Change makes for a vibrant daily life

Change Management is a paradox in itself. Because the term denotes something that is a daily routine in private and professional life: change and development.

We constantly move from one "setting" to the next, from waking up and going to the bathroom, from work and to off time spend with family and friends. We constantly react to what we encounter and thereby, to a certain degree, alter ourselves as well as our environment. Perhaps precisely because change is so self-evident, as part of a project, change management is sometimes considered a mere luxury.

CHANGE MANAGEMENT AS LUXURY

Specifically IT projects are initially about tangible optimisations of processes or structures. They are designed in view of major milestones and measurable effects. Anything in between, especially the "taking along" of colleagues, is considered self-evident by the project management - a given task to be done on the side.

This mindset ignores the fact that not all stakeholders in the project automatically follow the same development. Each staff, unit, department or company could pursue a different goal. Also, behind the scenes, hidden agendas and entire dramas unfold: desire, rejection, jealousy, ambition, interests, rebellions. Another aspect are projections and expectations towards the project or the IT that seem irrational and out of place, and therefore remain untreated.

FOCUS ON RESISTANCE: A SHORT CIRCUIT

Once projects develop in this direction, the focus diverts from their potential and possibilities and resistances manifest themselves. Only by ignoring unconscious correlations, a situation occurs in which the change management has no choice left but to focus on resistances. This is due to the fact that any development implies simultaneously opportunities and limitations. Both have a psychological impact and and push towards development. It depends on the context and the participation for stakeholders to perceive development opportunities or to cling to the familiar status quo.

DEVELOPMENT ON COMMON GROUND

We know all the satisfying experience when something is developed collectively and cooperatively, when something becomes more than just the sum of its parts. We postulate that all stakeholder aspire to this concerted evolution, because basically we as human beings constantly strive to participate and thus realize ourselves. Yet to establish a common ground that recognizes all the differences in both small and complex organizations, is a distinct discipline.

This distinct area can only be set up on a well-crafted project work base. Change Management is a sufficient condition to achieve designated goals, but not a necessity. Imperative though are a neatly run project and liability! Because transformational phases are characterised by uncertainty, a stabilising, reliable framework becomes absolutely vital. Only if the "hard facts" are backed up, can the other variables be attended to. Yet it is those that make the absolute difference as to whether a project is merely implemented or fully accepted and filled with life.

Therefore, change management is always a cooperative task at the interfaces of the organization(s) that synchronise or involve project management, implementation and operative business.

CHANGE MANAGEMENT IN IT-PROJECTS

The advisory portfolio of Bayard Consulting includes solutions for the described determinants in the environment of master data management. Initially, our IT experts support you software-independently with the technical processing of your project. We understand master data management as a process that brings together stakeholders from different worlds on a technological basis. Accordingly, we support you with the operationalisation of the project management. The change management is established as an interface function at the beginning of the project and continuously implemented with the aim to create synergies. The relevant correlations are processed in the form of concrete measures and methods that quantifiably enhance the project success and are based on the specific issues at hand.

Daniel Piontek welcomes all questions at daniel.piontek@bayard-consulting.com.

Daniel Piontek is a psychologist who studied in Cologne, Frankfurt and Vienna. For Bayard Consulting he currently oversees an SAP implementation for several hundred employees in the German food retail sector.

Communication and sales promotion 2.0 – stationary retailers sit back and watch

Traditional retailers miss opportunities which good online communication and online sales promotions provides. Online retailers leverage this space for their own growth. Already small differences in the details can have an appreciable impact.

The evolution of online food draws an interesting picture. Emerging online retailers, often Internet pure-players (IPP), typically offer a very selective assortment like tea and coffee or muesli. They conquer a specific market segment, establish themselves and expand their range of products. Of course they show recognizable strengths in their execution of online communication and online sales promotions. At the same time they successively enhance their logistic as the business growths. Meanwhile traditional retailers work on closing gaps in the assortment, increase online-investments and start integrating their different sales and communication channels.

