For much of the ECR Europe gathering, the Scottish Exhibition and Conference Centre was picketed by a small, but highly vocal, group of anti-globalisation activists who were protesting against the growing power of worldwide fmcg corporations. If they really understood the industry, this ragbag collection of protestors would have been less concerned. Sure, trade is going global, but few people realise that the major multinationals still face massive barriers to their continued growth. These barriers are not political or economic. They are caused by something a little less tangible standards, or rather a worrying lack of them. And it is in this area that the ECR Europe movement is now playing a pivotal role.
Speaker after speaker at the conference highlighted instances where a lack of standards had created massive business headaches even within organisations. One startling example: Unilever's chief information officer Peter Slator revealed that his company operated 25 different EDI techniques around the world which make it hard to develop standardised processes. Here's another: poor quality outer case marking still causes nightmares for the grocery industry, even though the coding knowhow has been around for 25 years.
By sharing such insights, the speakers were making the point that while universal standards are vital for business, they are highly difficult to develop and at times a real struggle to implement successfully. Enter the Global Commerce Initiative a pan industry "user group" which is trying to devise standards for everything from radio frequency ID tagging to product identification, Collaborative Planning, Forecasting and Replenishment, and a global scorecard for ECR practitioners.
Many of those actively involved in ECR Europe are backing the GCI, but Peter Jordan, Kraft's director, European systems, told the conference that more companies, particularly smaller firms, needed to get on board. "This is not a closed shop," he said, "We can produce the standards, high quality business processes and templates. But we need you to recognise that these things will help your business, help your supply chain become more efficient and help you to serve your end customer better."
Jordan also urged the industry to keep B2B at the forefront of all its planning. But he was talking about "back to basics", not whizzy internet exchanges. His pun got the intended laugh, helping him deliver his message about the importance of standards to everyday trading. However, he also made it clear that global standards were urgently needed in the e-business arena particularly for the new online exchanges that have cropped up in the past year or so. And the GCI is active here too.
Other speakers quickly warmed to the B2B theme. IGD's Joanne Denney warned that unless the industry and the exchanges got their act together they would have a "$1bn bust" on their hands. There's no doubt some would prefer to see the creation of a single industry exchange. However, Luc Vandevelde of Marks and Spencer said there was nothing wrong in having competing exchanges so long as they all operated to the same standards: "It's healthy to have a choice. But it's not healthy to duplicate efforts that bring no benefits to anyone."
The CEOs gathered in Glasgow last week agreed that standards were vital to their future particularly if the industry is to avoid repeating the same mistakes as it did when EAN and UCC were allowed to build competing barcoding systems; a mistake that led to a very real, and costly, barrier to free trade. Christian Koffmann, head of Johnson & Johnson's consumer and personal care group, said: "There's a number of things we can do to simplify the system and prepare the future. The concern is are we going fast enough as the exchanges build up?"
But while the exchanges are developing apace, there's still much detailed work to be done before powerpoint ambition is translated into real applications. There's plenty of debate going on about fee structures, for instance. And the painstaking work needed to develop online product catalogues is still in its infancy with no agreement on how some items should even be classified. But the big companies are going to persevere with exchanges because at stake is a multi-billion dollar prize. Unilever CEO Antony Burgmans points out that waste in Unilever's supply chain accounts for between 2% and 3% of total turnover, while it has 60 days of stock on its balance sheet. If Unilever can use the internet to tackle these issues by cutting, say, its stockholding in half it would generate massive savings and in the process would be able better to serve its customers and consumers.
It may, as Burgmans believes, take 10 years to achieve this vision. But that's the direction in which companies operating on the world stage are heading. Achieving it will require a lot of hard work on the basics. But if the industry succeeds, and generates the sort of standards that will help drive the fmcg business forward, the anti-globalisation activists will really have something to shout about. As will consumers albeit for very different reasons.
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