Implementing a Product Information Management (PIM) strategy can help support your corporate sustainability initiatives by having correct data throughout the supply chain. Inaccuracies in product information can cause waste and inefficiencies in the supply chain. And how, as a side benefit, PIM systems contribute to a company’s sustainability initiatives by eliminating these inaccuracies, reducing waste and saving money at the same time. Statistics prove the benefits of implementing a PIM solution and as the amount of product information continues to increase, the old methods of managing it all just won’t work anymore when sustainability, efficiency and accuracy is a concern.
by Robert Rowe,Marketing and Communications Director, GXS Product Master Data Management (PMDM) Business Unit. Follow him on Twitter at @gxs_pmdm
Green business is good business. Corporations which adopt a sustainability program do so for the following reasons: reduced costs, to gain public/customer support, corporate strategic importance, improved efficiency, reduced carbon footprint and to meet regulatory requirements.
Adopters of a green supply chain benefit from a reduced supply chain carbon footprint which actually helps to improve their bottom line. Jeffrey Immelt, CEO of General Electric, stated that GE thought it would cost $100 million to reduce its carbon footprint, but instead the company saved $100 million in energy costs2. So what is sustainability? Sustainability is information about products, packaging and the manufacturing processes. It includes information such as water and energy usage in the manufacturing process, the percentage of the product which can be recycled and anything related to the generation or disposal of the product in its life cycle.
Drivers of a Green Supply Chain
There are numerous drivers for a green supply chain. Governmental regulations, reducing expenses, social responsibility and positive publicity are some examples. A Green Transportation & Logistics survey by eyefortransport3, concluded that government compliance, improved customer and public relations, a decreased fuel bill, and financial ROI are important drivers for transport and logistics greening initiatives. With the growing momentum of shoppers wanting to buy from companies employing a sustainability strategy, many corporations are adopting an initiative to show their concern and environmental commitment in an attempt to boost sales. A 2010 Cambashi report4 states that “In the US, the Industrial Research Institute (IRI) found that one in five consumers is sustainability-driven when selecting brands and stores.”
Many manufacturers are regulated by law as to the amount of emissions they are allowed to generate, and so having a sustainability program is not an option. Some manufacturers and suppliers are mandated by their retailers to reduce their carbon footprint, such as Wal-Mart. For example, their 2010 Sustainability report5 states that “We will require that all direct import suppliers source 95 percent of their production from
factories that receive one of our two highest ratings in audits for environmental and social practices by 2012”, and “Walmart to work with the Sustainability Consortium globally to establish the criteria that will be used to gather information from top-tier suppliers and other retailers for products in at least 20 categories.”
Other companies have realized that going green actually can save them money through reuse, recycling and being conscientious about their everyday operations. Take GE, for example, as mentioned previously.
The Effect on Warehousing
Inaccurate product information in warehousing can have negative effects. Warehousing efficiency relies on accurate case dimensions and accurate pallet information and dimensions, among other things. When this is not accurate, wasted space or overcapacity
conditions can occur.
Consider what happens when the case strength is incorrect. Take, for example, bottled water. The plastic containers used to be thicker and stronger than they are today. So, to stack them without damaging them, either the case packaging or the pallet structure must accommodate the reduced strength of the product itself.
What about incorrect dimensions or product packaging? That can affect the number of cases or pallets which can be stored in a given area.
Another consideration is how incorrect labeling can affect food products. If temperature controlled storage is required, but not properly listed, product spoilage, resulting in unsalable items, can be introduced. The Supermarket News7, April 26, 2010 edition reported.
“Each year in the US, food borne illness affects 76 million people, leading to 300,000 hospitalizations and 5,000 deaths, according to the US Food & Drug Administration estimates.”
How much of this can be attributed to incorrect storage due to inaccurate product information? Hazardous materials must be labeled, handled and stored properly, to prevent accidents and injuries. Again, this comes back to accurate product information.
The Effect on Transportation
The 2008 eyefortransport report states that with “up to 75% of a company’s carbon footprint coming from transportation and logistics”, it is imperative to investigate how this can be reduced.
There are a number of issues related to transportation costs when product information isn’t accurate. With incorrect dimensional data, trucks may not be able to carry the quantity originally intended, resulting in an extra delivery cycle, adding to costs and emissions. Alternatively, if the weight is not correct, truck drivers may face fines when stopped at weigh stations, if the load is too heavy and over what was calculated from the product information supplied. This is a particular problem that a large Northeast US grocery chain identified as a primary concern to rectify at the 2010 UConnect conference.
