Improved data management systems in the supply chain could offer UK grocery retailers and suppliers savings of “at least” GBP1bn (US$1.6bn) a year over the next five years, a new study has found.
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According to the Data Crunch study, conducted by not-for-profit supply chain standards group GS1 UK, the grocery industry could make “substantial” savings by ironing out data inconsistencies, with benefits being passed to consumers in terms of improved shopper experience.
GS1 compared product data from the UK’s four largest supermarkets – Tesco, Asda, Sainsbury’s and Morrisons – with that of four of the largest product suppliers – Nestle, Unilever, Procter & Gamble and Mars. The data, which should have been identical, found inconsistencies in over 80% of cases.
After calculating the impact this has in terms of lost or late deliveries, inaccurate orders, surplus transport costs and duplicated work, GS1 found the savings opportunity for the retail industry was more than GBP700m.
These savings fell into two main areas – avoiding shrinkage and eliminating workaround processes. The total savings from eliminating workarounds and corrections was estimated at GBP135m for retailers and GBP100m for suppliers. The total savings from avoiding shrinkage were placed at GBP250m and GBP225m for retailers and suppliers respectively
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By GlobalDataGS1 also identified a further GBP300m opportunity for new sales.
“The Data Crunch report highlights the significant benefits for both retailers and suppliers in adopting data standards across the industry,” GS1 chief executive Gary Lynch said.
“By working together to improve their supply chain systems, both retailers and suppliers stand to benefit considerably from reduced costs and greater productivity.”
Commenting on the report’s findings, Sainsbury’s trading director Mike Coupe said that it was in “everyone’s interests” to build a “smarter supply chain”.
“From a retailer’s perspective, we’re constantly exploring ways to provide greater business insight to help drive improved decision making and operational efficiencies. We must all work with our suppliers to ensure a reliable flow of information and product data to make this happen,” he said.
