Cost of Poor Data Quality for Retailers and Wholesalers
“What is the cost of inaccurate data in the retail supply chain?”. I remember posting this as an opening question to a live audience at a Symphony Retail Conference in Paris (in 2017) as we launched the most recent version of Simplain Vendor Portal then. I practiced my speech so often at home that my five-year-old daughter used to ask me the same question, for fun, knowing I did not have the exact answer. While the exact cost poor data quality is hard to measure,Retail and wholesale supply chain business functions experience poor data quality daily!
Preventing data quality issues in the retail supply chain is a priority for most retailers and wholesalers as they cater to the savvy omnichannel shopper. During the COVID-19 pandemic, many retailers and wholesalers came to terms with the hard reality that their current systems and processes not only slowed their response to changing supply chain dynamics, but also helped them fall short of the online shopper’s needs and expectations.
Data Quality Issues & their Business Impact
A product introduced at the retailer/wholesaler can have anywhere from a few dozen to a couple of hundreds of attributes. Their supplier provides all the attributes that describe the product, while the retailers and wholesalers enrich the product information with additional details required for their internal operations. Since only some of these attributes are mandatory for ordering and selling the product, some of the issues with poor data quality do not surface at the time of product introduction.
Rudimentary issues such as incorrect or invalid UPC and cryptic product descriptions can turn off the in-store shopper. Issues such as ambiguous marketing messages about the product, inaccurate product specifications, incomplete certifications/claims, and incorrect compliance information will prevent the retailer from providing a rich shopper experience to omnichannel shoppers. For example, an online shopper may appreciate a high-resolution product image and accurate product specifications such as assembly instructions, allergens, nutritional information, and a marketing story.
Issues with basic product dimensions, weight, tax, bottle deposit etc., may not only discourage the shoppers but may also cost the retailer in the form of fines from regulators.
Inventory and Logistical
Supply chain-specific information, such as product availability, delays and substitutions, are time-sensitive. Any delays in exchanging this information will create additional issues for both retailers and suppliers in the form of excess inventory/shortages.
Data Governance Measures and Accountability
Establishing a robust data governance policy that assigns accountability to the source of the data elements is an essential first step in ensuring data quality within the Retail and Wholesale supply chains. Retail and Wholesale organizations sometimes have a data integrity department accountable for data quality. However, these teams end up operating on bad data they received from the suppliers or even from other teams internal to their operations.
The supplier provides most of the product data elements in the retail supply chain. Different departments within the retailer organization care for different sets of product attributes. For example, category managers may assign product classification and manage the total cost and margin for the product. A compliance team may work closely with the vendor to ensure that the import-related attributes that determine the duty and tariff are assigned correctly. Accounting or Master Data team may assign other attributes that drive the Retail Taxes, Bottle Deposits, Commissions, and any local government fees associated with the item, such as Recycling Fees, at different locations.
Streamlined Supplier Collaboration
Streamlining Supplier Collaboration using a tool such as Simplain Vendor Portal can reduce data quality issues in the retail/wholesale supply chain. By making the supplier accountable for the data they provide and empowering them with tools to manage it, the retailer/wholesaler can prevent bad data from entering their ERP systems in the first place rather than trying to fix it later downstream. This does not eliminate the need for internal data governance processes within the retailer. However, it allows the data integrity teams and category managers to spend time on strategic activities rather than doing data entry.
Simplain Vendor Portal
Simplain Vendor Portal allows retailers and wholesalers to streamline several aspects of their supplier collaboration activities, such as New Vendor On-boarding, New Item Introduction, Cost Management, Deals & Promotions Management, Rebates Billing, Purchase Order Management, Merchandise Invoice Management, and sharing various important information such as Supplier KPIs, Inventory levels, product movement/velocity and forecast sharing.
Retailers and Wholesalers often start their digital transformation projects with the New Item Introduction module as a starting point. This module has hundreds of data validations, preventing bad data from being submitted to the retailer/wholesaler. In addition, this tool also provides various mass data management capabilities such as spreadsheet uploads, mass updates etc. According to a case study with Longos Brothers Supermarkets, the data integrity teams measured a productivity improvement of 50% and a corresponding improvement in speed to market with the implementation of Simplain Vendor Portal.
Retailers and Wholesalers can mitigate their data quality issues by implementing data governance policies that prevent most of the issues at the source by empowering the vendors with the tools to have visibility and access to avoid customer data issues. New Product Introduction is an excellent place to start as Retailers and Wholesalers begin their journey toward digital transformation. However, there are several other areas of supplier collaboration (starting with Vendor On-boarding, Cost Management, Deals and Promotions Management, Rebate Invoices, Purchase Orders, Merchandise Invoice Management and KPI sharing (Key Performance Indicators)) that can provide excellent value to the Retailer/Wholesaler and their suppliers.
A Simple Use Case
We worked with one of the largest FMCG retail chains in the US for a transportation plan for picking up purchase orders from their supplier ship points. The main inputs into such as system were the weight, volume, and pallet count for the purchase order. The retailer often ended up with inefficient truck planning because the product dimensions in their system were incorrect.
We enabled the Purchase Order Confirmation process through Simplain Vendor Portal to fix the issue. Vendors confirmed weight, volume, and pallet count information (along with other information that is typically part of Advance Shipment Notice (ASN) ) via the vendor portal. The system immediately warned the vendor if the dimensions calculated by the retailer were out of tolerance level compared to the dimensions input by the vendor forcing corrective action on data already in the system.
The root cause of the problem was indeed the item introduction process. We noticed that the vendor representative was providing incorrect item dimension information with no way for the retailer to validate it. Vendors and Master Data Team at the retailer were both educated on the importance of this data element for pick-up purchase orders to mitigate the issue.