Essential Retail's View from the Top is a regular series of interviews with executives operating at the heart of the retail technology industry. This week, the focus of the feature is Gary Lynch, CEO of supply chain standards organisation, GS1 UK.
Standards organisation GS1 UK is bringing the grocery industry together with the aim of improving product data in the supply chain to help both businesses and consumers.
Under the title of 'Digital DNA', the programme has joined up some of the UK's largest grocers with a selection of the world's most prominent suppliers to the industry. Together, under the stewardship of GS1 UK, the organisations are looking to standardise, automate and simplify data points wherever possible – with the ultimate goal being to take costs out of the grocery supply chain.
There is also a consumer angle to the work, with accurate product data becoming increasingly essential as people buy more and more products online, relying on digital information around product dimensions, ingredients and dietary advice.
Representatives from companies such as Tesco, Unilever, Sainsbury's and Procter & Gamble (P&G) are acting as a sub-group for the broader industry by pushing through the adoption of GS1 UK's Digital DNA standards. It is hoped success in this pursuit will result in a reduction of manual intervention and re-keying of data – and outsourcing of data management – within organisations throughout UK grocery, which could save them money and improve the customer experience.
Essential Retail caught up with GS1 UK CEO, Gary Lynch, to find out how the project is progressing and what success looks like. Some countries such as Sweden already take advantage of GS1's Global Data Synchronisation Network which enables trading partners to globally share trusted product data, so is the time now right for the UK to follow suit?
Essential Retail (ER): Why is the time right for the Digital DNA project in the UK?
Gary Lynch (GL): "There are a number of things we're looking at but the most important one came to be known as Digital DNA which is really looking at the problem of poor quality data in the industry. Although not a lot of that poor data reaches the consumer, there is an awful lot of manual intervention, re-keying in around the world to get to a level so the data that reaches the consumer and is used in the supply chain is more accurate.
"GS1 looked at this before about four years ago, but something that was deemed painful then has become quite acute now, primarily driven by the needs of the new digital shopper and the data that comes from the brand owner needs to get to the consumers' tablet, iPhone or desktop much quicker than it does and in much better shape."
ER: What are the benefits of data standardisation in the grocery supply chain?
GL: "The idea is that it cuts down the amount of re-keying and different retailers taking arbitrary versions of data for the same product – not because they think their way is any better than everyone else's but over time they drift apart.
"This gives the demand side quite a lot of challenge. It's more complicated to get on the shelves and if it's complicated to get on the shelves it's going to be complicated to get on the website and there's a risk data is incorrect which slows down the supply. All of this can mean the retailer and manufacturer won't sell as much, or the consumer has poor choice.
"Other problems are when the customer orders something online and it turns out to be something they were not expecting."
ER: The project was formed in 2015, so how are things progressing?
GL: "We have round the table a large group but we have companies such as Co-op, Mondelez, Ocado, P&G, Nestle, Sainsbury's, Tesco, Unilever and Waitrose as a sub-group of the broader board, who are specifically driving the Digital DNA adoption.
"We're keen for them to choose the area they want to work on and get behind, rather than GS1 coming up with something and selling into them.
"The group commissioned PA Consulting to review the current situation in the UK. They did a large number of interviews. Putting that together with our existing work, they've put together a 'state of the nation' type report.
"They've also looked at other countries to see how they manage data and what other countries are doing that the UK is not. There were a number of countries where the industry had come together to address the identical, or very similar problems with more success than we have erstwhile in the UK."
ER: What do you see as the main benefits of the project?
GL: "A repository of clean data signed off by brand owner available to subscribers is such a change from what is currently being undertaken, where there are loads of data points, lots of different systems and multiple ways of doing it.
"If you add all that up alone you're talking about hundreds of millions of pounds savings for the industry per annum. One could argue it's not a huge amount, but margins are tight so we're looking for areas where we can reduce cost. Things you'd previously let go like inefficient processes can't afford to be kept in place for much longer.
"[The challenging landscape] is going to get a lot worse. The way people are ordering and buying goods, and the new complexities and legal requirements around data and consumer demand for governance, especially of food, mean you need accurate data.
"If you're spending a lot of time updating, collecting and changing that data your analytics are more difficult and it costs you more money. Although managing data in far-flung places is viewed as "cheap", it's nowhere near as cheap as having an automated process.
"The whole industry if it is to compete on wafer thin margins has to drive out all cost, and this is a cost that is avoidable."
ER: How do you get such competitive companies to work together?
GL: "You get critical mass and benefit when manufacturers work one way with all the retailers, and therefore their costs will be down and hopefully that reflects back on the retailers and consumers. It takes seniority and vision to say: 'Enough of this. All of us are sending data to be re-keyed and need armies of people checking and redoing things. Why don't we just clean up that part of our act so where we compete is products, price, ambience of stores and delivery speed, which is nothing directly to do with standards?'
"We have got some people who bring that leadership on our board and who have pushed that over the line."
ER: So, what happens now?
GL: "What we're now getting is commitment from early adopters and they're getting their technical architects working with GS1 UK. We've got a idea of what the industry needs, where we should look and we've got the people around the table saying 'we will get behind it'. Now it's a case of establishing what exactly it looks like from a service functionality and considering the existing service providers in the space and how they are involved.
"The most important thing is for the industry to articulate at a more detailed level the user requirements – a big document that could turn into an invitation to service providers. I'm hoping to get a really good indication of what that looks like in the first quarter of next year.
"We'll start to get some flesh on this and possibly end up with a model similar to what the guys have got in Sweden [identified by the Digital DNA board as a country with a progressive approach to data standards]. We've got to make sure the UK is well served on this.
"Online grocery is where all the growth is. That, plus regulation and the need to reduce cost, is what is moving this project forward. Those on their own don't do it; it needs a combination of all of those."