cgt data sharing study 2012

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SHAREDDATASTUDY 2012

RETAILER/SUPPLIERA SUPPLEMENT TO CONSUMER GOODS TECHNOLOGY AND RIS NEWS

Going Deeper withData SharingTRAdIng PARTnERS REALIzEExPAndEd ImPAcT of bEnEfITS

13 Retailer ViewAttitudes improve as ROI r ises, but issues preventing wider adoption persist

3 Progress ReportQuality of collaboration between trading partners cl imbs

8 Supplier ViewSuppliers expand usage despite concerns over paying for data

2 | C G T / R I S S H A R E D D ATA S T U D Y 2 0 1 2

STUDY 2011

SHAREDDATAR E TA I L E R / S U P P L I E R

STUDY 2012

About the Shared Data StudyWe are pleased to present the third annual 2012 Shared Data Study, produced by CGT and RIS News. The data featured in this report was gathered through online surveys during the summer of 2012. There were two separate surveys (one for retailers and another for suppliers) written by the CGT editorial staff and kept identical to last year so that we could track trending over three years. Many of the same questions appeared on both surveys, which allowed us to gather both supplier and retailer perspectives on specific issues. The responses were mostly from Tier 1 and mid-sized consumer goods suppliers and retailers. The majority of the consumer goods supplier responses came from food/beverage and pack-aged goods suppliers, including personal care manufacturers. Respondents to the retail survey spanned all major channels, including specialty retail, depart-ment store/apparel, grocery, drug, mass merchandise, and convenience stores. We would like to thank all of those that completed the survey and hope that this study helps you further downstream data initiatives within your organiza-tion and facilitate collaboration between trading partners. We would appreciate hearing your feedback on this report, as well as your perspective on data sharing in our industry; please email Kara Romanow at [email protected] to participate in the conversation.

C O N T E N T SOVERVIEW: EXPANDED USAGE FOR DOWNSTREAM DATASuppliers and to a lesser extent retailers are recognizing shared data’s value as they use it more widely within their organizations

SUPPLIERS DIG DEEPER INTO DATASuppliers expand their data usage to different departments despite continued concerns over paying for data

RETAILER SATISFACTION RISES AS BENEFITS BECOME CLEARERProofs of data sharing’s ROI are gradually improving retailer attitudes

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C G T / R I S S H A R E D D ATA S T U D Y 2 0 1 2 | 3

Collaboration Expands Along with Data Usage

Despite the benefits available through downstream data sharing with consumer packaged goods suppliers, a number of retailers are still hesitant about these col-laborations. However, those that have taken the plunge are beginning to see rewards from such partnerships, in-cluding significant ROI, fewer out of stocks, improved category management and better forecasting and re-plenishment capabilities. Retailer satisfaction with how suppliers utilize their data has also grown since the in-augural CGT/RIS News Retailer/Supplier Shared Data Study in 2010.

Both suppliers and retailers agree that the quality of collaboration and dialogue between them is improving with time, and this year, each group reported expanding their use of shared data beyond sales and supply chain initiatives. These include integrating the data into key activities such as category management, new product introductions and planogram management.

While some retailers still don’t use the most up-to-date technologies for their data sharing initiatives, those that have taken the time and money needed to imple-ment new systems are receiving proof of their benefits. This year, more than one third of retailers reported 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 use of manual processes such as Excel spreadsheets, and the increase in the use of Web-based portals seen in this year’s study.

However, it’s also important for retailers to under-stand the potential upside of sharing data: expensive technologies need not be implemented up front to test the waters and explore these benefits.

One of the big hurdles to greater expansion of data sharing initiatives is the increasingly common practice of retailers charging for their data. Some retailers be-lieve sharing data with their suppliers for free creates a risk to the revenue they receive from data syndicators;

F I G U R E 1 : D a t a S h a r i n g – S u p p l i e r s v s . R e t a i l e r s

B o T H R E TA i l E R S A n D S U p p l i E R S f i n D A R A n g E o f B E n E f i T S f R o m D o w n S T R E A m D ATA S H A R i n g

Between 10 and 50

Number of Suppliers

None

2010 2011

Less than 10

All Suppliers

2012

31%27%

19%

34%43%

56%

26%23%

6%

9%7%

19%

S U P P L I E R S : How many retailers are you receiving daily

downstream data from?

R E TA I L E R S : How many suppliers are you sharing daily downstream data with?

6 to 10

Number of Retailers

1

2010 2011

2 to 5

More than 10

24%

2012

18%38%

34%41%

31%

20%12%

6%

22%29%

25%

O V E R V I E W SHAREDDATAR E TA I L E R / S U P P L I E R

STUDY 2012


others are simply trying to monetize an asset.While the majority of suppliers indicated that being

asked to pay for data wouldn’t be sufficient motiva-tion to kill a data sharing program outright, many said that they would either limit the number of retailers they work with or decrease the frequency of data acquisi-tion, perhaps moving from a daily to a weekly schedule. Such moves would hamper much of the progress cur-rently being made.

