by Melanie Nuce, GS1 US
Businesses today are challenged with constant disruption – and the retail industry is no exception. Every day, suppliers and retailers alike face pressures to innovate by bridging the gap between consumer expectations and supply chain realities.
The task of coming up to speed on something as game-changing as omni-channel retailing may seem like a tall order, but it is certainly not insurmountable with the solutions and support available to both sides of the retail community. As a whole, the industry is evolving into this new era of commerce and industry collaboration provides the opportunity to lead innovation rather than arduously playing catch-up.
What are the benefits of industry collaboration?
The topic of collaboration is nothing new – it has always been a valued business strategy. However, in today's rapidly changing marketplace, it is now more of a requirement for those who wish to address inefficiencies for their own companies, learn from businesses similar to theirs, and reach common goals to help their entire industry thrive.
A recent Accenture study found the potential first year value of improved retailer – supplier collaboration could total up to $50 billion in reduced working capital spending, up to $125 billion in reduced operating expenses, and up to $90 billion in reduced manufacturing and distribution costs.1 Figures like these signify how powerful industry collaboration can be in terms of reducing costs and streamlining operations, and suggest why trading partners might be more inspired than ever to ask each other to participate in a standardized system approach rather than operate through their own proprietary siloes.
What are GS1 Standards?
Collaboration can help retail companies solve a number of challenges, but specifically collaborating on the use of GS1 Standards can mean achieving the fundamental supplier-retailer alignment to capitalize on omni-channel sales opportunities.
The backbone of the GS1 System of Standards is the Global Trade Item Number® (or GTIN®). A product's GTIN can be serialized and encoded into a barcode or an EPC-enabled RFID tag to mark, identify and track individual items. Used in conjunction with GS1-128 barcodes, which have long been implemented for case and pallet serialization in retail, standards provide real time inventory accuracy across the entire supply chain network. This leads to reduced labor costs and greater efficiency. For example, retailers that have implemented RFID programs in their stores have achieved almost perfect inventory accuracy – as much as 99 percent – and significant sales increases. Exploring game-changing technology to enhance source-to-store visibility, combined with the standards that help businesses create, maintain, analyze and use information, can mean more effective operations to the ultimate benefit of both the industry and the consumer.
The story of how GS1 Standards came to be is itself a powerful illustration of supply chain collaboration. The UPC barcode was first scanned more than 40 years ago and still has many diverse applications today. In the early 1970's, the checkout process was revolutionized because of the collaboration between trading partners who universally agreed to use a common symbol or language to facilitate specific business functions.
That milestone has set the foundation for additional industry alliances focused on driving supply chain efficiencies through GS1 Standards. By facilitating the collaboration of supply chain partners through formal industry initiatives across many industries and sectors, GS1 US helps industries move forward with best practice solutions to supply chain and business process challenges. Initiative members drive success through the development of guidelines, readiness programs and other educational tools via the industry-wide adoption of standards.
Specifically in the apparel/general merchandise industry, GS1 US works directly with the industry to enhance inventory accuracy and speed-to-market capabilities. Members often contemplate new best practices that ultimately aim to better satisfy consumer demands, while still addressing requirements around supply chain efficiency and product safety.
What happens when you don't use standards?
Without the common language of business that GS1 Standards provide, inconsistencies from trading partner to trading partner occur. They can stem from companies using their own identification systems or a combination of other non-interoperable product identification classifications. These proprietary data solutions prevent brands and retailers from capitalizing on omni-channel sales opportunities. While they may seem effective for internal business purposes, proprietary solutions, by definition, are usually incompatible with other systems, creating unnecessary costs and business process complications.
These inconsistencies result in incorrect and out-of-date product information in a time when the consumer expects transparency and trustworthy information. The GS1 System of Standards allows for scalable, repeatable processes leading ultimately to the improved inventory visibility needed for delivering on the omni-channel promise.
What can standards do for you?
Through organizations like RVCF and GS1 US, the retail industry can work collaboratively to explore industry challenges and develop best practices to help all companies better align their capabilities with what the consumer demands. It seems as if every day there is a new industry report stating that a clear gap exists between what customers expect and what retailers and brands can actually deliver. To close the gap, we must recognize the interdependency between consumer-facing operations and supply chain practices and how crucial this is for aiming high and achieving omni-channel fulfillment goals.
When the industry agrees on common information standards for sharing data, they are free to invest more resources into understanding insights that truly drive their service, price or shopping patterns, which, in turn, creates competitive advantage. Ultimately, adopting and using GS1 Standards means a commitment to future success by collaborating to eliminate inefficiencies in the supply chain.
Melanie Nuce is Vice President of Apparel and General Merchandise at GS1 US and leads the GS1 US Apparel & General Merchandise Initiative. She and Patrick Javick, GS1 US, Director Apparel and General Merchandise, will present "Resources, Initiatives and Standards – based Solutions for Better Business Processes" at the RVCF Spring Conference May 3-6, 2015. Contact her at firstname.lastname@example.org.
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