Cgt data sharing study 2012
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This document is a summary report of the 2012 Shared Data Study conducted by CGT and RIS News. It surveyed retailers and suppliers about their use of shared data between trading partners. The key findings were: 1) Both suppliers and retailers, but especially suppliers, recognized the expanded benefits of using shared data in more areas within their organizations. 2) Suppliers have expanded their use of shared data to different departments despite ongoing concerns about paying for the data. 3) Retailer satisfaction with shared data initiatives is rising as the returns on investment from these programs become clearer. Proofs that data sharing provides ROI are gradually improving retailer attitudes.
Cgt data sharing study 2012
- 1. A SUPPL EMENT TO CONSUMER GOODS TECHNOLOG Y A N D R IS N EWS RETAILER/SUPPLIER SHARED 3 Progress Report Qualit y of collaborati on between DATA t r ading par t ner s cl i mbs 8 Supplier View Suppliers expand usage despite concerns over paying for data STUDY 2012 13 Retailer View Attitudes improve as ROI rises, but issues preventing wider adoption persist Going Deeper with Data Sharing T ra d i n g part n ers reali z e expanded impact of benefits FOUNDING SPONSOR PRODUCED BY
- 2. R E TA I L E R / S U P P L I E R SHARED DATA STUDY 2011 STUDY 2012 ® About the Shared Data Study We are pleased to present the third annual 2012 Shared Data Study, produced by PublisherS Albert Guffanti, CGT CGT and RIS News. The data featured in this report was gathered through online aguffanti@edgellmail.com surveys during the summer of 2012. There were two separate surveys (one for Dave Weinand, RIS News dweinand@edgellmail.com retailers and another for suppliers) written by the CGT editorial staff and kept CGT EDITORIAL identical to last year so that we could track trending over three years. Many of Executive Editor: Kara Romanow the same questions appeared on both surveys, which allowed us to gather both kromanow@edgellmail.com Editor: Alliston Ackerman supplier and retailer perspectives on specific issues. The responses were mostly aackerman@edgellmail.com from Tier 1 and mid-sized consumer goods suppliers and retailers. The majority Assistant Editor: Alarice Padilla apadilla@edgellmail.com of the consumer goods supplier responses came from food/beverage and pack- RIS NEWS EDITORIAL aged goods suppliers, including personal care manufacturers. Respondents to Editor-in-Chief: Joe Skorupa the retail survey spanned all major channels, including specialty retail, depart- jskorupa@edgellmail.com Executive Editor: Adam Blair ment store/apparel, grocery, drug, mass merchandise, and convenience stores. ablair@edgellmail.com We would like to thank all of those that completed the survey and hope that Assistant Editor: Nicole Giannopoulos ngiannopoulos@edgellmail.com this study helps you further downstream data initiatives within your organiza- Report Author: Tammy Mastroberte tion and facilitate collaboration between trading partners. We would appreciate CGT sales hearing your feedback on this report, as well as your perspective on data sharing Associate Publisher: Diana Masurack Mann in our industry; please email Kara Romanow at kromanow@edgellmail.com to dmann@edgellmail.com Senior Account Manager: Bill Little participate in the conversation. blittle@edgellmail.com RIS NEWS sales Associate Publisher: Cathy Marder cmarder@edgellmail.com Account Executve: Ashley Oswald CONTENTS aoswald@edgellmail.com Account Executve: Lisa Wallace lwallace@edgellmail.com ART & PRODUCTION Creative Director: Colette Magliaro cmagliaro@edgellmail.com Production Manager: Pat Wisser pwisser@edgellmail.com 03 OVERVIEW: EXPANDED USAGE FOR DOWNSTREAM DATA Suppliers and to a lesser extent retailers are recognizing shared Subscriptions: 978-671-0449 Reprints: edgellreprints@parsintl. com, 212-221-9595 data’s value as they use it more widely within their organizations corporate CEO/Chairman: Gabriele A. Edgell 08 gedgell@edgellmail.com SUPPLIERS DIG DEEPER INTO DATA President: Gerald C. Ryerson Suppliers expand their data usage to different departments gryerson@edgellmail.com Vice President: John Chiego despite continued concerns over paying for data jchiego@edgellmail.com Founder: Douglas C. Edgell, 1951-1998 13 RETAILER SATISFACTION RISES AS corporate office BENEFITS BECOME CLEARER Edgell Communications 4 Middlebury Boulevard Proofs of data sharing’s ROI are gradually improving retailer Randolph, NJ 07869-1111 attitudes (973) 607-1300 • Fax (973) 607-1395 TECHNOLOGY GROUP 2 | C G T / R I S S H A R E D D ATA S T U D Y 2 0 1 2 www.edgellcommunications.com
- 3. R E TA I L E R / S U P P L I E R OVERVIEW SHARED DATA STUDY 2012 Collaboration Expands Along with Data Usage B o th reta i l ers a n d su p p l i ers f i n d a ra n g e o f be n e f i ts f r o m d o w n strea m data shar i n g Despite the benefits available through downstream FIGURE 1: data sharing with consumer packaged goods suppliers, Data Sharing – Suppliers vs. Retailers a number of retailers are still hesitant about these col- S U P P L I E R S : How many retailers are you receiving daily laborations. However, those that have taken the plunge downstream data from? are beginning to see rewards from such partnerships, in- Number of Retailers cluding significant ROI, fewer out of stocks, improved 24% category management and better forecasting and re- 1 18% plenishment capabilities. Retailer satisfaction with how 38% suppliers utilize their data has also grown since the in- augural CGT/RIS News Retailer/Supplier Shared Data 34% Study in 2010. 2 to 5 41% Both suppliers and retailers agree that the quality of 31% collaboration and dialogue between them is improving 20% with time, and this year, each group reported expanding 6 to 10 12% their use of shared data beyond sales and supply chain 6% initiatives. These include integrating the data into key 22% activities such as category management, new product More than 10 29% introductions and planogram management. 25% While some retailers still don’t use the most up-to- date technologies for their data sharing initiatives, those 2010 2011 2012 that have taken the time and money needed to imple- ment new systems are receiving proof of their benefits. R E T A I L E R S : How many suppliers are you sharing daily This year, more than one third of retailers reported downstream data with? significant ROI from data sharing, and many are now investing in more sophisticated technology. This is evi- dent in the lower percentage of retailers reporting the Number of Suppliers use of manual processes such as Excel spreadsheets, and 31% the increase in the use of Web-based portals seen in this None 27% year’s study. 19% However, it’s also important for retailers to under- 34% stand the potential upside of sharing data: expensive Less than 10 43% technologies need not be implemented up front to test 56% the waters and explore these benefits. One of the big hurdles to greater expansion of data 26% Between 10 and 50 23% sharing initiatives is the increasingly common practice 6% of retailers charging for their data. Some retailers be- lieve sharing data with their suppliers for free creates a 9% All Suppliers 7% risk to the revenue they receive from data syndicators; 19% 2010 2011 2012 C G T / R I S S H A R E D D ATA S T U D Y 2 0 1 2 | 3
