Role of technology in the merchant marketplace (continued)
Published: 16 April, 2013
In the second report from the Builders’ Merchants News/Epicor debate, the panel weigh up the benefits of IT and whether GLNs are the right way forward for the merchant industry.
Lisa Arcangeli: Global Location Numbers, or GLNs, are a simple tool used to identify a location. This might be a site, such as a warehouse or a legal entity such as a company or a customer, or a function that takes place within a legal entity. GLNs can also be used to identify something as specific as a particular shelf in a store.
GLNs are used in electronic messaging between customers and suppliers, where location advice is important. They are also used within companies to identify specific locations both electronically in a database and physically where the GLN can be produced in a barcode. Can merchants make use of this system? How would it work for them and the industry at large?
Arthur Duffy: The structure of the product would be used consistently among suppliers and merchants. The components don’t matter, but the structure will enable a string of information to be consistent, no matter who or what you are.
Kevin Fenlon: The next stage of difference would be the merchant’s product code for the product.
Arthur Duffy: People bring suppliers’ catalogues into the merchant, but merchants don’t want to apply those product codes because they worry that the customer will go somewhere else to buy the product for less. There is some information that is used as standard and you would be able to wrap as much or as little information around it, creating a consistent core or framework against a particular product that would be a part of it, wherever it went.
Kevin Fenlon: It’s so simple…so why doesn’t it work?
Arthur Duffy: Probably because there isn’t a compelling enough reason or enough traction within the industry to buy into it.
Tom Mason-Elliott: Many companies would completely have to restructure the way they sell their products. If a product comes in five different colours, the company would have to state that. It would be a big benefit to us, but for many merchants and suppliers, it would mean having to make a big investment.
Peter Buttle: If you place an order for a product in certain colours, you expect to get what you ordered. Suppliers must have some recognition system in their database that says there are five different product colours.
Arthur Duffy: Just knowing what it is, is not a compelling reason to make it happen. The industry has to see some real advantage for doing it. There would have to be a win-win for both the supplier and the merchant.
If a supplier came to you and said: ‘I would really like you to order everything from me electronically and I will give you a further 25% discount, that would be good for the supplier because they save money and it would be good for the merchant, too. That would be a compelling reason for investing in this system.
Chris Hayward: How many of your businesses use barcoding at the trade counter? Some companies don’t barcode all of their products.
The majority of products can be sold with a barcode. Things like bricks do not lend themselves to a barcode…
Peter Buttle: They do! You have the identity, maybe not on the brick, but on the racking.
Arthur Duffy: How many people use barcodes for outer packaging or goods received? There are different levels of barcoding, even in purchasing or stock recording. In my opinion, most people don’t use it that way.
Chris Hayward: The times you hear of people picking the wrong product from the back of a shelf – usually the more expensive product because it sits side-by-side with another, cheaper one. With a barcode, they can scan the product so they know they are picking up the right product.
Peter Buttle: GLNs have been around for at least 30 years. You only have to apply one number to each delivery point, but the driver to do this is small when compared to the complexity and number of products in the marketplace. There is no builders’ merchant apart of the top three nationals that have enough locations to consider doing this.
Chris Hayward: BMF, NMBS and Unimer have come together to address this problem. We have sourced these numbers from GS1 Malta. GS1 is a leading global organisation dedicated to the design and implementation of global standards and solutions to improve efficiency and visibility in supply and demand chains globally and across sectors. So, any merchant that wants GLNs can have them at a discounted rate by contacting any of our organsiations.
Peter Buttle: What is the business benefit?
Chris Hayward: If you want them, they will be cheaper. Not too many companies are using GLNs at the moment, but, they would be a massive benefit to the industry at large. I was speaking to one manufacturer who has 7000 customers and every company it deals with has its own individual codes. If we all had the same codes, things would not go wrong as often as they do.
Peter Buttle: Once GLN codes are allocated, they’re picked by the people who will get the business benefit – the delivery party. That would make sense. But merchants aren’t going to get any business benefit from GLNs, are they?
Arthur Duffy: Do you see the suppliers being the driver for this?
Chris Hayward: You can’t drive ownership of an identity. People have to take that responsibility for themselves. GS1 owns the numbers and you have to register to get them. They have to be owned and maintained to ensure the address is correct. There is an identity issue about GLN codes. You can have as many delivery addresses as you want, but the location code belongs to a company.
Tom Mason-Elliott: None of our customers are going to get location codes for their businesses. Most are small builders. If there is a big benefit to suppliers and they want to give me another 2.5% discount because I have given them a location number, they will need to drive it. There is no benefit for us to do this until we start trading in EDI.
Chris Hayward: Any company trading electronically must have an EDI number.
Tom Mason-Elliott: There is some momentum from certain merchants regarding EDI and they are leveraging a benefit from it. For most of us it is too premature. There is a great deal of effort needed to get it 80% right for one supplier.
Arthur Duffy: The challenge we have – whether it’s EDI or electronic trading – is not getting something from points ‘A’ to ‘B’. It is about interpreting it between supplier and merchant. That is what catches people out.
Peter Buttle: As soon as people start assuming that the system is going to do it right, you might find you have just ordered 100 times of what you want.
Tom Mason-Elliott: I think Merchant Pages is a great first step towards this. We’re talking about consolidating all of this data into one place and for the first time merchants will be able to start leveraging some of that benefit. I think people will become aware of the problems with data very quickly. When that happens, it will start to drive the requirement to standardarise the data we have on Merchant Pages even further. That will drive everything. It has the potential to dramatically increase efficiency.
