11 billion. reasons to say thank you to barcodes

Transcription

1 YOU 11 billion reasons to say thank you to barcodes

2 Copyright GS1 France - Fotolia, Istockphoto. Printed 09/11

3 INTRODUCTION On the importance of standards A standard represents an agreement that structures companies activities. It can involve rules or recommendations that everyone applies, and it can involve a method of measuring, describing or classifying products or services. GS1 standards are a set of rules on usage and a common language that enable the efficient management of supply chains globally by identifying products uniquely, shipping units, sites and services and by making the exchange of information between independent partners more reliable. The international and multisector GS1 standards can thus help companies meet the challenges of a globalized supply chain and make them more efficient and more profitable. 3

4 GS1 standardsbenefitting company performance Business processes that are too often based on manual exchanges (paper, fax, telephone) are affecting the performance of companies on increasingly competitive markets. They generate additional costs due both to dealing with paper, archiving data and managing claims as well as to the lack of reliable information. Thousands of documents throughout the supply chain are exchanged daily between business partners to deal with the design, production, distribution and sale of manufactured products. From the product sheet to the notice of payment, and including vital messages like orders, shipping notices and invoices, the efficiency of the supply chain depends on the smooth and secure flow of a great deal of reliable information. Barcodes lead to 11 billion euros in annual savings in France 4

5 u From the barcode Manufacturers mark their products with a barcode and retailers equip their stores with optical readers. Automatic product identification thus facilitates the checkout process by reducing data entry errors and waiting time. Use of the barcode is the basis for an automatic resupply system and leads to an improvement of the onshelf product availability. The use of barcodes is now being extended to logistics and is helping optimize inventory and stock management while ensuring product traceability. Savings proved by 30 years experience In France, 28 million orders are exchanged every year in the commercial sector u... to EDI Half of manufacturers and 100% of FMCG retailers automate the exchange of data by using Electronic Data Interchange (EDI). They electronically send and receive the documents forming the basis of their transactions in a predefined format. This automation has resulted, among other things, in the elimination of the costs related to paper, in more reliable data and in the reduction of manual inputting. * 2010 survey conducted among members of GS1 France. 5

6 Economic impact of standards on the supply chain u Savings achieved through the use of barcodes Barcodes lead to an annual savings of 5.69% of retail revenue.* The direct, concrete and quantifiable savings from the use of barcodes amounts to 2.8% of sales. These savings are related to the reduction in time at the checkout, fewer errors and the better use of the cashier operators time. The indirect savings come to 2.89% of sales, which is related to the increase in sales due to better customer service, better tracking of stocks and store flows and the reduction of unknown markdowns. Annual savings of 5.69% of annual retail revenue through the use of barcodes * According to the study 17 billion reasons to say thanks, PWC (Vineet Garg, Charles Jones & Christopher Sheedy) 6

7 u Savings due to the use of EDI The implementation of EDI by retailers is considered as strategic since all of them use EDI orders, representing 87% of all orders sent by this means. Every year, 794 million euros in savings are realized through the use of GS1 EDI standards for ordering, shipping notices, invoices and product data sheets (see table below). EDI leads 794 million euros in annual savings in France Electronic messages Number % Savings in euros Orders % Shipping notices % Electronic invoices % Synchronized product data sheets Savings for the members % Study methodology: The savings shown were calculated based on information gathered from manufacturers and retailers and are totaled for the entire supply chain. The study was conducted among 98% of generalist retailers on their warehouse flows and on a sample that was representative - in terms of business sectors and sales - from their suppliers (2009/2010). In all, about 1.56 billion euros could be saved if all current transaction messages (order - shipping notice - invoice) were dematerialized. 7

8 The savings transaction by transaction EDI order: a savings of 18.5 per message The order is the message that initiates the business transaction. The reliability of this process depends on the way it is handled: the administrative costs and the order-to-delivery period. A manually processed order generates additional administrative costs and leads to more claims than an order that is integrated directly into the information system of whoever receives it. Savings for everyone in the supply chain No need to send a fax Elimination of manual order entry Elimination of errors related to automated shipments Fewer claims due to errors in manual input One day less of stock needed The integration of EDI adds real value to the company s business strategy and offers a competitive advantage thanks to the simplification of the interaction between partners and the greater capacity for flow management, and because a smaller team can now handle a larger volume of business. GS1 s ROI Simulator u How are savings due to the use of GS1 standards calculated? The savings matrix developed by GS1 France enables company managers to calculate the return on investment (ROI) associated with the use of GS1 standards in the supply chain. This new approach makes it possible, for each standard broken down by process (product reference, resupply, shipping, reception, billing, etc.) to identify the potential savings that could be realized if the standard were used. u How does the tool work? Based on its profile as a manufacturer or retailer, the user enters its data into a matrix (number of pallets shipped or received, number of product sheets, pay of an operator, etc.) and the ROI Simulator then computes the potential gains for each stage in the supply chain. The ROI Simulator is a powerful tool for making decisions about the use of standards and is available by request by ing: [email protected] 8