- 4. R E TA I L E R / S U P P L I E R SHARED OVERVIEW overview DATA STUDY 2012 others are simply trying to monetize an asset. FIGURE 2: While the majority of suppliers indicated that being Ty p e s o f D a ta S u p p l i e rs R e c e i v e fro m R etai l ers asked to pay for data wouldn’t be sufficient motiva- tion to kill a data sharing program outright, many said Type of Data that they would either limit the number of retailers they 80% work with or decrease the frequency of data acquisi- Daily or Weekly 78% Inventory Data 90% tion, perhaps moving from a daily to a weekly schedule. Such moves would hamper much of the progress cur- Daily Point-of- 88% rently being made. Sale Data 86% Retailers also reported room for improvement in 85% suppliers’ use of shared data in a number of process categories. In this year’s study, satisfaction rose in ar- 47% eas such as forecasting and replenishment, inventory Loyalty/Card Data 33% 27% management, out of stocks, category management and unsaleables, but some retailers believe suppliers are 29% Other Data 18% still lacking in their data analysis and usage when it comes to new product introductions, promotion man- 27% agement and pricing management. 2010 2011 2012 More Retailers on Board When this survey was first launched in 2010, 31% of re- 27% of suppliers reported receiving it from retailers. This category sponding retailers revealed that they were not sharing continues to decline year over year, with retailers remaining hesitant any downstream data with supply partners. This year, about releasing what they consider proprietary data – even though the non-participation percentage has dropped to 19%, suppliers can gain insight into the demographics of who is buying demonstrating that more retailers are embracing col- their products and provide valuable perspectives to trading partners laboration (see Figure 1). However, among those shar- to boost sales for both parties. ing data, the majority (56%) reported working with fewer than 10 suppliers, indicating the narrow scope More Collaboration, More Benefits of most initiatives. In Figures 3 and 4, retailers and suppliers were asked to rate the ben- From the supplier side, all indications are that the efits associated with data sharing. Both retailers and suppliers saw bigger consumer packaged goods companies are re- improvements in downstream data’s ability to improve the shopper/ ceiving more data than smaller companies. A total of consumer experience this year, reaching 43% for suppliers and 40% 69% of supplier respondents reported working with for retailers. Both trading partners are laser-focused on the consumer between one and five retailers. However, this year’s and understanding what drives him or her, and improving the overall survey saw a noticeable shift toward collaborating experience at the store shelf is a major goal for both organizations. with only one retail partner, as this number jumped This and many other reported benefits are sending money directly from 18% last year to 38% in 2012. This could mean to the bottom line. The biggest jump on the retail side was seen in bet- suppliers are concentrating their efforts on bigger ter store execution, with 53% reporting significant benefits in this area, players, such as Walmart and Target, and/or are be- up 29 percentage points from last year (see Figure 3). ginning to limit the number of retailers they work with With improved replenishment programs such as VMI and DSD, because they are being charged for data. retailers and suppliers are gaining visibility into what products are Drilling into the details, the most prevalent form of selling at which stores and at what pace. These programs also im- data being shared by retailers is point-of-sale, followed prove on-shelf availability of products, and a majority (53%) of re- by inventory and online sales data (see Figure 2). Loy- tailers reported significant benefits in this area – more than double alty card data sharing is down again this year, as only the 26% reported in 2011. 4 | C G T / R I S S H A R E D D ATA S T U D Y 2 0 1 2
- 5. founding sponsor: retail solutions a D v e r t o r i a l Q&A A True Partnership H o w D o w n strea m D ata C a n T ra n s f or m T he R etai l er / S upp l ier R e l atio n ship 4 mize its benefits? For companies that are just start- GOLOVIN: The smart use of down- ing this journey, where should Jonathan Golovin stream data cannot occur in a silo. they first focus their efforts? Chairman and Chief The analysis and application of GOLOVIN: Companies should start Executive Officer business-critical data needs to be in- by asking themselves, what is the Retail Solutions Inc. tegrated into all processes in which business problem we’re trying to the retailer and manufacturer con- solve? It could be reducing excess 1 Which specific business pro- nect. It becomes a single version of inventory, improving on-shelf avail- cesses benefit the most from in- the truth — where marketing, sales, ability, accelerating new product corporating downstream data? supply chain and store operations introductions — or curbing theft or What is the typical ROI in these ar- read off the same page. In a nut- increasing store traffic. Once a re- eas? shell, this is about people and pro- tailer and a supplier have a joint set GOLOVIN: Downstream data plays cesses, not just putting data into a of priorities, they can start thinking a key role in boosting the efficiency black box and pulling out specific about how shared data can support of a number of critical business pro- recommendations. activities. Data should always be an cesses, from inventory management enabler rather an objective in itself. 