In early 2003, the supply chain writing was on the wall. Executives at J.R. Wood Inc., a privately held, US$135 million frozen fruit vendor, knew they would need to update their IT systems to more efficiently enable electronic transmissions about product shipments to Wal-Mart Stores Inc.
J.R. Wood’s efforts would start with an upgrade to an integrated package to interface with an ERP system, then support UCCnet, an initiative started in 1998 by the nonprofit Uniform Code Council standards group to create a common repository for product data — prices, colours, dimensions and other specifications of goods headed for retail shelves.
Initiatives aimed at standardizing supply chain technologies are popular with retailers, but can be frustrating to their suppliers since cleaning up a data repository to automate it can be costly. But with powerful players like Wal-Mart using their clout to mandate adoption, compliance with measures such as UCCnet and radio frequency identification (RFID) is a matter of when, not if.
Implementation of the new systems at J.R. Wood’s Atwater, Calif., headquarters wasn’t without snags; the software the company used didn’t integrate with its ERP system, J.D. Edwards’ World software.
With a January 2004 Wal-Mart deadline looming, IT director Jennifer Jones went shopping for a replacement and settled on a system from Extol International Inc. J.R. Wood went live on UCCnet with Wal-Mart in February. The company now supports EDI transactions for all of its products.
Jones says the system helped her company improve its internal processes. “We’re able to better communicate information about our products across business units. And from sales to logistics to IS, we have better visibility,” she says.
UCCnet’s enthusiasts tout its potential for reducing costly product data errors, but J.R. Wood has so far seen only a small increase in error detection. It’s also finding slow adoption among its smaller customers: Of the 200 retailers stocking J.R. Wood’s products, only three are so far taking advantage of the company’s UCCnet support. Still, for the modest investment involved (J.R. Wood spent less than US$50,000 on the infrastructure for its UCCnet link), Jones says she’s satisfied with the returns.
J.R. Wood’s investment is on the low side, says AMR Research Inc. analyst Kara Romanow. For companies without a clean, central data repository, properly enabling EDI and UCCnet support can cost millions. And only wide-scale adoption will lead to big savings. “The problem is, that hasn’t really been happening. A lot of companies have been taking shortcuts” that don’t ensure clean, reliable data, Romanow says.
The next milestone is support for RFID tagging, a technology for tracking product units that could replace bar codes. Wal-Mart already put its top 100 suppliers on notice that it expects them to begin RFID tagging shipments next year, and others in the retail Goliath’s pipeline, like J.R. Wood, are making plans for it by building on earlier UCCnet efforts. “Our EDI and UCCnet package sets us up well to expand into RFID,” Jones says.