Thirty years ago, I took one lone journalism course on the way to my undergraduate degree. Although I still can remember the teacher quite vividly, a hard-nosed ex-reporter named Ralph Dagget, I can’t recall his lessons on journalistic protocol. But if my recollection serves me correct, he did say that a reporter should not cover a story in which he or she is directly involved in, which now (three decades later) is suddenly whipping me into quite an awkward position. You see, I’m part of a team that presented key information at this year’s Aftermarket eForum, and it warrants being written about. So, with apologies to Professor Dagget for not following protocol, let me tell you about the TEST program.
TEST is an acronym for Technology Enhanced Standards-Based Trading. The name is an apt description for a year-old pilot program undertaken by two aftermarket trading partners, their technology providers, and a lone industry consultant who moonlights as an Aftermarket Business columnist. I say it is an apt moniker because it describes very succinctly what O’Reilly and Wix set out to do; enhance and improve the speed and accuracy of their trading relationship by implementing industry standards as the fuel of choice for their supply chain technology.
The group started with a couple of like-minded individuals: Mike Williams, VP of advanced technology from O’Reilly and Jerry McCabe, VP of marketing for the Dana Automotive Aftermarket Group, the owner of Wix. Jerry and Mike assembled a team, including individuals from their technology partners, Comergent and Evant, and yours truly, with the idea of “proving the concept” that implementation of the newly created industry standards and solutions would generate new selling opportunities and reduce costs for both the supplier and reseller. Even more impressive in these days of “I’ve got mine, you go get yours” was their decision to conduct the entire process openly, and document and share it for all to see.
Over the last four years, the eForum has become a premier annual aftermarket event. With attendance approaching 400, this year’s conference provided a broad audience for TEST group’s results to date. That brief, one-hour report described the efforts of four groups of people working as a team. The vendor and its technology partner — along with the reseller and its technology partner — working together to accomplish a state of data synchronization.
The group covered six steps they worked through in achieving their comprehensive data match. To summarize the one-hour presentation that the team shared, accompanied by a 100-page white paper, I offer these Cliff’s Notes:
- Wix identified within its enterprise the best and most reliable sources for 82 product data attributes as requested by O’Reilly. Wix used that source data to populate a PIES compliant database.
- Subsequently, those 82 data fields were used to create a comprehensive data distribution application that was capable of updating itself from the identified internal sources, and could be used as an export device to trading partners and third party eCat providers.
- All 82 data fields were then filtered, cleaned and certified as compliant with the PIES standard through AAIA’s Data Audit Certification process.
- A communications link utilizing the industry solution PARTnerShip Network was established between Wix and O’Reilly.
- The Wix data was shared with O’Reilly, which used it to populate a PIES compliant database on its enterprise management system.
- A method to update data files between vendor and reseller systems was established that will keep the files synchronized and push new data out as Wix creates it.
The resulting synchronized and standardized data, at both ends, sets the foundation and the enabler for everything that Wix and O’Reilly hope to accomplish. An automated trading environment requires a state of perpetual data synchronization.
Interestingly, unless you’ve been through this arduous but rewarding process, it doesn’t sound like that big a deal. Take a few seconds and analyze your own reaction at this point. If you’re like most members of our aftermarket community that I’ve spoken to, you’re puzzled about the significance of two trading partners having achieved a state of perpetual data synchronization. The typical reaction is a pregnant pause and a look of anticipation for a pronouncement of some greater accomplishment. When no additional news follows, some people will make a prompting gesture accompanied by a comment like “and” or “so:” but most just respond with a polite, “Oh, really.”
These reactions reflect the lack of understanding and respect that most aftermarket practitioners have for data, and more importantly, synchronizing data with trading partners. Part of the problem seems to be that when the term “data” is mentioned, most people only think about application data. In a way, that is understandable given the fact that we are an application driven industry. But we must expand our collective consciousness to consider all product attribute data as a critical toolset for modern supply chain management. We need a better understanding and appreciation for how rich, standardized and synchronized product attribute data can make us all more efficient.
What I want to do is get graphic. First, I want to share with you some bad news about incredible and ridiculous redundancies and wasted activities that exist throughout our supply chain. And then I want to share the good news about how we can reduce and eliminate them through the data synchronization process. While many of the examples come from the Wix and O’Reilly study, I’m sure most of you will recognize practices that are common in your business. And while some of the activities may seem almost comical, remember that we’re not talking about a couple of hacks, but two of the aftermarket’s more technologically sophisticated practitioners. I will leave to your imagination what might be going on between trading partners with less developed capabilities.