3 to promotion execution. But going How have you seen data shar- 5 forward, we think downstream data ing impact the relationship be- As it gets more common, how can also can help companies, and their tween suppliers and retailers? data sharing still give a competi- retail partners, target offers to spe- GOLOVIN: Data sharing can be tive edge? cific customers. Instead of market- a valuable tool in dramatically GOLOVIN: The real value of data ing the same item to everyone at improving supplier/retailer rela- sharing doesn’t come from the basic the same price, companies could tionships, and turning them into sharing itself. It flows from the follow- offer, say, a certain brand of diapers true partnerships. In today’s ultra- on collaboration suppliers establish to a customer who routinely buys competitive retail environment, with retailers, and from retailers’ com- a competing brand — just as he’s retailers are looking for every pos- mitment to making sure that collabo- passing by a store where that brand sible advantage to boost sales and ration cascades through their entire is in stock. visibility. And data sharing, very organization, down to the store. The simply, helps stores offer the right real competitive advantage of data 2 Which departments and indi- products at the right time to the sharing stems from the retailer’s abil- viduals should be most direct- right customers—at the right price. ity to work together with suppliers to ly involved with integrating But this takes teamwork. drive increased sales, higher margins downstream data in order to maxi- and inventory reductions. n Retail Solutions is the leading provider of technology that helps consumer-product companies create value from retailer data, leading to increased sales, better inventory management and more effective product pro- motions. The company’s comprehensive suite of software-as-a-service (SaaS) solutions gives manufacturers better product and demand visibility from the warehouse to the store shelf and, finally, to the shopper. www.retailsolutions.com C G T / R I S S H A R E D D ATA S T U D Y 2 0 1 2 | 5 SDS_0912_RSI.indd 1 8/20/12 4:24 PM
- 6. R E TA I L E R / S U P P L I E R SHARED SUPPLIER o v er v ie w DATA STUDY 2012 FIGURE 3: FIGURE 4: Retailer Benefits Associated with Data Sharing Supplier Benefits Associated with Data Sharing Note: Respondents answered on a scale of 1 to 5, where 1 is “no ben- Note: Respondents answered on a scale of 1 to 5, where 1 is “no ben- efits” and 5 is “significant benefits.” The chart is based on adding the efits” and 5 is “significant benefits.” The chart is based on adding the percentages of those respondents selecting “4” and “5.” percentages of those respondents selecting “4” and “5.” Benefit Benefit Improving on-shelf 26% Improving on-shelf 62% availability 53% availability 61% Better category 29% Lower inventory and 49% management 47% safety stock levels 60% More accurate 29% Better management 42% demand forecasts 47% reporting 53% Better store execution 18% Better sales force targeting 45% 47% and campaign execution 53% Lower inventory and 28% Better demand 48% safety stock levels 46% forecast accuracy 53% Improved joint replenishment 25% Sensing product acceptance in 54% programs (VMI, DSD) 40% new product launch execution 52% Improving the shopper/ 36% Improving promotion design, 48% customer experience 40% forecasting and execution 45% Better new product 29% Improving the shopper/ 30% introductions 40% customer experience 43% Improved planogram 26% Demand insights to drive 23% management 34% new product development 39% Improving promotion design, 27% Reduction of 38% forecasting and execution 33% demand latency 36% 2011 2012 Sensing of product 32% category changes 33% Improving order to cash efficiency including the reduction 26% Going hand in hand with this significant increase is “more of deductions and more 27% accurate billing for promotions accurate demand forecasts,” reported as a benefit by 47% of retailer respondents in 2012. These two metrics alone can have 2011 2012 a huge impact on revenue and can often justify any investment in leveraging such data. Both retailers and suppliers are expanding the use of shared One benefit that stood out this year on the supplier side data to include new areas and processes in their organizations, was a large increase in “demand insights to drive new prod- leading to better management reporting on the supplier side: ucts development,” with 39% of suppliers reporting this ben- 53% of respondents report this benefit, up 11 percentage points efit compared to 23% last year. It’s noteworthy that insights from last year. This is important because as more executives from shared data are increasingly being used to drive new interact with retailer data (whether they realize it or not), its products, because previously such data rarely reached the integration into management reports improves the retailer and groups within the enterprise that were responsible for innova- consumer insights that can drive better decision-making at tion (as opposed to simply managing ongoing processes). multiple levels of the enterprise. l 6 | C G T / R I S S H A R E D D ATA S T U D Y 2 0 1 2
- 7. a D v e r t o r i a l Q&A Enable Sales Through In-Depth Analytics Y ou C a n ’ t F i x W hat Y ou D o n ’ t M easure 4 nities with a retailer when they dem- As it gets more common, how onstrate strong store level analytics, can data sharing still give a com- understand how to improve execu- petitive edge? Lisa Bohn tion, and use fact based selling. But BOHN: The suppliers whose IT sup- President and CEO that is not enough. Suppliers need ports their teams with resources and Shiloh Technologies understand what is going on in thou- solutions instead of leaving it up to sands of stores and DC’s, competi- them, operate at a much higher lev- 1 Which specific business pro- tive interaction, market conditions, el. Left to their own, account teams cesses benefit the most from in- promotion ROI, and more. When a will select point solutions which tend corporating downstream data? supplier has access to downstream to be canned, inflexible, and don’t What is the typical ROI in these ar- data and doesn’t make use of it, they differentiate what you versus your eas? will lose to suppliers that do. competitor can do. Suppliers that BOHN: The business processes that adopt a customizable solution that 3 