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Common Supply Chain Problem – Data, Data, and More Data!

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Everyone is challenged to solve the same Supply Chain Problem. Data, Data, Data and more Data. What I find amazing is that it is 2009 and we are trying to solve the same 15 year old issue given our technology advancements.

I had the pleasure to attend and speak at the AFS Technologies user conference in Phoenix, AZ. Truth be told I was not that familiar with AFS Technologies until recent months, however I was surprised and delighted to see the attendance for their user conference was well over ninety participants (considering our economic times). AFS Technologies took a different approach to their user conference. The focus of their conference was less about AFS Technology and more about industry experts speaking and discussing the challenges with Food Manufacturers, Distributors, Brokers and Operators and trying to drive waste out of the their customer’s supply chains from source to consumption. The participants varied but there was a good mix of Food Manufacturers and Distributors (Wholesale and Food Service).

There was an underlying theme at the user conference which I thought was refreshing and validated my position on the concept of data integrity and management. I have claimed and still claim that the company that wins the data battle will win the war on supply chain effectiveness and efficiency. Supply Chain Software Providers be warned that if you are not providing end to end data synchronization, integrity and validation you are not helping your users improve their supply chains. I have used the following analogy before but it is like opening Microsoft Internet Explorer and not being connected to the internet. I think we all would agree that a web browser with no connectivity to the internet and the ability share data and INFORMATION is absolutely useless. Therefore traditional perpetual license software companies (you know who you are) that are not developing data gateways to connect trading partners be warned, your ability to survive in today’s market place is short lived. As example who would use select as software provider given equal functionality: (1) software vendor “X” who sells their licenses in the traditional perpetual model and provides no connectivity to trading partners nor has intellectual property around specific industry data, and then wants to charge you consulting service to help with the connectivity or (2) software vendor “Y” who provides a subscription based model and provides data connectivity to your trading partners as part of their monthly or annual cost. Regardless of software application: Category Management, Trades and Promotion, Global Trade Management, and Transportation Management solution providers that are solving real data integrity issues by Vertical Industry and providing IP around data ultimately will and are surpassing the old guard (no connectivity perpetual software solution providers). I was pleased to see that AFS Technologies, a $30M software company, GETS IT!

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The old cliché data rich and information poor is very true in today’s global markets and trade. Why do Business Intelligence (BI) solutions exist? BI tools and data warehousing exists in order to pull and sanitize data so it can be turned into information for decision making and proactive management. However BI tools would be obsolete if companies had end to end integration and one common data model, i.e. one version of the truth. I don’t want to oversimplify the problem, but SAP, Oracle and Microsoft’s value proposition is that they can provide a synchronized data model. However it is only limited to one company and not many companies or trading partners. Therefore, providing data that is validated, useful, and standardized is of value to companies that have extended supply chains. As an example the food industry is trying to standardize on the G10 bar-code for this very reason. There is tremendous waste in food and beverage industry due to data integrity. What is interesting is that Food Distributors are not really in the business of selling they are in the business of buying. The industry has shifted from pull to push based upon Contract, Marketing and Trade Promotions that the manufactures have given to the Distributors. Experts state that a distributor could improve their bottom line (EBITA) by as much as 2% if there was clean data form source to consumption. Steve Potter, Sr. VP of Industry Relations for the International Food Distribution Association (IFDA) provided the following facts which I thought were eye opening. Based upon one manufacture and one distributor that were engaged in a traditional supply chain contract (Purchasing Agreement) found that on 75 SKUs:

  • 75% of the UPC were in error
  • 85% of the dimensions were incorrect (each, inter-pack and case)
  • 89% of the weights were incorrect
  • 100% of the tare weights were incorrect
  • 61% of the total cube (L, W, H) were in incorrect
  • 37% of the Ti/Hi information was wrong

I also learned based upon a study that IFDA completed, that only 6% of the companies they surveyed (110) used ASN’s (856), 75.2% used inbound bar-codes, only 73% of the bar-codes were readable, 89% used pallet LPN’s and only 14% had some level of vendor compliance and feed-back system.

In summary, it was refreshing that a company like AFS Technologies is adopting an architecture and platform for their customers and trading partners. They are trying to help their customers win the war on data integrity specifically in the area of Food and Beverage manufacturing and distribution, they get it and they are developing software that is linking trading partners from source to consumption. More importantly they are doing it with cost effective applications in a SaaS/On Demand Environment.

AFS Technologies acquired Motek (Priya WMS) in September of 2008.

Jim Barnes
Always in Motion

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