Posted Date: 5/12/2011
Data: The Underutilized Asset
By J. Gregory “Greg” Smith, Cognizant
Most consumer goods (CG) companies are overwhelmed by the diversity, complexity and volume of data. Many are now creating standards for data collection and reporting, but data synchronization hurdles remain. Effectively harnessing this data can drive significant process cost reduction and labor productivity.
Data standardization roadblocks include multiple, disparate ERP systems and versions, “best of breed” software (TMS, WMS and PLM) and data from third parties (transshippers, contract manufacturers, wholesalers and retailers). These roadblocks often negate the data’s strategic value.
Leading CG companies have taken decisive steps to utilize this data to streamline complex processes; others are still using complex, customized spreadsheets that are not integrated with corporate systems. Processes most benefiting from synchronized “clean” data typically reside in the supply chain function: Supply chain visibility, sales and operations planning (S&OP), transportation management (especially as it relates to full truck loads or FTLs) and trade promotion management/optimization.
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Supply Chain Visibility: This encompasses a variety of strategic functions that require a common view of data:
- Compliance and reporting with retailer-specific mandates (for example, Wal-Mart package reductions);
- Regulatory compliance reporting related to U.S. Customs trade reporting, carbon cap and trade, and hazardous material documentation;
- Process-driven functions such as product recall planning and execution or supply chain review consolidation and optimization; or
- Customer initiatives such as vendor managed inventory (VMI) or demand-driven replenishment (DDR).
S&OP: While generally classified as part of supply chain operations, S&OP comes with its own data management challenges: creating high forecast accuracy, predicting and reporting customer demand with production scheduling, shortening cycle times from order to cash, and achieving enterprise inventory reductions. These processes require a single view of multiple data elements.
Transportation Management: The business benefits of transportation management can be enormous. Poor dimensional data causes lower FTL rates, as cargo loaders resort to guessing optimal truck loads. One retailer we worked with experienced an eight-figure annual cost reduction through tighter dimensional management alone. The knock-on effect of improved FTLs includes reducing your company’s carbon footprint, improved labor productivity and reduced warehouse labor costs.
Trade Promotion Management/Optimization: This process straddles supply chain, marketing and sales. Most organizations still struggle with accurately reporting trade promotion spend and are in the early stages of analyzing spend effectiveness. Digital couponing through social media has complicated an already complex arena. Accurate trade promotion spend effectiveness modeling requires analyzing and assimilating data from multiple sources, like point-of-sale systems and syndicated data providers (Nielson, SymphonyIRI) along with internal sales, marketing and operations. Most CG companies measure TPO/TPM analytics through complex spreadsheets, prohibiting even simple predictive analytic modeling.
The explosion of data across disparate sources will only grow in coming years. The ability to digest, synchronize and effectively utilize this data will deliver a strategic advantage by reducing labor costs, improving supply and demand chain integration, enhancing marketing spend analytics, and driving down operational costs. It requires a well-articulated plan for coordinating data and a data governance roadmap. A business-focused process will ensure the innovative use of data to drive business value.