benefit the most from downstream For companies that are just gives them the benefit of shared best data are sales analysis, forecasting starting this journey, where practices and yet let them do it their of sales and shipments, ordering, should they first focus their ef- way will create their competitive ad- VMI, on-shelf availability, promo- forts? vantage. tion planning, retail execution, and BOHN: Suppliers should first fo- 5 category management. ROI is typi- cus their efforts on their top ac- What if canned solutions just cally in the millions in improving counts or top issues needing reso- don’t fit? Does “DIY” mean “more forecast accuracy, instock, retail lution — address a limited number IT”? execution, and repeating more ef- of objectives and not try to do it BOHN: If canned solutions don’t fit fective promotions. ROI from using all in a short period of time. Shi- your requirements we recommend downstream data effectively should loh customers typically start with finding a customizable DSR solution be well within the first year of incor- Walmart, or their biggest account, versus building it yourself. Use a solu- porating it into your business pro- and implement to meet the needs tion that includes services to custom- cesses. of sales, supply chain, and category ize it for you, or that is customizable management. Automating data col- with minimal IT resources. Shiloh DSR 2 How have you seen data shar- lection and reports, implementing not only comes with 17 years of best ing impact the relationship be- master data management practices, practices, but it is fully customizable. tween suppliers and retailers? ordering, forecasting, and address- You can start small and scale up as BOHN: A supplier can gain tremen- ing out of stock and root causes are your needs grow, becoming a compet- dous credibility, trust, and opportu- typical starting points. itive advantage for your company. n Through 17 years of experience working with retail suppliers, Shiloh Technologies developed, im- ® plements and supports the industry leading Enterprise Demand Signal Repository (DSR). Shiloh DSR integrates all demand data sources and serves both corporate and account team level sales, category management, and supply chain roles, across all retailers. www.shilohtech.com C G T / R I S S H A R E D D ATA S T U D Y 2 0 1 2 | 7 SDS_0912_Shiloh.indd 1 8/20/12 4:23 PM
- 8. R E T A I L E R / S U PPL I E R SHARED s u p p l ier DATA STUDY 2011 STUDY 2012 Digging Deeper into Data S u p p l i ers e x p a n d data usa g e t o d i f f ere n t de p art m e n ts des p i te c o n t i n ued c o n c er n s o v er p ay i n g f o r data While consumer packaged goods companies are still FIGURE 1: ahead of their retailer customers in their enthusiasm for H o w s ta n d a rd i z e d i s y o u r a p p ro a c h to m anagi ng sharing of downstream data and their ability to man- d o wn s tre a m d a ta ? age and use it, this year’s study does indicate that the Status quality of collaboration and dialogue between these sets of trading partners is improving. Suppliers are also No corporate level strategy; each 22% customer team decides how to manage 20% expanding their use of data into a variety of new func- data received from their retailers 34% tional areas, including new product introductions, pro- motion, forecasting and pricing management – even as 22% Made a decision on a corporate the trend toward creating a unified corporate data shar- strategy; currently implementing 39% ing strategy continues to grow within these enterprises. it across teams 28% The growing acknowledgement of the value of down- 15% stream data is seen in the vast majority of responding The same tool is in place 16% across all teams today suppliers (83%) that view their data sharing efforts as a 23% strategic initiative. 34% In addition, this year 28% report that they are cur- Looking at a corporate strategy, but 24% rently implementing a corporate data sharing strategy, do not have one in place yet 15% while 15% are researching this option for the future. A larger percentage of suppliers are moving to the use of a 2010 2011 2012 common tool set by all teams, with 23% of respondents currently taking this approach, up from only 16% in 2011 and 15% in 2010 (see Figure 1). FIGURE 2: To measure suppliers’ perspectives on data sharing, Su p p l i e r P e rs p e c ti v e s o n D a ta S h a ri n g respondents answered the questions on a scale of 1 to 5, where 1 is “completely disagree” and 5 is “completely Note: Respondents answered on a scale of 1 to 5, where 1 is “completely disagree” and 5 is “completely agree.” The chart is based on adding the percentages of those agree.” The numbers in Figures 2, 3 and 4 are based on respondents selecting “4” and “5.” adding the percentages of those respondents selecting “4” and “5.” I M PA C T 2010 2011 2012 A large majority (85%) of suppliers view data shar- Downstream data is a supply chain initiative 77% 78% 85% ing as a supply chain and a sales initiative. However, the supply chain responses had a higher proportion of Downstream data is a sales initiative 82% 82% 85% those who “completely agree” versus simply “agree.” We view downstream data as a strategic 78% 84% 83% This demonstrates the growth and maturity of data initiative sharing initiatives that has developed over time. Many Downstream data is a significant upgrade 65% 84% 76% data management efforts begin with sales and then compared to syndicated data move into supply chain as companies and trading part- We have seen significant ROI from our ners become more sophisticated. 46% 44% 60% downstream data initiative Results from surveyed retailers match up with the Downstream data is a marketing initiative 41% 51% 30% supplier results: 80% identified data sharing as a supply 8 | C G T / R I S S H A R E D D ATA S T U D Y 2 0 1 2
