October 31, 2007

Data Synchronization: Unexpected Benefits with Big Plans for the Future

So much has been written about data synchronization, but most of the attention and interest has been from the large tier one companies. Managers and even executives from large manufacturers and distributors have been actively touting the benefits of synchronizing their business information with their trading partners, and studies conducted to date prove the value.

 

Many tier one companies have programs or solutions in place and are trying to sync their product and price files with their manufacturer or distributor trading partners. However, if we scan the average distributor vendor line card, many of the smaller sized supplier companies are not being pressed to become engaged in data synchronization. To get the smaller supplier engaged in data sync, it must be driven by a customer requirement. The distributor should make data sync a top priority whenever they meet with their supplier partners.

 

One challenge for small and medium enterprises is how to approach the technology for data synchronization activities. The smaller company may not be able to afford or may not necessarily need a licensed Product Information Management (PIM) application as they may be able to pull most of the necessary data attributes from a single ERP application. Furthermore, most small sized, and even some medium to large size suppliers are using a complete or partial manual process to produce their business data to initiate the data sync process. Companies that use manual processes for producing and delivering data will find it very difficult to keep up with the data updates and even harder to realize the true benefits of data synchronization. It certainly supports our findings as suppliers that don’t understand the benefits of data synchronization are very reluctant to change their business data processes.

 

The benefits realized by having your business information identical to that of your trading partner on a continuous basis (data sync) are tremendous, including:

 

  • Lower transportation and logistics costs
  • Increased sales force productivity
  • Error free order management processes
  • Improved invoice accuracy
  • Internal company business system alignment

 

While each of the above benefits drive ROI, smaller companies often benefit more from aligning their internal applications which is akin to an ad-hoc master data management strategy. This benefit alone improves overall system capabilities because of the attention to data accuracy and how the data interacts with disparate software applications.

 

Data accuracy improves employee efficiency enabling sales, accounting and shipping to spend more time on other value based activities instead of wrestling with data problems or downstream problems caused by inaccurate data. With internal business data and process alignment, the company is now dealing with one version of the truth which makes shipments more efficient, leading to higher customer satisfaction at a lower cost to the supplier.

 

In last week’s edition of This Week in IDEA, the components of data synchronization were outlined. To jump start a solid data synchronization program that drives benefit, the supplier must move towards more automated processes and replace their manual methods. In addition, delivering business information to trading partners must be done on a 24X7 basis using a system/service like IDW that serves as a data synchronization hub.

 

By: Mike Rioux, President, IDEA