9 Savings for everyone in the supply chain The electronic shipping notice and the shipping label: a savings of 0.5 per pallet The joint use of the electronic shipping notice and the marking of shipping units using the GS1-128 shipping label helps optimize logistics operations throughout the supply chain: goods receipt, order preparation and the stocking and shipping of the goods. The automatic capture of information on the packages / pallets together with the electronic submission of additional information relating to these packages / pallets improves the reliability of the operations and leads to significant productivity gains. It also guarantees control over product traceability. Elimination of the cost of printing and attaching storage labels Better circulation of trucks Automating the logistics processes has led to greater reliability with respect to order preparation, shipping and billing, and it has also improved logistics productivity, accelerated the reception process, and reduced the number of claims. The resulting improvements in traceability, quality and security all go to the benefit of the consumer. Logistics excellence: a savings of 1 per pallet Simplified reception is a process that helps expedite reception by reducing checks on quantity and quality while improving the reliability of information concerning reception. It is the result of collaboration between the manufacturer and retailer based on mutual trust and on the successful use of the electronic shipping notice and the shipping label. Savings for everyone in the supply chain Elimination of the cost of printing and attaching storage labels Better circulation of trucks Reduction of time for checks upon reception Elimination of claims about reception Fewer staff needed on the unloading dock Elimination of quality checks Elimination of claims about reception The GS1 standards allow to reduce the time spent receiving products by more than 50%. 9

10 Savings for everyone in the supply chain The electronic invoice: a savings of 14 per message The invoice is a fundamental element in the business relationship. Whether an accounting record or evidence for legal purposes, the speed and quality with which it is processed are crucial for triggering payment. The dematerialization of the invoice consists in eliminating the sending of the paper invoice and involves the computer-to-computer exchange of invoices using EDI or an electronic signature. Elimination of mail handling costs Reduction of sending costs Reduction of costs for checks Reduction of accounts reconciliation Elimination of inputting costs Reduction of data storage costs Reduction of the time to process claims This has a number of advantages in terms of reducing administrative costs and storage costs as well as automating and streamlining processes (processing speed, data integration, accounts reconciliation, etc.). The result is better access to information and a better business relationship. A savings of 14 per electronic invoice and of 42 per product data sheet 10

11 Savings for everyone in the supply chain The synchronization of product information: a savings of 42 per product data sheet The electronic catalog is indispensable for the supplier to provide reliable and up-to-date product information to its various partners. The partners can thus be informed in real time, without technology being a barrier. The synchronization of product information thus ensures that the manufacturer (who holds the information) and the retailer (who receives the information) have mirror images of the product information in their systems. Reduction in the time to input information in the product reference Better productivity in the management of product data sheets Fewer disputes with suppliers Acceleration of the introduction of new products Increased productivity in order processing Administrative costs are lower due to the elimination of re-entries of product data sheets, to the use of a single exchange format and to a fall in commercial claims. Logistics and shipping operations are optimized; the trucks are fuller; warehouse deliveries are faster and more accurate, with as a result a decrease in logistics disputes. The shelving of new products is speeded up. Finally, the availability of products on the shelves is improved (less stockout, greater product range, fresher products) suppliers of retail products dematerialize their product data sheets 11

12 Achieve operational excellence with GS1 standards u An annual study conducted by the Consumer Goods Forum has established a link between the use of GS1 standards and improvements in business performance. No use of SSCC and of ORDERS messages Use of SSCC and of ORDERS messages Difference - 52% 3,8% 7,8% Reduction in the out-of-stock percentage due to the use of SSCC and EDI order transmission Use of GDSN 1-50% Use of GDSN > 50% Difference - 44% 5% 8,9% Reduction of distribution costs due to the use of GDSN 12