- 9. a D v e r t o r i a l Q&A Leveraging Downstream Data G uideli n es for u n dersta n di n g , shari n g , a n d utili z i n g dow n stream data 2 4 Which specific business pro- How can downstream data be cesses benefit the most from in- integrated into existing business corporating downstream data? applications? Dave Shuman What is the typical ROI in these SHUMAN: CG companies can lever- Chief Operating Officer areas? age downstream data into existing Vision Chain SHUMAN: Our customers are rapid- business applications either by us- ly expanding the use of downstream ing a DSR that matches with their 1 What is the most valuable type of data as more broad demand signals current infrastructure or starting data that retailers can share with are being shared. Processes to en- with a SaaS DSR solution. Examples their suppliers? What insights rich this data with additional context include using store-item-day level are most valuable for the retailer to enable existing and new applications data to improve promotion execu- receive? What is the granularity and to easily analyze the refined data. tion, short-term demand forecasting, frequency that provides the most Improved customer and shopper consumption-based replenishment, benefit? service levels are achieved through retail sales execution, and space SHUMAN: There are three key com- short-term replenishment, demand, planning. As the use of downstream ponents to sharing data; grain, fre- and promotion planning. Retail ex- data becomes more strategic, it is quency, and facts. Store-Item-Day- ecution is achieved by demand en- important that the DSR can scale to Sales Type or Warehouse-Item-Day abling applications and business meet the service levels of the depen- grain describe events at an action- processes with inventory and con- dent applications and apply the con- able level. Transmitting this data dai- sumption data in a context and form text to feed those applications. ly allows CG companies to respond that is immediately relevant. 5 in real-time and take immediate cor- How have you seen data sharing 3 rective actions. As to the facts…share For companies that are just start- impact the relationship between everything you have. The more visi- ing this journey, where should suppliers and retailers? bility you can provide to your trading they first focus their efforts? SHUMAN: Data sharing creates a partners as to events that are occur- SHUMAN: Focus on the retailers that “single version of the truth” that both ring inside your network the bet- are strategic to your business and trading partners use to communicate ter the CG companies can plan and where you have either customer fo- and collaborate. The retailer influ- respond to improve the experience cused teams or initiatives that can le- ences this conversation by choosing at the shelf. At a minimum provide verage that data. While strong execu- the scope of data being shared and unit movement, and price data. With tive sponsorship is important, the use the actions that can be taken within each data element beyond those two of downstream data requires a com- its’ network. The CP company influ- (e.g. store receipts, store inventory) mitment from the customer teams or ences this conversation by the re- you enable CG companies to take from a functional team such as de- sources committed to using this data additional actions to improve sales, mand planning. Make sure you have and the depth of integration into sys- promotions, and replenishment. strong stakeholders at both levels. tems and processes. n Vision Chain, Inc.’s Enterprise Demand Signal Repository and Predictive Analytics solu- tion is the No. 1 choice among sales, category management and supply chain personnel for leveraging demand data to drive revenues and eliminate out-of-stocks. The solution is available via SaaS or on-premise. www.visionchain.com C G T / R I S S H A R E D D ATA S T U D Y 2 0 1 2 | 9 SDS_0912_VisonChain.indd 1 8/20/12 4:21 PM
- 10. RE T A ILER / SUPPLIER SHARED supplier DATA STUDY 2012 chain initiative, up from 72% who did so in 2011 and F I G URE 3 : 63% in 2010. Viewing data sharing as a sales initiative H o w m u c h a re y o u u s i n g d o wn s tre a m d a ta ( not was the second most popular retailer choice, with 75% s y n d i c a te d d a ta ) to p o we r e a c h p ro c e s s? choosing this option. (More detailed analysis of retail- Note: Respondents rated the following statements on a scale of 1 to 5, where 1 is ers’ responses follows on page 13.) “not at all” and 5 is “systematically.” The chart is based on adding the percent- Overall, suppliers’ view of data sharing remains quite ages of those respondents selecting “4” and “5.” positive. This year, a solid majority (60%) of respon- dents saw significant ROI from their initiatives, up from Process the mid-40s in 2010 and 2011. In addition, more than Forecasting and 42% three quarters of suppliers rated the quality of shared replenishment 62% downstream data as a significant upgrade over syndi- Inventory management 45% cated data. 61% 36% Data Usage Expands Internally Category management 61% As suppliers utilize shared data for sales and supply chain purposes, they are also beginning to see the ben- 44% Out of Stocks 54% efits it can offer other projects and capabilities, and are expanding their use of data into different areas of their 22% Promotion management enterprises. Increases were seen for all processes iden- 54% tified in the survey this year compared to 2011, with 38% New product introductions 49% several processes showing double-digit increases in the percentage of respondents (see Figure 3). 24% Field sales enablement 42% 26% Suppliers’ view of data shar- Planogram management 34% ing remains quite positive: 60% 18% Pricing management of respondents saw significant 34% ROI from their initiatives this Unsaleables 18% 21% year, up from the mid-40’s in 2010 and 2011. 2011 2012 The top five most popular supplier processes pow- ered by downstream data are: forecasting and replen- The next two largest increases came in the areas of inventory man- ishment, inventory management, category manage- agement, up 16 percentage points from 45% to 61%, and pricing man- ment, out-of-stocks and promotion management. Year agement, which also saw a 16-point increase, from 18% last year to over year, the biggest increases were seen in promotion 34% in 2012. These were followed by new product introductions (from management, rising 32 percentage points from 22% 38% to 49%), out-of-stocks (44% to 54%) and planogram management in 2011 to 54% in 2012; category management, up 25 (26% to 34%). points (from 36% to 61%); and forecasting and replen- Parallel with the increased use of data by suppliers, surveyed re- ishment, which rose 20 points, from 42% in 2011 to 62% tailers reported more satisfaction with the way suppliers are utilizing this year. In addition, the explosion in the use of mo- data, with increases in a variety of processes, including forecasting bile devices pushed field sales management from 24% and replenishment, inventory management, out-of-stocks and cat- in 2011 to 42% in 2012. egory management. 10 | C G T / R I S S H A R E D D ATA S T U D Y 2 0 1 2