Retailers also reported room for improvement in suppliers’ use of shared data in a number of process categories. In this year’s study, satisfaction rose in ar-eas such as forecasting and replenishment, inventory management, out of stocks, category management and unsaleables, but some retailers believe suppliers are still lacking in their data analysis and usage when it comes to new product introductions, promotion man-agement and pricing management.

MoRe ReTaIleRS on BoaRdWhen this survey was first launched in 2010, 31% of re-sponding retailers revealed that they were not sharing any downstream data with supply partners. This year, the non-participation percentage has dropped to 19%, demonstrating that more retailers are embracing col-laboration (see Figure 1). However, among those shar-ing data, the majority (56%) reported working with fewer than 10 suppliers, indicating the narrow scope of most initiatives.

From the supplier side, all indications are that the bigger consumer packaged goods companies are re-ceiving more data than smaller companies. A total of 69% of supplier respondents reported working with between one and five retailers. However, this year’s survey saw a noticeable shift toward collaborating with only one retail partner, as this number jumped from 18% last year to 38% in 2012. This could mean suppliers are concentrating their efforts on bigger players, such as Walmart and Target, and/or are be-ginning to limit the number of retailers they work with because they are being charged for data.

Drilling into the details, the most prevalent form of data being shared by retailers is point-of-sale, followed by inventory and online sales data (see Figure 2). Loy-alty card data sharing is down again this year, as only

F I G U R E 2 : Types of Data Suppliers Receive from Retailers

Loyalty/Card Data

Type of Data

Daily Point-of-Sale Data

2010 2011

Daily or Weekly Inventory Data

Other Data

2012

80%78%

90%

88%86%

85%

47%33%

27%

29%18%

27%

O V E R V I E WO V E R V I E WSHAREDDATAR E TA I L E R / S U P P L I E R

27% of suppliers reported receiving it from retailers. This category continues to decline year over year, with retailers remaining hesitant about releasing what they consider proprietary data – even though suppliers can gain insight into the demographics of who is buying their products and provide valuable perspectives to trading partners to boost sales for both parties.

MoRe CollaBoRaTIon, MoRe BenefITSIn Figures 3 and 4, retailers and suppliers were asked to rate the ben-efits associated with data sharing. Both retailers and suppliers saw improvements in downstream data’s ability to improve the shopper/consumer experience this year, reaching 43% for suppliers and 40% for retailers. Both trading partners are laser-focused on the consumer and understanding what drives him or her, and improving the overall experience at the store shelf is a major goal for both organizations.

This and many other reported benefits are sending money directly to the bottom line. The biggest jump on the retail side was seen in bet-ter store execution, with 53% reporting significant benefits in this area, up 29 percentage points from last year (see Figure 3).

With improved replenishment programs such as VMI and DSD, retailers and suppliers are gaining visibility into what products are selling at which stores and at what pace. These programs also im-prove on-shelf availability of products, and a majority (53%) of re-tailers reported significant benefits in this area – more than double the 26% reported in 2011.

STUDY 2012


Q&Aa D v e r t o r i a l

1Which specific business pro-cesses benefit the most from in-corporating downstream data?

What is the typical ROI in these ar-eas?GoloviN: Downstream data plays a key role in boosting the efficiency of a number of critical business pro-cesses, from inventory management to promotion execution. But going forward, we think downstream data also can help companies, and their retail partners, target offers to spe-cific customers. Instead of market-ing the same item to everyone at the same price, companies could offer, say, a certain brand of diapers to a customer who routinely buys a competing brand — just as he’s passing by a store where that brand is in stock.

2 Which departments and indi-viduals should be most direct-ly involved with integrating

downstream data in order to maxi-

mize its benefits? GoloviN: The smart use of down-stream data cannot occur in a silo. The analysis and application of business-critical data needs to be in-tegrated into all processes in which the retailer and manufacturer con-nect. It becomes a single version of the truth — where marketing, sales, supply chain and store operations read off the same page. In a nut-shell, this is about people and pro-cesses, not just putting data into a black box and pulling out specific recommendations.

3How have you seen data shar-ing impact the relationship be-tween suppliers and retailers?

GoloviN: Data sharing can be a valuable tool in dramatically improving supplier/retailer rela-tionships, and turning them into true partnerships. In today’s ultra-competitive retail environment, retailers are looking for every pos-sible advantage to boost sales and visibility. And data sharing, very simply, helps stores offer the right products at the right time to the right customers—at the right price. But this takes teamwork.

4For companies that are just start-ing this journey, where should they first focus their efforts?

GoloviN: Companies should start by asking themselves, what is the business problem we’re trying to solve? It could be reducing excess inventory, improving on-shelf avail-ability, accelerating new product introductions — or curbing theft or increasing store traffic. Once a re-tailer and a supplier have a joint set of priorities, they can start thinking about how shared data can support activities. Data should always be an enabler rather an objective in itself.

