information sharing standards, but rather more consistent and broader adoption of the existing standards. The report describes a strong theme indicating that “existing standards still have huge untapped potential both to increase supply chain efficiency and to support new areas of collaboration beyond the supply chain.” We would add that that potential includes the ability to sustain a synchronized execution process across the extended supply chain.
My conversation with Kees Jacob amplified that the current standards are not being consistently implemented. There is a perceived need for supply chain participants to consistently adopt standard data attributes vs. too much current proliferation of additional unique data needs, particularly among larger global based firms. The so-termed big data supply chains are perhaps overwhelming participants with data collection mandates. Retailers find it difficult to conform to standards when UPC and barcode numbers change every time a product is slightly altered. Manufacturers cite challenges to provide different sets of data for different trading partners. Bottom-line, the industry has a consistency of discipline challenge to overcome.
Study participants point to the improvement of existing guidelines and services that surround standards as generating more value for all the participants. The report specifically identifies the need for broader adoption among small and medium sized supplier groups, who today seem to be overwhelmed by complicated requirements that strain internal cost and resource commitments, without receiving a compensating benefit. The report points to a simplified version of standards adoption to help overcome these obstacles. Also noted is a potential new value-added role for the GS1 organization, from standards defining body to center of excellence and facilitator in helping firms in standards deployment.
Any of us who have been involved in information technology deployment are well aware of the tendency of teams to want to customize requirements because their processes are unique. Think back to the original deployments of enterprise level ERP systems where “scope creep” and customization needs suddenly made ERP instances different among divisions and product groups. That was a painful and costly lesson when changed business requirements necessitated upgrades to existing systems.
This latest report on standards adoption in consumer goods and retail supply chains points to similar tendencies of participant firms driving data complexities and uniqueness of one, while the broader goal of supply chain wide information transparency remains elusive. It should be viewed as a call to action.
We need to heed the messages drawn out in this report. Stop over complicating needs for all forms of data and focus on needs for overcoming information latency and insuring transparency.
Participants in consumer goods and retail supply chains are welcomed to share their insights in the Comments section related to this posting after reviewing the Capgemini Consulting report.