- 11. a D v e r t o r i a l Q&A Collaborate to Reach Consumers S hari n g co n sumer ce n tric data pro v es i n creasi n g l y v a l uab l e S improve basket size and margins and identify, manage and govern the data. in cases where a retailer lets a CG 4 partner become category captain the For companies that are just start- data sharing extends to assortment ing this journey, where should mix and planogram information. they first focus their efforts? Hari Shetty Hiral Chandrana The insights that are most valuable For retailers the starting point is to clearly VP, Retail Global Business Wipro Technologies Head - Consumer Goods for a retailer have shifted from item, define the objective of the initiative, iden- Wipro Technologies assortment and category performance tify the types of data to be shared, the view to consumer centric insights such frequency of sharing data and create a 1 How have you seen data sharing as which physiographic / demographic portal for information sharing. CG com- impact the relationship between groups are buying the products, what panies can start with a few categories, suppliers and retailers? is their typical purchase pattern and fre- sharing data with select primary retailers. The majority of large food retailers quency, what are the cross sell / up sell By combining the Consumer-Drive De- have data sharing arrangements with opportunities in these segments and mand Signal approach with a Sales and their suppliers that take the relationship what is the next logical product they are Operations Planning process, the CPG from a tactical level to a strategic level likely to buy. manufacturer will attain a more effective with the opportunity for increased col- system to predict consumer demand and 3 laboration leading up to Collaborative How can downstream data be in- respond to the retailer’s requirements. Planning Forecasting & Replenishment tegrated into suppliers’ existing 5 (CPFR). The benefits cut across the sup- business applications? What is the most important con- ply chain and merchandising for both. Data integration has multiple facets sideration when sharing and ana- In some cases, there are instances with each group within a CG organiza- lyzing very large amounts of data? where retailers have shared data for tion finding new and innovative uses It is important to understand the data a subscription fee. However, what is for the data shared. Typically, the ac- sharing objectives of both parties. Oth- most effective is data shared based on counts team uses it for value creation er important considerations are access true collaboration, which includes in- in the relationship; operations uses it controls, data quality, inclusion of un- tegrating inventory and replenishment to create supply chain efficiencies; and structured data, life cycle, sharing meth- systems so the supplier knows when it marketing uses it for trade promotions. ods, frequency. Typically, data is made is time to ship goods and the quantity The primary data for Demand Signal available within 24 hours and in certain needed for each shipment. Repository comes from this source of cases retailers are moving to near real data. If used effectively, an accurate de- time sharing of information to support 2 What is the most valuable type mand signal has the potential to signifi- DSD and price optimization. Addition- of data that retailers can share cantly improve service levels while im- ally, there should be a closed loop to with their suppliers? What in- proving inventory management across feed insights back into the value chain. sights are most valuable for the re- the value chain. This will ensure that changing con- tailer to receive? From a process and technology per- sumer demands can be addressed in The typical data shared between re- spective, data integration does not just real time. n tailers and suppliers is item and sales involve defining the data and imple- data. However, we have noticed that menting the right technologies. Data an increasing number of retailers are integration needs be viewed as a MDM sharing restricted data related to ag- project with suppliers taking a very stra- gregate customer/loyalty information tegic view and ensuring that they set the with key partners. Overall, this helps right processes and structure in place to C G T / R I S S H A R E D D ATA S T U D Y 2 0 1 2 | 11 SDS_0912_Wipro.indd 1 8/20/12 4:20 PM
- 12. R E TA I L E R / S U P P L I E R SHARED SUPPLIER supplier DATA STUDY 2012 Mixed View of Retailers FIGURE 4: The majority of suppliers responding to this year’s sur- S u p p l i e r P e rs p e c ti v e s o n R e ta i l e r D a ta S hari ng vey are seeing the benefits of data sharing with retailers, A c ti v i ti e s particularly in the quality of collaboration and the dia- Note: Respondents answered on a scale of 1 to 5, where 1 is “completely dis- logue they are having with retail partners. Last year, two agree” and 5 is “completely agree.” The chart is based on adding the percent- thirds of responding suppliers reported improvement in ages of those respondents selecting “4” and “5.” this area; this year, nearly nine out of 10 did (see Figure 4). Another attitude check sought suppliers’ level of Perspective agreement with the statement “Retailers are responsive to the suggestions I make based on my analysis.” In With data sharing, the quality 66% of collaboration and dialogue 89% 2011, just over half (53%) of suppliers agreed; this year, has significantly improved nearly three quarters did. In addition, a higher percent- age of suppliers believe retailers are transparent with Retailers are responsive 53% to the suggestions 74% their data, rising from 32% in 2011 to 46% in 2012. I make based on my analysis However, the issue of retailers’ charging for the data they share continues to be a point of contention. The Retailers have the policy of 36% practice is on the rise: in 2011, 36% of suppliers said re- charging for their data 49% tailers were charging for data; in 2012, the figure had risen to 49%. As might be expected, paying for data does have an Retailers are transparent 32% with their data 46% impact on data sharing programs. As seen in Figure 5, if faced with having to pay for data, a majority of respond- ing suppliers would either limit their downstream data 2011 2012 programs to a few retail trading partners (35%) or would slow the scale or pace of these programs (33%). This means these suppliers would