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Manufacturing savings come with huge up-front price tag

October 6, 2003
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UCCnet, a not-for-profit organization, provides item registry and data synchronization based on industry-developed standards. The group also provides a foundation for electronic commerce and cost-effective transaction of data among partners. Over 750 companies including Campbell Soup, Coca-Cola, Hershey’s, Unilever and Kraft have joined UCCnet and over 60,000 products have been registered.

According to a recent report from ARC Advisory Group, UCCnet membership has increased significantly over the past year, driven in part by retailers like Wal-Mart that are requiring their suppliers to join by the end of the year. But while UCCnet offers many benefits, companies have to invest significant time, money, and resources to achieve them. Among the challenges food companies face in joining UCCnet are obtaining proper funding and support from upper management, and cleaning up existing product data. But membership does have its rewards. Among them, says Adrian Gonzalez, Director Logistics, Executive Council at ARC, is the potential to achieve $1 million additional earnings for every $1 billion in sales.

Incorrect or outdated product data creates significant financial losses due to out-of-stocks, delayed production introductions, time spent resolving invoice disputes, and other factors, Gonzalez says. “Data cleanup is a prerequisite for successfully deploying UCCnet and it’s a costly and time-consuming process,” he states. “Expect to spend between 6-12 months on this effort. The extent of the cleanup is dependent on several factors, including number of stock keeping units (SKUs), frequency of new product introductions or product changes, and the number of databases where data resides.”

Determining the root causes of data quality problems is critical, cautions Gonzalez. While UCCnet may solve the issues related to external communication, it doesn’t necessarily solve internal communication issues. “Cross-functional alignment and support is very important,” he says.

Enabling timely, accurate, and complete information is the core of UCCnet’s usefulness. Also key to the program are RFID and Collaborative Planning, Forecasting, and Replenishment (CPFR) initiatives. While each of these initiatives can be deployed independently, the greatest value will be derived by treating them as interrelated components of a global strategy to improve information flow and quality, Gonzalez says.

For more information visit www.arcweb.com or www.uccnet.org.

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