Stationary food retailers retain price leadership in food retailing

Traditional German food retailers still continue to lead the price competition in our observation. Their challenge is to transfer their efficient merchandize management and logistic processes into the online world, where they inevitably have to offer more services and still want to make profit. Store processes, that have been transferred onto the customer since decades, have to be done by the retailer again, like the physical picking of items during the shopping process. By introducing self-service supermarkets back in the 1960's, this was no longer done by the merchant behind the counter, but by the customer himself via pushing his shopping cart through the store. The gain in efficiency was for instance reflected in lower prices. But online retailing means to add services like picking and packing or a comfortable home delivery. Especially customer oriented fulfilment services became an important competitive advantage during last years. As it is very hard to charge extra fees for additional services in the German grocery market, retailers need to scale this business and find new approaches for making it viable. Established retailers will find ways to handle such challenges.

Make better use of online options for communication and sales promotion

However, we often notice that traditional food retailers neglect their online communication and sales promotion in the course of the effort described above. For example, a young online retailer advertises a key value item,  JACOBS Krönung 500g, for 6,59 EUR using Google. At the same time, a stationary retailer runs a price promotion for the same item at 4,29 EUR - a difference of 2,30 EUR or 35 percent. As the Google search result does not bring up this promotion, the potential customer will not be informed about this offer and probably shop the coffee for 6,59 EUR.

Example: JACOBS Krönung 500g - price advantage and customer approach

In this example, the stationary retailer could render his promotion interpretable for search engines by utilizing the shared markup vocabulary (http://schema.org). He could explicitly bring up the promotion price, product availability and customer feedback. The algorithms of popular search engines reward and typically use such kind of information when preparing search results.

Approach customers online at the right time and stage in their buying process

The retailer gains a digital version of the popular weekly hand-out without having to place a Google ad. The customer is already targeted during his Google search, long before visiting the online shop when the buying decision was already made. Additionally, a consumer will hardly buy the coffee online for 6,59 EUR if he only has to spend 4,29 EUR during the next shopping trip in the store or online. The retailer can add such kind of online activities as added value to the regular dialogs and negotiations with his suppliers.

Reliable master data is the basis

There are many ways to be more present online and expand the business. The basis for us is reliable master data. We love to help you to properly set up your master data and leverage business value.

Only unpacked Chocolate accepted! - Or: Why retail is struggling with incomplete item master data

Whether large or small, whether from Palatinate or beautiful Bavaria, one thing everyone is obliged to do: maintain ones item master data fully and accurately. Yet somehow this task doesn't seem to be that easy.

For almost 2 years now I am involved with an ever growing customer project concerning the synchronization of master data in food retailing. Again and again, I am astonished about how inconsistently many suppliers maintain their item master data. Especially now, in the context of the migration from Sinfos to GDSN, I increasingly encounter the same problem: items with incomplete packaging hierarchies in the data pool.

One could almost say the suppliers didn't know their own products. That they had no idea that chocolate bars come in a box where they are well protected and ultimately need the least possible packaging space in order to be optimally positioned on the retailers shelf. Also, the supplier doesn't seem to be aware that for transport, lots of cartons are being lifted on one pallet which is then foil wrapped - after all, you don't want things to get broken - to be safely shipped to the next retailer by truck.
Apparently, these three packaging levels are simply unknown to them.

Or are they?

You'd think that a manufacturing company knows its products and their packaging.

But why is it then, that packaging hierarchies are often neglected or incompletely maintained? Could lack of know-how play a role? Does the small chocolate manufacturer simply ignore the GDSN standard? Does the small chocolate manufacturer even know what a packaging hierarchy and its hundred associated attributes are? Is he aware of additional mandatory information required by the EU Regulation 1169/2011? Or does he simply see no added value in the electronic maintenance of item master data in the item master data pool for his own business?

Shouldn't he be able to maintain those few mandatory information in the item master data pool practically blindfold?

In fact, this is not as trivial as one at first might think and as many suppliers assume in the beginning. There is no short supply of suppliers who are very happy to have gotten access to the data pool and then ask "And where can I now create an item?" only to call 3 hours later again, because they have realised that their products cannot be published as no order units and and no units of account have ever been maintained.