be more choosy FIGURE 5: about which of their retail customers they obtain data H o w wo u l d y o u r d o wn s tre a m d a ta s h a ri ng pro- g ra m b e i m p a c te d i f re ta i l e rs c h a rg e d s uppl i ers from and/or might scale back to weekly data reporting fo r d a ta ? from a daily program. However, the importance suppliers place on data I M PA C T 2011 2012 sharing overall is indicated by the low percentage (9%) who say that paying for data would motivate them to RATIONALIZE – would limit downstream data 46% 35% kill their programs outright. programs to a few retail trading partners As in previous years, the 2012 survey asked suppli- HAMPER – would hamper downstream data ers to choose the retailers they consider to be the best 22% 33% programs in terms of scale and/or pace at sharing data, and once again Walmart topped the list by a wide margin, with 57% of suppliers choosing DELAY – would push out plans to pursue 18% 15% the Bentonville giant as a data sharing leader. Walmart or expand downstream data program was followed by Kroger (26%), Target (26%) and Wal- KILL – would suspend existing or planned greens (23%). 10% 9% downstream data sharing program Suppliers also chose which manufacturers they be- lieve are best at managing downstream data. Procter NO IMPACT – would have no impact on the & Gamble ranked No. 1, with 35% of suppliers choos- 4% 9% direction and strategy for downstream data ing the company, followed by Unilever (27%), Kraft (15%), Walmart (15%), Johnson & Johnson (12%) and PepsiCo (12%). l 12 | C G T / R I S S H A R E D D ATA S T U D Y 2 0 1 2
- 13. R E TA I L E R / S U P P L I E R R E TA I L E R SHARED DATA STUDY 2012 Satisfaction Improves as Benefits Emerge R eta i l er att i tudes i m p r o v e as R OI r i ses , b ut i ssues p re v e n t i n g w i des p read ad o p t i o n p ers i st As the benefits of data sharing become clearer and a FIGURE 1: solid return on investment can be calculated, retailers W h a t a p p ro a c h h a s y o u r c o m p a n y ta k e n to s hare are warming to the idea of partnering with their con- d a ta wi th y o u r s u p p l i e rs ? sumer packaged goods counterparts. They are also re- Note: Multiple responses were allowed. porting more satisfaction with the way suppliers are us- ing the data they share, and are beginning to expand its Approach use into new areas of the organization. 25% My company operates a Web-based portal 31% While some retailers remain reluctant to share data 50% with suppliers, this number is dwindling, according to the 2012 survey. The percentage of those not sharing any 34% My company is using EDI 51% data fell from 18% in 2011 to only 6% in 2012. However, 44% a larger percentage of retailers are requiring suppliers to pay for data: 13% compared to only 4% last year (see My company is sharing data with 56% suppliers using manual processes 44% Figure 1). (flat files, Excel, etc.) 44% The payment issue isn’t likely to kill existing data sharing initiatives, but it could well slow them down 3% We sell data to our suppliers 4% or prevent new ones from starting up. The vast majority 13% of suppliers surveyed (91%) would not end their down- 16% stream data programs if required to pay retailers for the My company does not share data 18% data, but 35% would limit the programs to a few retail 6% trading partners and 33% would slow the scale or pace of their programs. This means they would be choosier My company has outsourced this 6% initiative to a third-party solution provider 9% about which retailers they worked with and how often they gathered data. Those retailers that have taken the plunge into down- 2010 2011 2012 stream data sharing are finding it beneficial enough to invest in more sophisticated technology in order to improve the processes involved. This is evident from prises. While they still remain behind suppliers in terms of viewing the the drop in those using manual processes such as Excel process as a strategic or corporate initiative (66% compared to 83% of spreadsheets, from 56% in 2010 to 44% this year, and responding suppliers), surveyed retailers are beginning to view the data the rise in the use of Web-based portals, up 19 percent- as more than simply a sales initiative. age points from 31% in 2011 to 50% this year. The use Most retailers view the practice of data sharing as a supply chain of EDI, an older multi-party communications tool, de- (80%) or sales initiative (75%). This shift toward the supply chain be- clined from 51% in 2011 to 44% in 2012. gan in 2011, and it demonstrates the maturing of data sharing practices, most of which begin with sales and move into the supply chain over Data Sharing Views Expand time. Suppliers share this sentiment: 85% report that they view data As retailers continue to embrace the concept of data sharing as a supply chain initiative. sharing, they are opening up to new possibilities for One significant trend to note is the increase in retailers that view data use of the data throughout different areas of their enter- sharing as a marketing initiative. Marketing as a whole has become C G T / R I S S H A R E D D ATA S T U D Y 2 0 1 2 | 13
- 14. R E TA I L E R / S U P P L I E R SHARED DATA STUDY 2012 much more important to retailers, with consumers’ FIGURE 2: increased use of social media networks, websites and R e ta i l e r P e rs p e c ti v e s o n D a ta S h a ri n g mobile devices giving them more power and putting Note: Respondents answered on a scale of 1 to 5, where 1 is “completely dis- a premium on targeted communications and promo- agree” and 5 is “completely agree.” The chart is based on adding the percent- tional offers. ages of those respondents selecting “4” and “5.” Last year 37% of retailers surveyed viewed data shar- ing as a marketing initiative, but this figure rose 16 per- PERSPECTIVE 2010 2011 2012 centage points to 53% in 2012. Linking data sharing to Data sharing is a supply chain 63% 72% 80% marketing puts these initiatives in the midst of a fast-ris- initiative ing, increasingly powerful part of the retail enterprise. Retailers were also asked to identify which part of Data sharing is a sales initiative 68% 53% 75% the organization has ownership of data sharing proj- We view data sharing as a ects, and respondents are beginning to embrace the 63% 63% 66% strategic initiative idea that departments other than supply chain can benefit from access to data. In 2011, supply chain Data sharing is a marketing initiative 34% 37% 53% topped