UK grocery sector counts the cost of poor product data

A major new report by Cranfield School of Management and the not-for-profit supply chain standards and solutions organisation, GS1 UK, reveals the sizeable opportunity which Britains retail sector can realise through improving data practices in the supply chain.  The report estimates that UK grocery retailers and suppliers can realise savings of at least 1 billion over the next five years as data inconsistencies are ironed out across the industry.

The report was developed in collaboration with the countrys four largest supermarkets, Tesco, Sainsburys, Asda and Morrisons, and four of the largest product suppliers, Nestle, Unilever, Procter & Gamble and Mars.  By comparing the product data held by suppliers with that stored on the supermarkets systems, the research uncovered inconsistencies in what should have been identical information in over 80% of cases.  After calculating the impact this has in terms of lost or late deliveries, inaccurate orders, surplus transport costs and duplicated work, it was estimated that the savings opportunity for the retail industry was more than 700 million and a further 300 million opportunity for new sales.

Commenting on the findings, Professor Richard Wilding from Cranfields Centre for Logistics and Supply Chain Management, said:  Given the overall health of the grocery retailing industry, it was surprising to discover such a high level of poor quality product data being held by retailers.  Bad data not only impacts British retailers and suppliers profits but also customer satisfaction which is the lifeblood of any business.  Empty shelves, missing allergy information and incorrect prices on display are all highly frustrating for consumers but could be avoided if UK retailers and their suppliers consider adopting a global industry standard for product data.  As online shopping continues to rise and consumers are unable to physically handle the product, the information provided on websites is increasingly critical to making informed decisions.  Data quality will therefore become more important in the future for retailing organisations.

The estimated opportunity for the industry to realise over 700 million in savings were found to fall into two main areas: avoiding shrinkage and eliminating workaround processes (such as manual investigations to cross check the accuracy of the data).  The total savings from eliminating workarounds and corrections was estimated at 135 million for retailers and 100 million for suppliers.  Additionally, the total savings from avoiding shrinkage were placed at 250 million and 225 million for retailers and suppliers respectively.

Consumers and regulatory bodies are continually demanding better product information and labelling for nutrition, health and lifestyle, as well as information related to packaging and the environment. Combined with the industry predicting a 400% increase in the amount of data retailers need to hold about products, the joint industry action to investigate and adopt data standards is timely.

GS1 UK chief executive Gary Lynch, said: The Data Crunch report highlights the significant benefits for both retailers and suppliers in adopting data standards across the industry.  Weve been very encouraged by the collaborative action the industry has taken to date in helping us develop this report and are confident this joint work will continue apace as the issue is addressed across the UK grocery industry. By working together to improve their supply chain systems, both retailers and suppliers stand to benefit considerably from reduced costs and greater productivity.

The report, Data crunch the impact of bad data on profits and consumer service in the UK grocery industry, is available to download from www.gs1uk.org/datacrunch.asp.