Food miles are another concern. These are the cumulative miles that food travels from production to consumer. Adding extra miles by returning the product to the warehouse when the order doesn’t match the delivery, can reduce the product’s life as well as add to transportation costs. In another case, when there isn’t enough of the product delivered to meet the order requirements, an expedited delivery must be initiated to meet the needs of the buyer. Using air freight instead of more optimal shipping methods increases costs and emissions. It is easy to see that it is far better to have accurate information and avoid this scenario altogether.
Product Information Management (PIM) Systems
PIM systems are used to manage product information, as well as other master data types. In this section we’ll investigate what PIM systems do, so we can then examine how having complete and accurate product information facilitates a green supply chain and resolves some of the problems identified above.
First of all, PIM systems contribute to paper reduction. With machine to machine (M2M) data transfer, no printing and re-keying of data is required, reducing error conditions. In addition, all access to the product information is through a web browser, so no paper is passed around when adding or editing data. Each user, depending on their role in the organization, has the appropriate access level to allow them to add, edit, review or approve product information, providing governance to the data. Sustainability information, including product packaging, fair trade & corporate information can be changed quickly and synchronized within the enterprise or externally with trading partners.
Workflows, as part of the PIM solution, govern users, data and business processes related to the life cycle of product data. For example, as each department verifies or edits product information in a new product introduction scenario, the workflow engine alerts each person assigned in the workflow when they have a task to perform at the appropriate step in the progression. And as business processes or condition change, the workflow can easily be changed accordingly.
In PIM, data is aggregated from back office systems. Each specialty system contains some amount of data related to product information. It all comes together in the PIM system and is validated against industry standards and company-specific business rules, to become your master data. Once the data is validated, it can be shared between suppliers and retailers, ensuring consistency of data which facilitates supply chain operations. One of the ways that this data is exchanged is through the Global Data Synchronization Network (GDSN). The GDSN is a method of sharing one source of standardized data between the supply side and demand side.
The GDSN Role in Sustainability
The GDSN provides the platform to share product master data information between trading partners. With GDSN, trading partners can leverage their existing investment to transfer sustainability information, along with their product information. And since the data adheres to standards, it is one of the most effective methods of synchronizing product information.
In brief, the GDSN includes the GS1 Global Registry, where all items are registered, and Data Pools, which store product information for each item. A supplier would subscribe and provide data to their selected data pool. All data pools synchronize and contain the same data, and are spread over the globe in various geographical locations, allowing local considerations while still adhering to the same standards. A retailer would select their data pool and subscribe to supplier information that they wish to receive.
Attributes supported by the GDSN include those related to packaging, environmental (contains pesticides, propellant, PolyvinylChloride, ROHS compliant), energy usage (electrical usage code, max energy usage, auto power-down), and recycling and waste (removable hazardous components, designed for easy disassembly, consumer upgradeable). Adopters of GDSN standards can be assured that they are working with quality data.
How Does PIM Contribute to a Green Supply Chain?
We’ve looked briefly at a few of the features that a product information system provides. As related to a green supply chain, a PIM solution provides the following benefits:
• Correct packaging/dimensional information
– Reduces expedited orders (additional transportation) to resolve stock-outs
• Correct pallet/case labeling
– Increases warehouse storage efficiency
– Increases transportation efficiency, reduces cost and emissions
• B2B data transfer
• The use of GDSN to ensure accuracy of data
– Data Pools and GXS Data Pool Manager (DPM)
• Master Data Management
• Data synchronization
– The same information inside and outside the enterprise
• Uses paperless, dedicated system for all product information throughout its entire life cycle
– Reduces paper usage (e.g. fax, printed spreadsheets)
• Enhances efficiency all through the supply chain
Summary
In this paper we’ve investigated some of the business issues related to the supply chain, particularly in the area of sustainability. As more and more companies adopt green initiatives, it will become evident that the facilitators center around having complete and accurate product information, which comes from implementing a product information management solution as part of your overall sustainability strategy. Statistics prove the benefits of implementing a PIM solution and as the amount of product information continues to increase, the old methods of managing it all just won’t work anymore when sustainability, efficiency and accuracy is a concern.
It is hoped that this paper invoked thoughts and realizations as to how inaccuracies in product information can cause waste and inefficiencies in the supply chain. And how, as a side benefit, PIM systems contribute to a company’s sustainability initiatives by eliminating these inaccuracies, reducing waste and saving money at the same time.