the list at 47%, followed by information tech- We have seen significant ROI nology (24%), category management (16%), marketing 46% 34% 40% from our data sharing initiative (8%) and procurement (5%). This year, however, the majority of respondents reported ownership residing Data sharing creates a risk for the rev- in either marketing or category management, at 29% 20% 12% 20% enue we receive from data syndicators each, followed by supply chain, procurement and in- formation technology at 14% each. suppliers. Four in 10 either “agree” or “completely agree” with the statement “We have seen significant ROI from our data sharing initia- Linking data sharing to tive,” up from 34% last year. However, one in five retailer respondents marketing puts these initiatives still believe data sharing creates a risk for the revenue seen from data in the midst of a fast-rising, syndicators, which continues to hold back progress across the board. increasingly powerful part of Retailer Satisfaction Grows the retail enterprise. Suppliers utilize the data shared by retailers in a variety of ways to help both themselves and their retail partners. This year, retailers are more impressed with the use of their data in a number of categories, While middle management remains the owner of especially forecasting and replenishment, inventory management, out data sharing management for the largest group of retail- of stocks and unsaleables, which all saw double digit percentage in- ers surveyed (46%), many are shifting this responsibility creases year over year (see Figure 3). to include top-level company executives. This is another The biggest improvement was seen in forecasting and replenish- indication of a deeper commitment to data sharing by ment, with 60% reporting high levels of satisfaction compared to 42% retail partners. As its ROI is consistently demonstrat- last year. Following closely behind is inventory management, up 16 ed, C-level executives are beginning to see its benefits. percentage points to 54% from 38% last year, and out of stocks, up 15 While the 2011 survey showed only 13% of C-level ex- points to 46% from 31% last year. ecutives with ownership of data sharing projects, this Despite these positive views, there still remains a disconnect in cat- year the figure jumped to 31%. egories important to retailers, including new product introductions, Additionally, as data use and sharing expands be- promotion management, pricing management and end of life’s and yond sales to other parts of the enterprise, retailers are package transitions, which all saw satisfaction declines year over year. beginning to see a substantial ROI from partnering with The biggest drops were in promotion management, which fell 11 14 | C G T / R I S S H A R E D D ATA S T U D Y 2 0 1 2
- 15. R E TA I L E R percentage points to 20%, compared to 31% last year, FIGURE 3: and pricing management, down to 20% from 26% in H o w we l l a re y o u r s u p p l i e rs u s i n g d a ta you s hare 2011. These results should serve as motivation for sup- ( n o t s y n d i c a te d d a ta ) to p o we r e a c h o f the fol l ow- i n g p ro c e s s e s ? pliers to launch initiatives to improve these processes or to boost communication with retailers to prove the Note: Respondents rated the following statements on a scale of 1 to 5, where 1 is benefits of data sharing in these areas. “not at all” and 5 is “extremely well.” The chart is based on adding the percent- Retailers were also surveyed to gain insight into their ages of those respondents selecting “4” and “5.” overall perspectives of data sharing with suppliers, and those surveyed are mostly positive about the collabora- Process tion, including the way suppliers utilize the data over- 42% Forecasting and replenishment 60% all. Nearly three quarters (73%) of respondents agree suppliers use shared data in the retailers’ best interests, 38% Inventory management 54% up from just over half (54%) in 2011 (see Figure 4). 31% Two thirds of those surveyed also agree that the qual- Out-of-stocks 46% ity of collaboration and dialogue has significantly im- Category management 35% proved between trading partners, and 60% believe sup- 43% pliers are leveraging the data shared in an effective way 35% New product introductions – nearly double the 2011 response rate of 31%. 33% In 2012, retailers have made more strides overall in Unsaleables 12% 27% sharing their data with supplier partners, particularly Promotion management 31% 20% Pricing management 26% FIGURE 4: 20% Retailer Per spect i ves on Suppl i er 19% Data Shar i ng A ct i vi t i es Planogram management 20% Note: Respondents answered on a scale of 1 to 5, where 1 is Field sales enablement 16% 20% “completely disagree” and 5 is “completely agree.” The chart is based on adding the percentages of those respondents selecting End of Life's and Package Transitions 16% “4” and “5.” 7% I M PA C T 2011 2012 2011 2012 Suppliers work with the data my company shares in my company’s 54% 73% best interest considering that these partnerships have been in place for a relatively With data sharing, the quality of short period of time. A total of 31% of respondents have been partici- collaboration and dialogue has 54% 66% pating in data sharing projects for more than 5 years, while the larg- significantly improved est group (38%) report that their programs are between two and five years old (the mean age of these programs is 3.6 years). Even more Suppliers are leveraging the data my encouraging is the drop in those who report not sharing data – from 31% 60% company shares in an effective way 18% last year to 6% in 2012. Suppliers should pay for my data When asked to point out retailers they consider as having the most as it creates significant value for their 29% 26% effective data sharing programs, Walmart tops the list, with 40% organization choosing the world’s largest retailer, followed by Costco, Food Lion and Home Depot. On the manufacturer side, the three companies re- Minimal benefit and ROI of data 17% 7% tailers believe create the most value with the data they share are Kraft sharing is not worth the effort (27%), Coca Cola (18%) and PepsiCo (18%). l C G T / R I S S H A R E D D ATA S T U D Y 2 0 1 2 | 15
- 16. R E TA I L E R / S U P P L I E R SHARED DATA STUDY 2012 C G T an d R I S w o u ld lik e t o t h a n k t h e Re t a ile r/ S u p p l i er S ha r e d D a t a S t u d y 2 0 1 2 s ponsor s: FOUNDING SPONSOR A S S O C I AT E S P O N S O R S ® PRODUCED BY