5 As it gets more common, how can data sharing still give a competi-tive edge?

GoloviN: The real value of data sharing doesn’t come from the basic sharing itself. It flows from the follow-on collaboration suppliers establish with retailers, and from retailers’ com-mitment to making sure that collabo-ration cascades through their entire organization, down to the store. The real competitive advantage of data sharing stems from the retailer’s abil-ity to work together with suppliers to drive increased sales, higher margins and inventory reductions. n

A True Partnership H O w D O w n S T R E A m D ATA C A n T R A n S f O R m T H E R E TA I l E R / S U P P l I E R R E l AT I O n S H I P

Jonathan Golovin

Chairman and Chief

Executive officer

Retail Solutions inc.

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

fouNDiNG spoNsor: retail solutioNs

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F I G U R E 4 : Supplier Benefits Associated with Data Sharing

Benefit

2011 2012

Improving order to cashefficiency including the reduction

of deductions and moreaccurate billing for promotions

Sensing of productcategory changes

Reduction ofdemand latency

Demand insights to drivenew product development

Improving the shopper/customer experience

Improving promotion design, forecasting and execution

Sensing product acceptance in new product launch execution

Better demandforecast accuracy

Better sales force targetingand campaign execution

Better managementreporting

Lower inventory andsafety stock levels

Improving on-shelfavailability

62%61%

49%60%

42%53%

45%53%

48%53%

54%52%

48%45%

30%43%

23%39%

38%36%

32%33%

26%27%

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 percentages of those respondents selecting “4” and “5.”

S U P P L I E Ro v E R v I E wSHAREDDATAR E TA I L E R / S U P P L I E R

Going hand in hand with this significant increase is “more accurate demand forecasts,” reported as a benefit by 47% of retailer respondents in 2012. These two metrics alone can have a huge impact on revenue and can often justify any investment in leveraging such data.

One benefit that stood out this year on the supplier side was a large increase in “demand insights to drive new prod-ucts development,” with 39% of suppliers reporting this ben-efit compared to 23% last year. It’s noteworthy that insights from shared data are increasingly being used to drive new products, because previously such data rarely reached the groups within the enterprise that were responsible for innova-tion (as opposed to simply managing ongoing processes).

F I G U R E 3 : Retailer Benefits Associated with Data Sharing

Benefit

2011 2012

33%Improving promotion design,

forecasting and execution

Improved planogrammanagement

Better new productintroductions

Improving the shopper/customer experience

Improved joint replenishmentprograms (VMI, DSD)

Lower inventory andsafety stock levels

Better store execution

More accuratedemand forecasts

Better categorymanagement

Improving on-shelfavailability

27%

34%26%

40%29%

40%36%

40%25%

46%28%

47%18%

47%29%

47%29%

53%26%

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 percentages of those respondents selecting “4” and “5.”

Both retailers and suppliers are expanding the use of shared data to include new areas and processes in their organizations, leading to better management reporting on the supplier side: 53% of respondents report this benefit, up 11 percentage points from last year. This is important because as more executives interact with retailer data (whether they realize it or not), its integration into management reports improves the retailer and consumer insights that can drive better decision-making at multiple levels of the enterprise. l

STUDY 2012



1Which specific business pro-cesses benefit the most from in-corporating downstream data?

What is the typical ROI in these ar-eas? BoHN: The business processes that benefit the most from downstream data are sales analysis, forecasting of sales and shipments, ordering, VMI, on-shelf availability, promo-tion planning, retail execution, and category management. ROI is typi-cally in the millions in improving forecast accuracy, instock, retail execution, and repeating more ef-fective promotions. ROI from using downstream data effectively should be well within the first year of incor-porating it into your business pro-cesses.

2 How have you seen data shar-ing impact the relationship be-tween suppliers and retailers?

BoHN: A supplier can gain tremen-dous credibility, trust, and opportu-

nities with a retailer when they dem-onstrate strong store level analytics, understand how to improve execu-tion, and use fact based selling. But that is not enough. Suppliers need understand what is going on in thou-sands of stores and DC’s, competi-tive interaction, market conditions, promotion ROI, and more. When a supplier has access to downstream data and doesn’t make use of it, they will lose to suppliers that do.

3For companies that are just starting this journey, where should they first focus their ef-

forts? BoHN: Suppliers should first fo-cus their efforts on their top ac-counts or top issues needing reso-lution — address a limited number of objectives and not try to do it all in a short period of time. Shi-loh customers typically start with Walmart, or their biggest account, and implement to meet the needs of sales, supply chain, and category management. Automating data col-lection and reports, implementing master data management practices, ordering, forecasting, and address-ing out of stock and root causes are typical starting points.

4As it gets more common, how can data sharing still give a com-petitive edge?