So, what do we suggest?

Set precise goals: premium, complete item master data aren't simply an operative byproduct. This topic belongs on the management agenda. For the point is not only to meet retail requirements. First class master data are a clear competitive advantage. This encompasses data provision at the touch of a button, the correct presentation of all products in trade partners online-shops, correct delivery of the demanded goods, speedier reaction-times in case of a crisis, enhanced provision of information if required by environmental organizations and of course the optimization of stocks and production.

With the right goals and consistent implementation suppliers creates benefits for themselves while almost automatically supplying its trading partners with master data.

What do we learn?

Item master data management isn't trivial. It's an issue that every company has to face. Even the smallest chocolate manufacturer should establish suitable organization, processes and IT support.

We wouldn't want it to become retail standard only to accept chocolate unpacked! 

Tablet of chocolate or box of chocolate? - The confusion over the allocation of GDSN packaging types

The challenge of migrating from Sinfos to GDSN confronts both retail and industry inside the German FMCG community right now. Both parties work hard to prime their item master data for the successful participation in the GDSN. Alongside the migration preparations, there are numerous smaller "sideshows" taking place, which I repeatedly encounter throughout our customers projects.

It is precisely these supposedly minor sideshows eventing around the GDSN migration that I will focus on in my upcoming blog series. Again and again, practice shows that for an effective migration a smooth coordination between industry and trade partners is absolutely essential. The success of the implementation highly depends on the correct interpretation of individual GDSN elements.

Let's start today with the definition of GDSN packaging types. When synchronising the item master data between industry and retail, there seems to be more disagreement regarding the immediate packaging then initially expected. On the one hand, this is due to the definition of the individual immediate packaging. For example, it is easily possible to define a 'carton', yet to differentiate it clearly from a 'folding box' is a different matter. Is it the size? The closing mechanism? Or rather the type of construction?

The abundance of existing packaging types inevitably leads to duplication and demarcation problems between two or more packaging types relating to the same item.

On the other hand it is the perspective from which an item is viewed and the resulting selection of immediate packaging in the master data system which leads to discrepancies between the industry and its retailers. The retailer primarily wants to service its customers. Therefore, parallel to choosing the immediate packaging, it also labels the shelf tags for the store. The industry, however, defines the immediate packaging inconsiderate of the customer's perspective at the point of sale.

The food retailer maintains a "Schogetten Alpenvollmilch" tablet of chocolate preferably as a 'tablet' in the system. The supplier, on the other hand, is more likely to choose "box" as the immediate packaging in the data pool on the grounds "that the chocolate is actually packaged in a box". This in itself is perfectly conclusive. There is only one problem: the customer is used to find "Schogetten" under the tag "tablet" on the shelf label at the point of sale - an expectation that the retailers would obviously like to continuously fulfill.

Let's look at another range of products such as the "Nivea Cream for Men". The cream comes in a glass jar and is additionally packaged in a box. This poses the question which package type to select: "box" or "jar"? The retailer leans towards the perspective of the end consumer, who will eventually hold a glass jar when using the Nivea Creme for Men. The supplier though chooses the packaging type "box", considering the item how it is distributed to the retailers.

Who is in the right? Is there a 'right' perspective at all?

According to the GS1 recommendations, the immediate packaging is also referred to as "sales packaging". In this context it can be legitimately understood as the outer packaging. In this case, the GS1 application recommendation "Efficient Unit Loads" goes even further. It defines "packaging types that are used as additional packaging to the sales packaging and are not necessary for reasons of hygiene, shelf life or the protection of the goods against damage or soiling when delivered to the end consumer" as immediate packaging, thus supporting the industries perspective.

If the suppliers insist on their perspective, the tagging of the immediate packaging on the shelf label will no longer make sense for a lot of items. At this point, the retailer will have to consider which additional applications there may be for the most efficient use of the packaging type provided by the industry. This is because the useful information left to the retailer in respect to the immediate packaging would merely be the information about how he can display his item according to the immediate packaging on the shelf.

