Kroger Taps UCCnet, Transora

Grocer working on item registration, data synchronization to streamline supply chain

Cincinnati, OH — April 7, 2003 — Retail grocery chain Kroger has signed up to work with product registration organization UCCnet and the consumer packaged goods industry e-marketplace Transora on item registration and data synchronization in a bid to improve the efficiency and effectiveness of its supply chain.

Headquartered in Cincinnati, Ohio, Kroger is one of the nation's largest retail grocery chains. At the end of fiscal 2002 the company operated, either directly or through its subsidiaries, 2,488 supermarkets and multi-department stores in 32 states under approximately two dozen names.

As part of an initiative to implement new and emerging technology and electronic information systems to improve the efficiency and effectiveness of its supply chain, the grocer is set to implement UCCnet's item registration services for its supermarkets and department stores. In addition, Kroger will be the first retailer to participate in Transora's DSD data synchronization project.

UCCnet enables registration and publication of item information, such as weight and dimensions, by providing a repository for standardized item, location and trading partner data. Suppliers load item, location and trading partner information into the UCCnet GLOBALregistry. UCCnet checks the data for compliance to industry standards and synchronizes it with demand-side partners, ensuring that all trading partners are using identical, updated, standards-compliant data.

Kroger believes that GLOBALregistry will improve its ability to collect new item data from suppliers in an electronic format. As part of this industry initiative, Kroger will work with its alliance partner, GlobalNetxchange (GNX), a B2B marketplace for the global retail industry, to implement the GLOBALregistry. Kroger will roll out the GLOBALregistry to selected suppliers throughout 2003.

The goal of UCCnet's services is to allow suppliers and their retail partners to reduce costly administrative errors in invoice pricing, purchase orders, product delivery and scanning accuracy. An industry study conducted by A.T. Kearney estimated that $40 billion, or 3.5 percent, of total sales lost each year are due to supply chain information inefficiencies. Specifically, the study showed that 30 percent of items in retail catalogs have data errors, which cost between $60 and $80 each and consume 25 minutes of manual cleansing per SKU. Other findings revealed that 60 percent of all invoices generated errors and 43 percent of all invoices resulted in deductions.

UCCnet's services may also allow companies to get new products to market faster and facilitate changes to existing item information, according to the organization.

Meanwhile, Transora reported that Kroger will be the first retailer to participate in its DSD data synchronization project. The objective of the DSD initiative is to add standards-based functionality to Transora's data synchronization solution and UCCnet's Global Registry that Direct Store Delivery (DSD) manufacturers and retailers need to facilitate information exchange between trading partners at the store level.

At the January 2003 meeting of the Food Marketing Institute (FMI) and Grocery Manufacturers of America (GMA) Management Board, the chief executives of many of the world's top food retailers and manufacturers reviewed and endorsed the Global Commerce Initiative (GCI) global technology vision calling for standards-based, industry-wide, accelerated data synchronization utilizing UCCnet as the global registry.

Aligned with this vision, Transora, and four of the world's largest DSD manufacturers, including The Coca-Cola Company, Kraft Foods/Nabisco, PepsiCo and Sara Lee Bakery Group, created a steering committee to assist with the development of industry standards and processes by developing a solution that will make the data synchronization vision a reality for DSD companies. As the first retailer to join the steering committee, Kroger, in conjunction with GNX, will help shape the solution and will also participate in the process development working group.

"Kroger supports the approach and objectives of the DSD Data Synchronization Initiative that Transora is leading, and [the company] believes that retailers and manufacturers working together will bring this much-needed functionality to the market in the shortest possible time frame," said Mike Heschel, chief information officer of Kroger. "Our plan is to utilize the standard processes defined in this initiative with the GNX data synchronization solution to improve data quality and reduce errors in our DSD supply chain processes."

Transora said its DSD steering committee is using existing work and standards produced by the Global Standards Management Process (GSMP), and the committee is actively working with the newly formed GCI DSD Process Group to refine the existing work and to define additional DSD specific requirements for data synchronization. Any new functional requirements, which are required to implement a DSD specific data synchronization solution, will be submitted to the GCI DSD Process group and managed through the GSMP process for inclusion in future standards releases.

"DSD data synchronization is a natural extension of Transora's data synchronization solution," said Ken Fleming, chief operating officer for Transora. "We welcome Kroger to this initiative and encourage other retailers and manufacturers interested in addressing the unique requirements of DSD to participate in this program."

Expanding on the agreement between Transora and GNX announced in October 2002 to define and develop industrywide data synchronization solutions that address the needs of both retailers and manufacturers, Transora says it will work with GNX to ensure that the solution is compatible with the requirements of its grocery retailer customers worldwide.

"Last year, Transora and GNX began a collaborative effort to deliver standards-based data synchronization services to manufacturers and retailers," said Joe Laughlin, CEO for GNX. "Kroger's participation in the DSD steering committee supports a key goal that GNX and Transora share: to streamline operations and reduce costs for retailers and manufacturers by driving the development of mutually-beneficial data standards. We look forward to helping roll out the standards to our DSD customers when they are available."