With that, consider the data disconnects and how similar problems may be plaguing your business:
- Many resellers use software that allocates their warehouse space more efficiently. When stock arrives, some of these systems calculate the area required to store it by multiplying the quantity of items received by the dimensions of each individual package. For this system to work, the reseller’s unit package dimension data must be accurate. Imagine receiving 25 pieces of an item where the individual box is an inch larger than the size entered in the reseller’s system. Total “cube” for that receipt would be two feet larger than the computer would calculate it to be. When the warehouse person discovers that the items won’t fit in the designated location, a significant number of man-hours are wasted in ascertaining why it doesn’t fit, where it should be put instead, and what must be done to fix the system so the problem doesn’t reoccur. Because they have experienced this sort of problem so many times, O’Reilly actually employs individuals at each of their distribution centers whose primary job is measuring and weighing vendor packaging to assure the accuracy of data in their system. Think for a moment about the redundancy of this activity. It is reasonable to assume that somewhere at the supplier’s place of business, a file exists of extremely accurate product package dimensions. Yet the inability of suppliers to provide reliable and accurate product dimension data in usable form, or failure of their customers to demand it, requires resellers to continue the redundant task of creating it themselves.
- Data dimension problems are not limited to just the distribution centers. Similar problems plague stores with missing or incorrect data. Most major retailers use elaborate planogram programs that require accurate packaging dimensions to set the configuration of their retail displays. Understating the product size means that products won’t fit as diagrammed on the planograms and results in “holes” in the display. In this scenario, both the reseller and the vendor lose sales until the data, and the affected planogram, are fixed.
- As absurd as it sounds, distribution center receiving docks are where most resellers usually find out about new products or product changes. In the absence of formalized data updates, a new or changed item is “discovered” when dock people check in a “mystery” product that fails to scan or otherwise match with the reseller’s system. These parts must be set aside until someone can undertake the expensive and laborious task of determining what it is, what it is replacing, or how it has changed. In the meantime, the product just sits with the reseller who is unable to stock, distribute or sell it.
- Bad data adds delays getting new items into stores. O’Reilly says it takes two weeks, interaction with three different departments, and a minimum of five people just to add a single item to their system. While they provide vendors with an Excel template for data, most of the data is received via phone, e-mails, websites, paper catalogs and faxes. With such a mishmash of data, you can understand why they feel compelled to review it for accuracy and completeness. And as you might imagine in such a process, there is a lot of missing and suspect data that must be validated.
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Bad data contributes to the over-purchasing and under-purchasing of products. Inaccurate, or mismatched minimum order quantities result in orders being placed for more parts than are required, or in receiving more parts than were ordered. Resellers often maintain different (and typically smaller) units of measure on a “per each” basis than do manufacturers. Such mismatched units of measure can result in large discrepancies in goods ordered vs. received. Examples include:
- Ordering a quantity of 12 of an item that comes in a bulk pack, and receiving 12 bulk packs; resulting in the shipment of 144 items instead of 12;
- Ordering 100 feet of hose, when the supplier unit of measure is one roll of 100 feet, and receiving a shipment of 10,000 feet; and
- Ordering 100 of an item that is sold in pairs and receiving a shipment of twice that amount.
- Inaccurate or mismatched prices also can cause problems from a replenishment standpoint. If prices in the reseller’s system are less than the prices in the vendor’s system, the reseller may increase order quantities more than necessary to meet either minimum order requirements or freight minimums. This can result in unnecessary overstocks and may fuel eventual returns.
- This is a small one, but it demonstrates the breadth of the product data issue: it has to do with Material Safety Data Sheets (MSDS). One of the ways our government protects us is by requiring all products that contain any potentially harmful ingredient to have a printed sheet detailing its contents and proper handling. Failure to have up-to-date MSDS sheets can result in substantial fines for resellers. In O’Reilly’s case, their merchandising department spends significant time tracking down MSDS’s and getting them into the O’Reilly system. Once there, each store can print them for customers on demand. The process often involves receiving a paper copy (that was originally in electronic form), scanning it, and posting it on the O’Reilly system. Sometimes, MSDS documents are faxed in and re-keyed!
These are but a few of the scores of profit-sapping redundancies that exist in our supply chain. It is undeniable that bad, missing and unstandardized data is costing our aftermarket billions of dollars. We are rekeying, remeasuring, reweighing, rescanning, remapping and generally redoing work that has already been performed. Even more absurd is when you consider that every time something is redone, we run the risk of introducing new errors.
Such data omissions and mistakes affect both the reseller and the vendor. Most result in either costly returns, missed sales opportunities, order delays, incorrect shipments, late payments, lost productivity or extra inventory in the supply chain. That ain’t a pretty picture.
The TEST program, as presented by Wix and O’Reilly, has shone a bright light on the problem. All aftermarket practitioners need to pay more attention to the state and condition of their data. Moreover, as the TEST initiative continues, it will help to demonstrate and document the savings that are available when suppliers get their data certified through AAIA’s Data Audit Certification and synchronize it with resellers.
Wix and O’Reilly have documented their experiences to date in a comprehensive white paper. A step-by-step recounting of their pilot program is available for downloading at the AAIA website, www.aftermarket.org.
