Improving the Digital Supply Chain with MDM

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Improving the Digital Supply Chain with MDM

By Christophe Marcant, Vice President of Product Str - 05/13/2014
Keeping a brand strong and maintaining product consistency is inherently complex for consumer packaged goods (CPG) companies in today’s digital landscape. You have to work through third parties to get your products to the end consumer; you’re also offering more categories of products through a wider variety of channels, and selling to a broader range of customers across a wider geography.

Today’s consumers expect to have accurate product information in a matter of seconds. Continued pressure from e-tailers and the rapid adoption of mobile devices such as smartphones and tablets have created high demands on consumer goods manufacturers to provide consistent and accurate product information alongside fresh compelling images. Data accuracy and consistency is paramount to consumers, as the growing number of resources enables them to find a plethora of information about your product across multiple channels. Any discrepancies and CPG brands run the risk of breaching consumer trust. But brand and product consistency shouldn’t happen on its own.

Managing Data before it Adversely Manages Your Business

As CPG manufacturers look for new ways to attract consumers and improve supplier interactions, many are doing so by learning how to put their critical data assets to work. Strengthening collaboration with retail partners has always been a focus for CPG companies. Yet to be successful in today’s digital landscape, it is critical that CPG manufacturers are proactive and responsive to retailers by providing them access to reliable data and a variety of corresponding digital images and assets.
 
After all, accurate and up-to-date information is essential for building strong brand equity across all value chains and for increasing profits and reducing inventory. Master Data Management (MDM) and Product Information Management (PIM) solutions are key elements in maintaining a successful digital supply chain, as these platforms enable uniquely defined entities like Product and Customer information to be shared as trusted data throughout your company and with trading partners. 
 
The practice of MDM is to build a single, accurate, and authoritative view of core information assets, including products, customers, and their associated properties without forcing every department or external party to use the same application. The challenge is that most organizations' master data is duplicated and disbursed among multiple systems and applications. The more data independently evolves, the more it becomes prone to errors. 
 
Worse, poor data quality is not just an internal issue anymore, since inaccurate data may have damaging consequences for everyone in the value chain. It can lead to increased costs for your company, and result in improper production planning, poor inventory management, and/or weakened supplier purchasing.
 
Lora Cecere of The Supply Chain Shaman may have summed it up best when she said, “Companies are increasingly learning the importance of Master Data Management the HARD WAY! Today, we are seeing the rise in system deployments for planning master data, demand data and supply data. Strong horizontal processes require clean data held at the granular level to support what-if simulation.” 
 
Removing the Divide in the Digital Supply Chain

How far retailers collaborate in terms of data sharing varies significantly and often depends largely on the retailer. Some are open to sharing line-item detail and daily point-of-sale information to consumer goods manufacturers in an effort to create a better order, to better manage delivery and to achieve more accurate inventory and forecasting based on actual sales. However, others are not as willing nor as accommodating.

Retail giant Walmart has understood the value of information sharing, and for the past decade has streamlined the supply chain in an effort to lower product costs, reduce inventory, improve in-store variety and selection, and offer highly competitive pricing for the consumer. By establishing strong relationships with vendors and rolling out creative uses of technology, Walmart effectively strengthens relationships with its distributors by providing opportunities for high sales volumes for a sustained period of time. This gives vendors an incentive to offer the lowest possible prices.

Acquiring and making use of master data is critical to effectively leveraging the growing number of data channels and providing much needed analytics. With this understanding, consumer goods manufacturers are continually looking for ways to make the retailer’s job easier and ensure they have the richest and most up-to-date library of product descriptions and images.  

However, this is no easy task, and retailers now expect the consumer goods manufacturer to help them better manage these images, videos and content descriptions. In fact, many retailers are extending the value of their existing MDM and PIM systems by offering a “Vendor Portal" which provides CPG vendors with the ability to directly upload and populate data into a retailer’s MDM system. Using the secure portal, consumer goods manufacturers can share and self-manage both structured and unstructured product information such as image, description, ingredients, and SKUs. These portals also allow them to make changes to a file or format on the fly and import the information directly into the MDM repository. This collaboration saves the retailer both the time and resources typically needed to publish reliable data in the supply chain. More importantly, it ensures that they have access to the freshest amount of product and digital assets possible to improve the customer experience and to create brand consistency across channels.

Looking to the Future – How MDM Collaboration Can Drive CPG Initiatives

While the value of information sharing has always been apparent for retailers, they clearly are not the only ones to benefit. Pending directives such as the EU regulation No. 1169 will affect both manufacturers and retailers, as compliant information will be required to be displayed on all product packaging and online stores sold in the EU starting in December 2014. The objective of EU 1169 is to standardize food labeling and provide greater clarity to consumers on ingredients, nutrition and allergens. 

Food and beverage manufacturers will have to update their packaging to comply and online retailers must ensure that the information they provide conforms to the regulation and is identical to the product information provided on the manufacturer’s physical packaging. Using the MDM portal, e-tailers and CPG manufacturers can remain compliant with the new legislation, and ensure that product information is consistent throughout the supply chain at every consumer touch-point.

CPG manufacturers are also taking cues from retailers by amplifying their own direct-to-consumer initiatives. A 2013 Financial Performance Report by the Grocery Manufacturers Association (GMA) and PwC US, titled Growth Strategies: Unlocking the Power of the Consumer, discovered that in 2013 more than 40 percent of CPG companies expected to sell products directly to consumers, up from 24 percent in 2012. According to the report, direct-to-consumer is a potent vehicle for testing new products and reaching out to new consumers faster and more effectively. This means that the aisle in the retail store is no longer the last mile in a consumer’s purchasing journey.  

Looking to push the creativity envelope, many manufacturers are also seeking new ways to establish loyalty by going direct to consumers with online services as opposed to just products.  Kraft created both a web site service and app that allows consumers to share recipes, while Johnson & Johnson established BabyCenter, which is an online community where parents can share advice and product recommendations.

Enabling suppliers, manufacturers and retailers to share in the responsibility of creating accurate and reliable master data, and apportioning this insight among all parties ensures each group will have the information they need to promote their brand throughout the value chain. Not only can MDM help to strengthen the digital supply chain by removing the negative “ripple effect” that can occur from poor data integrity, it can also help maintain compliance and prevent a number of damaging issues that may drive your customers to the competition.


ABOUT THE AUTHORchristophe_marcant-Stibo-Systems-(2)_resized-(1).jpg
Christophe Marcant is vice president of product strategy for Stibo Systems, a global company in multidomain Master Data Management (MDM) solutions. For more information, contact him at [email protected] or visit www.stibosystems.com.