BoHN: The suppliers whose IT sup-ports their teams with resources and solutions instead of leaving it up to them, operate at a much higher lev-el. Left to their own, account teams will select point solutions which tend to be canned, inflexible, and don’t differentiate what you versus your competitor can do. Suppliers that adopt a customizable solution that gives them the benefit of shared best practices and yet let them do it their way will create their competitive ad-vantage.

5 What if canned solutions just don’t fit? Does “DIY” mean “more IT”?

BoHN: If canned solutions don’t fit your requirements we recommend finding a customizable DSR solution versus building it yourself. Use a solu-tion that includes services to custom-ize it for you, or that is customizable with minimal IT resources. Shiloh DSR not only comes with 17 years of best practices, but it is fully customizable. You can start small and scale up as your needs grow, becoming a compet-itive advantage for your company. n

Enable Sales Through In-Depth AnalyticsY O U C A n ’ T F I x W H AT Y O U D O n ’ T M E A S U R E

Lisa Bohn

President and CEo

shiloh Technologies

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

®

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STUDY 2011

Digging Deeper into Data

While consumer packaged goods companies are still ahead of their retailer customers in their enthusiasm for sharing of downstream data and their ability to man-age and use it, this year’s study does indicate that the quality of collaboration and dialogue between these sets of trading partners is improving. Suppliers are also expanding their use of data into a variety of new func-tional areas, including new product introductions, pro-motion, forecasting and pricing management – even as the trend toward creating a unified corporate data shar-ing strategy continues to grow within these enterprises.

The growing acknowledgement of the value of down-stream data is seen in the vast majority of responding suppliers (83%) that view their data sharing efforts as a strategic initiative.

In addition, this year 28% report that they are cur-rently implementing a corporate data sharing strategy, while 15% are researching this option for the future. A larger percentage of suppliers are moving to the use of a 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).

To measure suppliers’ perspectives on data sharing, respondents answered the questions on a scale of 1 to 5, where 1 is “completely disagree” and 5 is “completely agree.” The numbers in Figures 2, 3 and 4 are based on adding the percentages of those respondents selecting “4” and “5.”

A large majority (85%) of suppliers view data shar-ing as a supply chain and a sales initiative. However, the supply chain responses had a higher proportion of those who “completely agree” versus simply “agree.” This demonstrates the growth and maturity of data sharing initiatives that has developed over time. Many data management efforts begin with sales and then move into supply chain as companies and trading part-ners become more sophisticated.

Results from surveyed retailers match up with the supplier results: 80% identified data sharing as a supply

F I G U R E 1 : How standardized is your approach to managing downstream data?

S U p p l i E R S E x pA n D D ATA U S A g E T o D i f f E R E n T D E pA R T m E n T S D E S p i T E c o n T i n U E D c o n c E R n S o v E R pA Y i n g f o R D ATA

The same tool is in place across all teams today

Status

No corporate level strategy; each customer team decides how to manage

data received from their retailers

2010

Made a decision on a corporate strategy; currently implementing

it across teams

Looking at a corporate strategy, but do not have one in place yet

2011 2012

22%20%

34%

22%39%

28%

15%16%

23%

34%24%

15%

s U p p l I E RSHAREDDATAR E TA I l E R / s U p p l I E R

F I G U R E 2 : supplier perspectives on Data sharing

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 respondents selecting “4” and “5.”

I M P A C T 2010 2011 2012

Downstream data is a supply chain initiative 77% 78% 85%

Downstream data is a sales initiative 82% 82% 85%

We view downstream data as a strategic initiative 78% 84% 83%

Downstream data is a significant upgrade compared to syndicated data 65% 84% 76%

We have seen significant Roi from our downstream data initiative 46% 44% 60%

Downstream data is a marketing initiative 41% 51% 30%

STUDY 2012



1What is the most valuable type of data that retailers can share with their suppliers? What insights

are most valuable for the retailer to receive? What is the granularity and frequency that provides the most benefit?SHUMaN: There are three key com-ponents to sharing data; grain, fre-quency, and facts. Store-Item-Day-Sales Type or Warehouse-Item-Day grain describe events at an action-able level. Transmitting this data dai-ly allows CG companies to respond in real-time and take immediate cor-rective actions. As to the facts…share everything you have. The more visi-bility you can provide to your trading partners as to events that are occur-ring inside your network the bet-ter the CG companies can plan and respond to improve the experience at the shelf. At a minimum provide unit movement, and price data. With each data element beyond those two (e.g. store receipts, store inventory) you enable CG companies to take additional actions to improve sales, promotions, and replenishment.

2 Which specific business pro-cesses benefit the most from in-corporating downstream data?

What is the typical ROI in these areas? SHUMaN: Our customers are rapid-ly expanding the use of downstream data as more broad demand signals are being shared. Processes to en-rich this data with additional context enable existing and new applications to easily analyze the refined data. Improved customer and shopper service levels are achieved through short-term replenishment, demand, and promotion planning. Retail ex-ecution is achieved by demand en-abling applications and business processes with inventory and con-sumption data in a context and form that is immediately relevant.