Which immediate packaging now is the right and which the wrong, remains undecided. This question will not be easily answered in the near future. The confusion about packaging types thus remains with us; there will still have to be a lot of discussions until an agreement is reached.

In my next blog article I will write on the question why the system of proper packaging hierarchies in the GDSN is so important and what the consequences of incomplete packaging hierarchies can be.

Heated discussions concerning the allocation of new GTINs due to the REGULATION (EU) No 1169/2011 have ensued!

The regulation on the provision of food information to consumers, coming into effect in December, poses various challenges. One of them is the procurement and maintenance of information that is subject to declaration. Another concerns the procedure when this information is being changed. In the following, I would like to comment on this currently hotly debated topic of change.

The problem, in brief

The unambiguous identification of an article is guaranteed via its GTIN. The article information is printed on the product label. At the store, the customer picks up the article and studies the label. If information changes, the label is adjusted. The customer can look at both articles at the store and compare the changes - even if they have an identical GTIN. No problem so far.

The regulation yet also refers explicitly to distance selling. Article 14 explains: "[...] mandatory food information [...] shall be available before the purchase is concluded and shall appear on the material supporting the distance selling [...]".

Here comes the problem: The unambiguous identification of the article takes place via its GTIN. If information concerning the article changes (for example if ingredients are changed), a new article with a new GTIN must be created so that both articles (with old and new ingredients list) are distinguishable.

Otherwise, the information of the article under the previous GTIN would change. Yet what isn't a problem in the store, does not work for the online shop. Here every distinguishable article requires its own, separate GTIN.

This evidently draws a rat-tail of consequences behind it:

An article with a new GTIN requires a new packaging hierarchy. New article variants have to be created in the master data systems, ordered, stored and shipped. An overview of this is offered in the "Position paper about the identification of products with different labeling at distance selling in the context of the Food Information Regulation (FIR)", published by GS1 Germany. It can be found on their website under http://www.gs1-germany.de/lebensmitteltransparenz/. It also details the perspective of a possible future solution called GTIN+X, namely the GTIN with additional variant identification (+X).

Due to such changes, there could be an inflation in the allocation of new GTINs. No wonder it is hotly debated under which circumstances a change is relevant for the allocation of a new GTIN if one looks at the necessary effort and time as well as the procedural consequences.

There are two points of view in this discussion:

a) Minimal changes of the foodstuff, as for example in the nutrition facts, do not require new GTIN, since foodstuff can not always contain exactly the specified nutritional value due to natural fluctuations and changes in production and storage.

This view can be supported by a manual of the EU: "GUIDANCE DOCUMENT FOR COMPETENT AUTHORITIES FOR THE CONTROL OF COMPLIANCE WITH EU LEGISLATION ON [ ... ] in relation to the establishment of tolerances for nutrition facts indicated on the label" (Source: http://ec.europa.eu/food/food/labellingnutrition/nutritionlabel/guidance_tolerances_december_2012.pdf). This manual, referring to the Food Information Regulation 1169/2011 and various directives, implies and explains the tolerances in the determination of nutrition facts. It also translates the otherwise ambiguous "minimal" into definable numbers. Already on its first page, the manual includes a notable restriction though: "IMPORTANT DISCLAIMER. This Document has no formal legal status and, in the event of a dispute, ultimate responsibility for the interpretation of the law lies with the Court of Justice of the European Union".

Which leads us to the alternative point of view in the discussion:

b) If the declarable information changes, the product has to be re-labeled according to the Food Information Regulation 1169/2011, namely get a new GTIN. (Source: http://www.gs1-germany.de/fileadmin/gs1/best_practices/GS1_LMIV_Kompaktes_Wissen.pdf). This approach avoids possible conflicts and points of attack concerning tolerances or the interpretation of the term "minimal change" by referring back to the description level.

Take the following example: A change of the nutritional value of "Sugar 8.5g" to "Sugar 8g" is within the tolerance of the nutrition facts - but since the text of the declarable specification itself changes, the article will be allocated a new GTIN.