13 IBM Global Technology Services 9 Competitive advantage As seen in Figure 6, the top-right quadrant represents Customer Efficiency Improved quality Sustainability satisfaction organizations with 6-10 standards implemented that have Time saving Improved client relationship Improved data quality Improved Image & Brand Cost reduction Improved customer satisfaction ewer invoice-disputes Less Waste Improved supply chain operations Better information availability Optimized usage of resources Improved visibility Better overview of inventory an average minimum implementation level of 51percent. Increased understanding of retailers needs and become preferred collaboration partner Increased sales Companies in this group reported lower distribution costs in comparison to their peers with fewer standards adopted and lower average implementation levels. Industry leaders Supplier Service Level Out of stocks Invoice accuracy Distribution costs GTIN on consumer units GTIN on cases/cartons/inners EDI for invoices (manufacturers) GTIN on consumer units GTIN on cases/cartons/inners SSCC GTIN on cases/cas/ / rtons/inners EDI for orders EDI for orders (companies that have implemented at least six standards at EDI for despatch advice Sales with synchronized master Store Service Level data via GDSN SSCC EDI for orders an average implementation level of above 50 percent EDI despatch advise Order to delivery er cycle time Sales with syn master data GTIN on consumer units GTIN on cases/ca/ rtons/inners Annual Revenue Growth Rate manufacturer as well as retailer and wholesaler) profit from Roll out and full implementation of Trading partner performance standards (E401) reduced distribution costs. Industry leaders Figure 7. Competitive advantage chart As shown in Figure 8, the out-of-stock rate (the extent to Distribution costs: 6.5% which the product is available when the consumer wants to buy it) is much lower among companies who have implemented the Serial Shipping Container Code (SSCC) standard or used EDI Distribution costs: 11.4% for orders. Both actions could lead to better serve consumers who benefit from fewer out-of-stocks and earlier access to new products. It is essential that consumer value and satisfaction are Number of standards implemented met to maintain shopper loyalty, not only for the brands, but also to the retail store in order to increase sales and category Figure 6. Distribution costs and the usage of standards profitability. Figure 7 illustrates that there are many beneficial relationships On-Shelf/POS out-of-stocks with the use of SSCC between the usage of standards and business measures. No Implementation of SSCC 7,8% Difference: -52% Implementation of SSCC 3,8% Figure 8. Lower out-of-stock rate with the use of SSCC Average im plementation level of standards implemented 1% 50% 51% 100% -43% Efficiency business relations Customer satisfaction relations satisfaction information More competitive Quality enhancement invoicing Sustainability Level of supplier service 8 Out-of-stock level 7 Quality of invoicing 8 Distribution costs 7 Level of store service 8 Annual growth rate of sales 8 standards (E401) # crates (for the suppliers) data by GDSN Duration of order --> delivery cycle 7 The tables are taken from the publication, Improving business performance and competitive advantage through the implementation of standards (Findings of the Consumer Goods Forum Global Compliance Survey - January 2011). The completion of the order - shipping notice - acknowledgment of receipt of goods - payment notice flows using GS1 standards leads to a savings of 50 per order 13

14 S GS1 France is contributing to companies digital development Since its inception, the mission of GS1 has been to facilitate commercial exchanges between businesses by developing multisector communication standards. GS1 has a vision of a world where objects and the information related to them circulate efficiently and safely. We do this for the benefit of companies and to improve the daily lives of everyone. Our mission is to be a neutral leader that enables communities of users to develop and implement international standards by providing the tools and building the confidence needed to achieve our vision. Identify, capture, share the 3 key stages in GS1 standards The GS1 system is built around two main elements: automatic identification standards and communication standards. The automatic identification standards are based on identifiers (e.g. a product reference, a use-by date, a batch number, etc.) and bar codes and / or RFID chips that can «carry» these identifiers and capture them automatically at any point in the supply chain. The communication standards are used to exchange data about transactions (order, invoice, shipping notice), stable master data (product sheet data) and visibility data (related to events). GS1 standards are a component of the company s Social and Environmental Responsibility 86% of companies continue to send and receive paper documents or use their phones to conduct their daily transactions. At a time when companies are all making commitments to sustainable development, this figure raises questions. The implementation of GS1 standards is part of a responsible development policy. Eliminating paper shipments through the dematerialization of flows and optimizing the filling of trucks through the improved synchronization of product information are some examples of ways that GS1 standards contribute to a better environment. 14

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