SHUMaN: Focus on the retailers that are strategic to your business and where you have either customer fo-cused teams or initiatives that can le-verage that data. While strong execu-tive sponsorship is important, the use of downstream data requires a com-mitment from the customer teams or from a functional team such as de-mand planning. Make sure you have strong stakeholders at both levels.

4How can downstream data be integrated into existing business applications?

SHUMaN: CG companies can lever-age downstream data into existing business applications either by us-ing a DSR that matches with their current infrastructure or starting with a SaaS DSR solution. Examples include using store-item-day level data to improve promotion execu-tion, short-term demand forecasting, consumption-based replenishment, retail sales execution, and space planning. As the use of downstream data becomes more strategic, it is important that the DSR can scale to meet the service levels of the depen-dent applications and apply the con-text to feed those applications.

5 How have you seen data sharing impact the relationship between suppliers and retailers?

SHUMaN: Data sharing creates a “single version of the truth” that both trading partners use to communicate and collaborate. The retailer influ-ences this conversation by choosing the scope of data being shared and the actions that can be taken within its’ network. The CP company influ-ences this conversation by the re-sources committed to using this data and the depth of integration into sys-tems and processes. n

Leveraging Downstream Data G U I D E L I n E S F O R U n D E R S TA n D I n G , S H A R I n G , A n D U T I L I z I n G D O W n S T R E A M D ATA

Dave Shuman

Chief Operating Officer

vision Chain

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

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1 0 | C G T / R I S S H A R E D D ATA S T U D Y 2 0 1 2

chain initiative, up from 72% who did so in 2011 and 63% in 2010. Viewing data sharing as a sales initiative was the second most popular retailer choice, with 75% choosing this option. (More detailed analysis of retail-ers’ responses follows on page 13.)

Overall, suppliers’ view of data sharing remains quite positive. This year, a solid majority (60%) of respon-dents saw significant ROI from their initiatives, up from the mid-40s in 2010 and 2011. In addition, more than three quarters of suppliers rated the quality of shared downstream data as a significant upgrade over syndi-cated data.

DaTa USaGe expanDS InTeRnallyAs suppliers utilize shared data for sales and supply chain purposes, they are also beginning to see the ben-efits it can offer other projects and capabilities, and are expanding their use of data into different areas of their enterprises. Increases were seen for all processes iden-tified in the survey this year compared to 2011, with several processes showing double-digit increases in the percentage of respondents (see Figure 3).

The top five most popular supplier processes pow-ered by downstream data are: forecasting and replen-ishment, inventory management, category manage-ment, out-of-stocks and promotion management. Year over year, the biggest increases were seen in promotion management, rising 32 percentage points from 22% in 2011 to 54% in 2012; category management, up 25 points (from 36% to 61%); and forecasting and replen-ishment, which rose 20 points, from 42% in 2011 to 62% this year. In addition, the explosion in the use of mo-bile devices pushed field sales management from 24% in 2011 to 42% in 2012.

s u p p l i e rSHAREDDATAr e TA i l e r / s u p p l i e r

F i G u r e 3 : How much are you using downstream data (not syndicated data) to power each process?

Note: Respondents rated the following statements on a scale of 1 to 5, where 1 is “not at all” and 5 is “systematically.” The chart is based on adding the percent-ages of those respondents selecting “4” and “5.”

Process

2011 2012

Pricing management 34%18%

Planogram management 34%26%

Field sales enablement 24%42%

New product introductions 38%49%

Promotion management 22%54%

Out of Stocks 44%54%

Category management 36%61%

Inventory management 45%61%

Forecasting andreplenishment 62%

42%

Unsaleables 18%21%

The next two largest increases came in the areas of inventory man-agement, up 16 percentage points from 45% to 61%, and pricing man-agement, which also saw a 16-point increase, from 18% last year to 34% in 2012. These were followed by new product introductions (from 38% to 49%), out-of-stocks (44% to 54%) and planogram management (26% to 34%).

Parallel with the increased use of data by suppliers, surveyed re-tailers reported more satisfaction with the way suppliers are utilizing data, with increases in a variety of processes, including forecasting and replenishment, inventory management, out-of-stocks and cat-egory management.

Suppliers’ view of data shar-ing remains quite positive: 60% of respondents saw significant ROI from their initiatives this year, up from the mid-40’s in 2010 and 2011.

STUDY 2012

C G T / R I S S H A R E D D ATA S T U D Y 2 0 1 2 | 1 1


1How have you seen data sharing impact the relationship between suppliers and retailers?

The majority of large food retailers have data sharing arrangements with their suppliers that take the relationship from a tactical level to a strategic level with the opportunity for increased col-laboration leading up to Collaborative Planning Forecasting & Replenishment (CPFR). The benefits cut across the sup-ply chain and merchandising for both. In some cases, there are instances where retailers have shared data for a subscription fee. However, what is most effective is data shared based on true collaboration, which includes in-tegrating inventory and replenishment systems so the supplier knows when it is time to ship goods and the quantity needed for each shipment.

