Monday, January 24, 2011

Manufacturer 2: There is no business case for GDS for suppliers!

Couple days ago, during one of those GDSN workgroup meetings, I had a chat with the GDS representative of another large, international FMCG manufacturer.

And he stated that there is no business case for GDS for a manufacturer.

He went into some details and explained that the saved costs are nothing compared to the efforts they have to spend into their IT but also into their organization to cleanse and prepare their data. And as they are currently only doing new items via GDS, he explained that it is a massive effort for them if a retailer wants to have all their current items synchronized via GDS. Reason for this is that it  means for them to prepare and cleanse couple thousand items. He estimated that it will take them one year to prepare their data!

And this company is already doing GDS for a couple of years.

Hold on a second – they cleanse and prepare their items ONLY for GDS?

I think this highlights one of the key issues with the approach of many companies to GDS. For some reason they are forced into GDS (e.g. because their customers strongly ask or even mandate GDS) and then they focus only on how to deliver data with their existing organisation, processes and IT infrastructure.

In that case it really will be very difficult to prove any business case for GDS for a large, multinational manufacturer.

I did some research also on the GS1 GDSN website http://www.gs1.org/gdsn. This is normally a very helpful ressource and you can really find some hints regarding business cases. E.g. you can find something here http://www.gs1.org/docs/gdsn/gdsn_brochure.pdf.

But esp. this brochure starts with an assumption which is not payed enough attention to. The very first sentence of this brochure reads “Every company in the world has a database filled with
information about the products they make, or sell, or buy.”.

And this is just not the case, because most of the companies in the world do NOT have “a database filled with correct and complete information they make, or sell, or buy”.

This is all MDM is about!
The ultimative goal of the MDM discipline is to setup an organisation, processes and an IT infrastructure to create and maintain “a database filled with correct and complete information about the products they make, or sell, or buy”.

Coming back to the business case.

I think it is already very obvious that you have to look at least at two business cases. One for the MDM program and a second one for GDS. The MDM program thereby is  a prerequisite for the GDS implementation. But the MDM program does not only help the GDS initiative, it also smoothes a lot of other business processes and that is where you get your earnings from your MDM program.

For example if your product measurements get improved, your logistics processes (warehousing, tour planning, …) will be improved.

But this is a whole new story and I will post some of my thoughts and experiences regarding business cases for MDM programs in the next couple of weeks. But maybe I should first describe what I think is a MDM program? Ok, that will be my next posting :-)

Summary for the GDS business case for large manufacturers: Do not mix up the efforts you have to spend to build your “database with correct and complete product information” with the efforts you have to spend to synchronize this database with your business partner! Those have to be two different business cases. And both can be calculated very well. I have done it already :-)

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