Food suppliers could save £1bn through better data management
19 Oct 2009
London - UK grocery retailers and suppliers can save £1 billion over the next five years through improving data practices in the supply chain, according to GS1 UK. By comparing the product data held by suppliers with that stored on the supermarkets’ systems, the firm's 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, GS1 UK found the savings opportunity for the retail industry was more than £700 million and a further £300 million opportunity for new sales.
The GS1 UK Data Crunch Report, also reveals the existing business opportunity for retailers and suppliers to address the issue of increased demand for better product information from consumers, governments, regulators and pressure groups.
GS1 collaborated with retailers Tesco, Sainsbury’s, Asda and Morrisons, and suppliers Nestle, Unilever, Proctor & Gamble and Mars to produced the report.
It used IBM's analytics capability to assess the ‘Data Crunch’ product data, which included more than one million records from the participating retailers and suppliers.
Mike Coupe, trading director at J Sainsbury, said: “It’s in everyone’s interests for the industry to work together towards building smarter supply chains. From a retailer’s perspective, we’re constantly exploring ways to provide greater business insight to help drive improved decision making and operational efficiencies. We must all work with our suppliers to ensure a reliable flow of information and product data to make this happen. We’ll be closely examining the report’s findings to see how GS1 standards can enhance our processes.”
The estimated opportunity for the industry to realise over £700 million in savings was 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.
GS1 UK chief executive Gary Lynch, said: “We’ve 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.”