2 What is the most valuable type of data that retailers can share with their suppliers? What in-

sights are most valuable for the re-tailer to receive? The typical data shared between re-tailers and suppliers is item and sales data. However, we have noticed that an increasing number of retailers are sharing restricted data related to ag-gregate customer/loyalty information with key partners. Overall, this helps

improve basket size and margins and in cases where a retailer lets a CG partner become category captain the data sharing extends to assortment mix and planogram information.

The insights that are most valuable for a retailer have shifted from item, assortment and category performance view to consumer centric insights such as which physiographic / demographic groups are buying the products, what is their typical purchase pattern and fre-quency, what are the cross sell / up sell opportunities in these segments and what is the next logical product they are likely to buy.

3How can downstream data be in-tegrated into suppliers’ existing business applications?

Data integration has multiple facets with each group within a CG organiza-tion finding new and innovative uses for the data shared. Typically, the ac-counts team uses it for value creation in the relationship; operations uses it to create supply chain efficiencies; and marketing uses it for trade promotions. The primary data for Demand Signal Repository comes from this source of data. If used effectively, an accurate de-mand signal has the potential to signifi-cantly improve service levels while im-proving inventory management across the value chain.

From a process and technology per-spective, data integration does not just involve defining the data and imple-menting the right technologies. Data integration needs be viewed as a MDM project with suppliers taking a very stra-tegic view and ensuring that they set the right processes and structure in place to

identify, manage and govern the data.


For retailers the starting point is to clearly define the objective of the initiative, iden-tify the types of data to be shared, the frequency of sharing data and create a portal for information sharing. CG com-panies can start with a few categories, sharing data with select primary retailers. By combining the Consumer-Drive De-mand Signal approach with a Sales and Operations Planning process, the CPG manufacturer will attain a more effective system to predict consumer demand and respond to the retailer’s requirements.

5What is the most important con-sideration when sharing and ana-lyzing very large amounts of data?

It is important to understand the data sharing objectives of both parties. Oth-er important considerations are access controls, data quality, inclusion of un-structured data, life cycle, sharing meth-ods, frequency. Typically, data is made available within 24 hours and in certain cases retailers are moving to near real time sharing of information to support DSD and price optimization. Addition-ally, there should be a closed loop to feed insights back into the value chain. This will ensure that changing con-sumer demands can be addressed in real time. n

Collaborate to Reach ConsumersS H A R I n G C O n S U M E R C E n T R I C D ATA P R O v E S I n C R E A S I n G lY vA l U A B l E S

Hari SHettyVP, retailWipro technologies

Hiral CHandranaGlobal Business Head - Consumer GoodsWipro technologies

SDS_0912_Wipro.indd 1 8/20/12 4:20 PM

S U P P L I E R


MIxed VIew of ReTaIleRSThe majority of suppliers responding to this year’s sur-vey are seeing the benefits of data sharing with retailers, particularly in the quality of collaboration and the dia-logue they are having with retail partners. Last year, two thirds of responding suppliers reported improvement in this area; this year, nearly nine out of 10 did (see Figure 4).

Another attitude check sought suppliers’ level of agreement with the statement “Retailers are responsive to the suggestions I make based on my analysis.” In 2011, just over half (53%) of suppliers agreed; this year, nearly three quarters did. In addition, a higher percent-age of suppliers believe retailers are transparent with their data, rising from 32% in 2011 to 46% in 2012.

However, the issue of retailers’ charging for the data they share continues to be a point of contention. The practice is on the rise: in 2011, 36% of suppliers said re-tailers were charging for data; in 2012, the figure had risen to 49%.

As might be expected, paying for data does have an 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 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 about which of their retail customers they obtain data from and/or might scale back to weekly data reporting from a daily program.

However, the importance suppliers place on data sharing overall is indicated by the low percentage (9%) who say that paying for data would motivate them to kill their programs outright.

As in previous years, the 2012 survey asked suppli-ers to choose the retailers they consider to be the best at sharing data, and once again Walmart topped the list by a wide margin, with 57% of suppliers choosing the Bentonville giant as a data sharing leader. Walmart was followed by Kroger (26%), Target (26%) and Wal-greens (23%).

Suppliers also chose which manufacturers they be-lieve are best at managing downstream data. Procter & Gamble ranked No. 1, with 35% of suppliers choos-ing the company, followed by Unilever (27%), Kraft (15%), Walmart (15%), Johnson & Johnson (12%) and PepsiCo (12%). l

S U P P L I E RSHAREDDATAR E TA I L E R / S U P P L I E R

F I G U R E 4 : Supplier Perspectives on Retailer Data Sharing Activities

Note: Respondents answered on a scale of 1 to 5, where 1 is “completely dis-agree” and 5 is “completely agree.” The chart is based on adding the percent-ages of those respondents selecting “4” and “5.”