Chris Hayward: With the buying groups backing us, we could see a lot of progress within the next 12 months.
Peter Buttle: Can NMBS exert pressure along with the buying groups on the suppliers who are already on board?
Chris Hayward: We can exert pressure, but not the same type as the buying groups. We can say: ‘as part of our deal, we won’t deal with you unless you use Merchant Pages’. Nothing stronger than that. I know it won’t be hard to enforce that from day one. Going forward, more pressure can be brought to bear and those suppliers who can do it will get the edge. I find that suppliers will do it if there is enough momentum. If NBG, CBA, Cemco, h&b, NMBS and Unimer are all saying it, then between us, surely, the suppliers will get the message.
Tom Mason-Elliott: A bit of a stick is required. At CBA, we are mandating suppliers to provide that information in a standardised format. If it’s inaccurate or not provided within a certain time constraint, then whatever the data, it won’t be accepted. If there is a price increase it won’t be adopted.
Kevin Fenlon: Suppliers will be doing this for the ‘big three’ nationals.
Arthur Duffy: But, suppliers have to have some traction. There has to be something in it for them. Any buying group can demand this or that, but there must be a benefit for the supplier to do it.
Tom Mason-Elliott: Or a penalty for not doing it.
Kevin Fenlon: The big benefit is efficiency. There is no monetary value in terms of an invoice transaction, but there has got to be a massive efficiency for the supplier.
Chris Hayward: God forbid, they might even sell some more products!
Peter Buttle: You are driving toward the position of never having ‘specials’. They should never be ‘specials’, but just products that don’t happen to be on our system.
Kevin Fenlon: You’re right. We’ve got to get away from that. It should be stock line or non-stock line. There are many manufacturers who have not gone as far down the road as they should have.
Chris Hayward: There are a large amount of manufacturers who almost have to manufacture a list and cannot just issue as it is.
Kevin Fenlon: If a company is producing 10 000 different widgets on an annual basis, don’t they want to track where those products are going? They must want to know what the cost price and selling price is?
Chris Hayward: There is often a detachment between the supplier’s back office system and its marketing department, which issues the list.
The template we developed for Merchant Pages will continue to evolve, so if a supplier has additional information, they can send their data along and it will be identified as their data. If, at some point, if there is a specific request from a buying group, they can have it. Basically, companies can pull down the information they want from the template.
Tom Mason-Elliott: Is h&b mandating its suppliers to provide it with that information?
Peter Buttle: We will be a lot stronger with our message this year. One in five of our members has made some attempt at doing this.
Kevin Fenlon: We have re-written our terms and conditions this year. It will go on to the agreement and will be the way we intend to operate to drive things forward.
Kevin Fenlon: What about product images? Where do they go?
Tom Mason-Elliott: If we got to the stage where every product has a unique identification and your system stores it in the same way as mine does, even if we have different product codes, there will be a process where somewhere, there will be a central store of images.
If NMBS had those images and my system could just pull them off the system, the individual on the counter can see what the image looks like and the guy on the internet – rather than having to research – only has to click a button to put it on a web page.
Chris Hayward: ‘Dynamic links’ work better because if the image changes, it automatically updates the website. NMBS is currently doing two things: on Merchant Pages we are either holding the pages centrally, or we have got dynamic links to the suppliers’ websites. We prefer the dynamic links because we know they will be up-to-date. But, the images aren’t great.
Kevin Fenlon: When we first went on to the ‘world-wide web’, we said we wanted to keep all the product data on it. We didn’t even have 5% of that data loaded before it needed updating. This has got to be driven by the manufacturer because they must keep their product information and images up-to-date and will have a standard format that will make it easier for everybody to use.
Peter Buttle: We’re not talking about cutting edge technology here, are we?
Kevin Fenlon: Global Trade Item Numbers (GTINs) were first mentioned to me 10 years ago. I thought: ‘this is simple, why aren’t we doing that?’ Then you go back to your business and you get ground down either within your own organisation or by a supplier and you begin to have second thoughts. You ask others and find it has fallen flat for them, too.
What NMBS has done with Merchant Pages is a fresh idea. There is momentum behind it because it is an industry-wide solution. The buying groups have taken it on board. If only we could all get behind one solution…
Peter Buttle: One benefit is that there is no lock-out – there is none of this ‘you can only use this if you pay for it’.
Chris Hayward: It’s a totally industry-owned solution. NMBS is only running it. We see it as a partnership. The solution is free to all, but it means the suppliers should own it, too, and they must provide the data in the right format.
There shouldn’t be an intermediary required to tidy the data up. At some point that could go wrong.
Peter Buttle: It’s a simple data set and should be simple enough to understand. As the holder of the data, if something is not right, it should be sent back to the supplier, explaining what is wrong and asking them to send it again.
Chris Hayward: We are going to have to resource it more than I had envisaged, but we don’t want to get into a battle with the supplier, asking them to re-submit, again and again.
Kevin Fenlon: You have to create something that will be self-propelling so that merchants and the buying groups can lock on to it. If it’s a coding issue and ive buying groups representing 300 members saying that there is a problem, the suppliers will have to put it right.
Arthur Duffy: If I were a merchant, I would be paying attention to GTINs and catalogues or EDI and e-business. But they are just one of several key IT technology drivers that are used to make your business.
Kevin Fenlon: If we can get communality from that data to get good information, there will be confidence of what will come out.
Arthur Duffy: That is only the start of the journey. It’s a moveable feast.
This article first appeared in the February 2013 issue of Builders' Merchants News.