It will be fascinating to watch which procedure will emerge from the discussion. This will certainly also depend on how the topic is treated by government agencies, consumer advocates and lawyers on behalf of competitors. Government agencies could consider version a) acceptable (the guidance document on tolerances may point that way). Meanwhile the procedure of version b) may be the safer way to go to fend of cost-intensive legal warnings.

We will follow the developments to come.

Another enthralling topic of the Food Information Regulation 1169/2011: "exceptions", such as for example in Annex V, point 19: "Food, including handcrafted food, directly supplied by the manufacturer of small quantities of products to the final consumer or to local retail establishments directly supplying the final consumer."

Here again the field is open for individual interpretation!

Automatic Classification According to eCl@ss

The product classification system eCl@ss has established itself in many industries as the preferred standard. Initiated and funded by Germany's major companies and later adapted by the federal procurement and some of the federal states, eCl@ss today plays an increasingly leading role in the implementation of electronic commerce for SME (small and medium-sized enterprises). This being said, the classification of product master data via eCl@ss is by no means trivial. eCl@ss is more than just a product group structure and the classification of items in product groups may be itself already an endeavor hardly manageable without automation, particularly with data sets that go into the hundred thousands or even millions.

Yet whoever wants to classify product master data entirely via eCl@ss has to consider the so-called feature lists on top. Also, there is no operating eCl@ss correctly and consistently without supplying all articles with a customs tariff number. We'll come to that in a later blog post.

Classifying on the "green field"

Naturally, here as elsewhere applies: Every journey begins with the first step. Every eCl@ss introduction should start with a product category assignment. On the one hand, it can be quite useful for the eCl@ss introduction if another product group system (a company-owned in-house one, for example) is already in place. On the other hand, as a point of departure this can tempt into going the wrong route, namely, into trying to map the eCl@ss category from the existing product group. At first, this approach appears obvious and sensible, as it makes use of already available information. In the long run though often entire departments become occupied with the creation of mapping tables intended to map the product groups onto each other. At the end it typically turns out that such a mapping can hardly or not be defined at all, unless the granularity of the two product group systems are incidentally identical up to the last detail.

Let's illustrate this with a specific example.
Assuming, a company’s product master data were classified according to an internal product group system. This system would, for example, separate flow pumps into axial, diagonal and radial pumps. Such product grouping may well occur in industrial practice.

eCl@ss, however, offers very different categories:

• Submersible pump
• Circulation accelerator pump
• Ship lift (pressure increase)
• Centrifugal pump with shaft seal
• Centrifugal pump with canned motor
• Centrifugal pump with magnetic coupling
• Other unspecified centrifugal pump

Obviously, there is no correlation between the two systems. The product group in eCl@ss is significantly determined by the sealing system (shaft seal, magnetic coupling , ...) of the centrifugal pump, while the design (axial, diagonal or radial) is only laid out as an additional feature. In our assumed example however, the design is crucial for the definition of the product group itself. No matter how you look at it: the eCl@ss category can not be derived, at least not as long as one only considers the internally classified product group. Unfortunately, in practice this often leads to "pragmatically" attributing a shaft seal to each and every pump. Alternatively and even worse, all pumps may straight away be subsumed under "Other unspecified centrifugal pump". It should be clear, that this "solution" is far from being pragmatic, actually even more than botchy.

The answer to this problem is relatively simple though. As well as considering the internal product category, all available information about the article needs to be evaluated. If for example the article description includes the terms "magnetically coupled", then this information should obviously be employed instead of being ignored. To effectively implement this approach, a software is needed that can utilize existing master data for automatic classification using machine learning algorithms. Roughly speaking, this principle uses known examples (learning set) to calculate how the occurrence of the term "magnetically coupled" as part of the article description affects the (conditional) probability, that the article in question is indeed a "centrifugal pump with magnetic coupling". The calculated value is then used to predict the remaining, as yet unclassified articles. In fact, algorithms for automatic classification work even quite satisfyingly if there hasn't been an internal product group in use prior to the introduction of eCl@ss.

The next blog post will discuss how methods of automatic classification can optimize master data quality.

Holger Joest