Perspective

Retailers are transparentwith their data

Retailers have the policy ofcharging for their data

Retailers are responsiveto the suggestions

I make based on my analysis

With data sharing, the qualityof collaboration and dialogue

has significantly improved

2011 2012

89%66%

53%74%

36%49%

32%46%

F I G U R E 5 : How would your downstream data sharing pro-gram be impacted if retailers charged suppliers for data?

I M P A C T 2011 2012

RATIONALIZE – would limit downstream data programs to a few retail trading partners 46% 35%

HAMPER – would hamper downstream data programs in terms of scale and/or pace 22% 33%

DELAY – would push out plans to pursue or expand downstream data program 18% 15%

KILL – would suspend existing or planned downstream data sharing program 10% 9%

NO IMPACT – would have no impact on the direction and strategy for downstream data 4% 9%

STUDY 2012


Satisfaction Improves as Benefits Emerge

As the benefits of data sharing become clearer and a solid return on investment can be calculated, retailers are warming to the idea of partnering with their con-sumer packaged goods counterparts. They are also re-porting more satisfaction with the way suppliers are us-ing the data they share, and are beginning to expand its use into new areas of the organization.

While some retailers remain reluctant to share data with suppliers, this number is dwindling, according to the 2012 survey. The percentage of those not sharing any data fell from 18% in 2011 to only 6% in 2012. However, a larger percentage of retailers are requiring suppliers to pay for data: 13% compared to only 4% last year (see Figure 1).

The payment issue isn’t likely to kill existing data sharing initiatives, but it could well slow them down or prevent new ones from starting up. The vast majority of suppliers surveyed (91%) would not end their down-stream data programs if required to pay retailers for the data, but 35% would limit the programs to a few retail trading partners and 33% would slow the scale or pace of their programs. This means they would be choosier about which retailers they worked with and how often they gathered data.

Those retailers that have taken the plunge into down-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 the drop in those using manual processes such as Excel spreadsheets, from 56% in 2010 to 44% this year, and the rise in the use of Web-based portals, up 19 percent-age points from 31% in 2011 to 50% this year. The use of EDI, an older multi-party communications tool, de-clined from 51% in 2011 to 44% in 2012.

DaTa ShaRInG VIewS expanDAs retailers continue to embrace the concept of data sharing, they are opening up to new possibilities for use of the data throughout different areas of their enter-

F I G U R E 1 : What approach has your company taken to share data with your suppliers?

R E TA i l E R AT T i T U D E S i m p R o v E A S R o i R i S E S , b U T i S S U E S p R E v E n T i n g w i D E S p R E A D A D o p T i o n p E R S i S T

R E TA I L E R SHAREDDATAR E TA I L E R / S U P P L I E R

STUDY 2012

note: multiple responses were allowed.

Approach

2010 2011 2012

My company has outsourced this initiative to a third-party solution provider 9%

6%

My company does not share data6%

18%16%

We sell data to our suppliers13%

4%3%

My company is sharing data with suppliers using manual processes

(flat files, Excel, etc.) 44%44%

56%

My company is using EDI44%

51%34%

My company operates a Web-based portal25%

31%50%

prises. While they still remain behind suppliers in terms of viewing the process as a strategic or corporate initiative (66% compared to 83% of responding suppliers), surveyed retailers are beginning to view the data as more than simply a sales initiative.

Most retailers view the practice of data sharing as a supply chain (80%) or sales initiative (75%). This shift toward the supply chain be-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 time. Suppliers share this sentiment: 85% report that they view data sharing as a supply chain initiative.

One significant trend to note is the increase in retailers that view data sharing as a marketing initiative. Marketing as a whole has become



F I G U R E 2 :

Retailer Perspectives on Data Sharing

Note: Respondents answered on a scale of 1 to 5, where 1 is “completely dis-agree” and 5 is “completely agree.” The chart is based on adding the percent-ages of those respondents selecting “4” and “5.”

much more important to retailers, with consumers’ increased use of social media networks, websites and mobile devices giving them more power and putting a premium on targeted communications and promo-tional offers.

Last year 37% of retailers surveyed viewed data shar-ing as a marketing initiative, but this figure rose 16 per-centage points to 53% in 2012. Linking data sharing to marketing puts these initiatives in the midst of a fast-ris-ing, increasingly powerful part of the retail enterprise.

Retailers were also asked to identify which part of the organization has ownership of data sharing proj-ects, and respondents are beginning to embrace the idea that departments other than supply chain can benefit from access to data. In 2011, supply chain topped the list at 47%, followed by information tech-nology (24%), category management (16%), marketing (8%) and procurement (5%). This year, however, the majority of respondents reported ownership residing in either marketing or category management, at 29% each, followed by supply chain, procurement and in-formation technology at 14% each.

