Industry Data Exchange Association (IDEA) report reveals the electrical industry is losing hundreds of millions in profits due to synchronization issues
West Springfield, MA September 11, 2003 Item Data exchanged between manufacturers and distributors in the electrical industry contain significant errors, according to a report released by the Industry Data Exchange Association (IDEA), an e-commerce service provider.
The report was the result of a study conducted to determine the level of synchronization of item data exchanged between manufacturers and distributors in the industry.
IDEA said the data synchronization study demonstrated that there is a wide degree of variance between the trading partner's item data causing significant financial and supply chain problems in the industry. According to the study, 60 percent of the items submitted by manufacturers do not accurately match those in their trading partner's files, costing companies in the industry hundreds of millions of dollars in increased transaction costs and lost sales.
"The study reveals that the industry faces a significant challenge in achieving and maintaining data synchronization," said Mike Rioux, president of IDEA. "Recognizing the high cost of this business issue, the IDEA Board of Directors approved the implementation of an IDW Data Audit and Certification Program. Profile Systems was selected to provide the data audit services for IDEA with the objective of ensuring that accurate data is exchanged between trading partners in the industry."
The study focused on identifying specific data issues between pairs of trading partners consisting of a manufacturer and of one of their distributors. Ten manufacturers and eight distributors participated in the study. The trading partners' data was matched on UPC code, part number, order quantity, unit of measure, distributor pricing and trade pricing. The participating manufacturers included; 3M, Cooper Bussmann, Cooper Crouse-Hinds, Cutler Hammer, Erico and Erico Canada, Hoffmann Enclosures, Hubbell, Osram Sylvania, Southwire, and Thomas & Betts. The distributors included; GE Supply, Crescent Electric, Hughes Electric, McNaughton-McKay, Stuart Irby, WESCO Distribution and WESCO Canada.
Results from data synchronization studies in multiple industries support the electrical industry findings. A recent study by the Automotive Aftermarket Industry Association concluded that the industry was losing $1.7 billion due to item data errors. An earlier report by the IDEA and the National Electrical Manufacturers Association (NEMA) revealed that product and pricing inaccuracies are costing manufacturers and distributors 1 percent and 3Ú4 percent of sales, respectively.
In a study for the Grocery industry released late last year, AT Kearney announced that 30 percent of items in retailer item files were in error and that the Consumer Packaged Goods (CPG) industry alone is losing $40 billion in sales every year due to poor product information.
Profile Systems, an IDEA technology partner, was authorized to perform the data synchronization analysis to help illustrate the extent and impact of data synchronization on the industry. Profile has conducted similar product data pilot programs in other industries.
"The results of this Electrical report are consistent with what we see everyday in our work in other industries," said Ed Heon, chief technology officer and founder of Profile Systems. "Data errors are very costly and we are pleased that the study findings have encouraged IDEA to embrace Data Certification to help the industry save costs and increase sales by exchanging quality item data between manufactures and distributors."