While middle management remains the owner of data sharing management for the largest group of retail-ers surveyed (46%), many are shifting this responsibility to include top-level company executives. This is another indication of a deeper commitment to data sharing by retail partners. As its ROI is consistently demonstrat-ed, C-level executives are beginning to see its benefits. While the 2011 survey showed only 13% of C-level ex-ecutives with ownership of data sharing projects, this year the figure jumped to 31%.

Additionally, as data use and sharing expands be-yond sales to other parts of the enterprise, retailers are beginning to see a substantial ROI from partnering with

STUDY 2012

P E R S P E C T I V E 2010 2011 2012

Data sharing is a supply chain initiative 63% 72% 80%

Data sharing is a sales initiative 68% 53% 75%

We view data sharing as a strategic initiative 63% 63% 66%

Data sharing is a marketing initiative 34% 37% 53%

We have seen significant ROI from our data sharing initiative 46% 34% 40%

Data sharing creates a risk for the rev-enue we receive from data syndicators 20% 12% 20%

suppliers. Four in 10 either “agree” or “completely agree” with the statement “We have seen significant ROI from our data sharing initia-tive,” up from 34% last year. However, one in five retailer respondents still believe data sharing creates a risk for the revenue seen from data syndicators, which continues to hold back progress across the board.

ReTaIleR SaTISfaCTIon GRowSSuppliers 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, especially forecasting and replenishment, inventory management, out of stocks and unsaleables, which all saw double digit percentage in-creases year over year (see Figure 3).

The biggest improvement was seen in forecasting and replenish-ment, with 60% reporting high levels of satisfaction compared to 42% last year. Following closely behind is inventory management, up 16 percentage points to 54% from 38% last year, and out of stocks, up 15 points to 46% from 31% last year.

Despite these positive views, there still remains a disconnect in cat-egories important to retailers, including new product introductions, promotion management, pricing management and end of life’s and package transitions, which all saw satisfaction declines year over year.

The biggest drops were in promotion management, which fell 11

linking data sharing to marketing puts these initiatives in the midst of a fast-rising, increasingly powerful part of the retail enterprise.

R E TA I L E R


F I G U R E 3 :

How well are your suppliers using data you share (not syndicated data) to power each of the follow-ing processes?

Note: Respondents rated the following statements on a scale of 1 to 5, where 1 is “not at all” and 5 is “extremely well.” The chart is based on adding the percent-ages of those respondents selecting “4” and “5.”

Process

2011 2012

End of Life's and Package Transitions

Field sales enablement

Planogram management

Pricing management

Promotion management

Unsaleables

New product introductions

Category management

Out-of-stocks

Inventory management

Forecasting and replenishment

16%7%

16%20%

20%19%

20%26%

20%31%

12%27%

33%35%

43%35%

46%31%

54%38%

42%60%

F I G U R E 4 : Retailer Perspectives on Supplier Data Sharing Activities

percentage points to 20%, compared to 31% last year, and pricing management, down to 20% from 26% in 2011. These results should serve as motivation for sup-pliers to launch initiatives to improve these processes or to boost communication with retailers to prove the benefits of data sharing in these areas.

Retailers were also surveyed to gain insight into their overall perspectives of data sharing with suppliers, and those surveyed are mostly positive about the collabora-tion, including the way suppliers utilize the data over-all. Nearly three quarters (73%) of respondents agree suppliers use shared data in the retailers’ best interests, up from just over half (54%) in 2011 (see Figure 4).

Two thirds of those surveyed also agree that the qual-ity of collaboration and dialogue has significantly im-proved between trading partners, and 60% believe sup-pliers are leveraging the data shared in an effective way – nearly double the 2011 response rate of 31%.

In 2012, retailers have made more strides overall in sharing their data with supplier partners, particularly

I M P A C T 2011 2012

Suppliers work with the data my company shares in my company’s best interest

54% 73%

With data sharing, the quality of collaboration and dialogue has significantly improved

54% 66%

Suppliers are leveraging the data my company shares in an effective way 31% 60%

Suppliers should pay for my data as it creates significant value for their organization

29% 26%

Minimal benefit and ROI of data sharing is not worth the effort 17% 7%

considering that these partnerships have been in place for a relatively short period of time. A total of 31% of respondents have been partici-pating in data sharing projects for more than 5 years, while the larg-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 encouraging is the drop in those who report not sharing data – from 18% last year to 6% in 2012.

When asked to point out retailers they consider as having the most effective data sharing programs, Walmart tops the list, with 40% choosing the world’s largest retailer, followed by Costco, Food Lion and Home Depot. On the manufacturer side, the three companies re-tailers believe create the most value with the data they share are Kraft (27%), Coca Cola (18%) and PepsiCo (18%). l

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 respondents selecting “4” and “5.”

CGT and RIS would l ike to thank the Retailer/Supplier Shared Data Study 2012 sponsors:

PRODUCED BY

®

F O U N D I N G S P O N S O R

A S S O C I AT E S P O N S O R S


STUDY 2012

cgt data sharing study 2012

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