Different Initiatives, Same Goal: How Retailers and CPG Manufacturers Can Reduce Net Landed Costs to Consumers

I’ve spent a large part of my life working on Activity- Based Costing. I love it. I like the people I’m involved with. I like the order and clarity ABC provides. I like showing clients how to effectively apply it. However, I’m as guilty as anyone of not creating linkages with other internal initiatives. That’s what this whitepaper is about. I try to answer the questions about how ABC contributes to ongoing supply chain and marketing issues. This whitepaper is not about how ABC is implemented or how it works. There are more than enough readily available resources to describe that process. I chose the “initiatives” from July 2006 issues of SuperMarket News.

Data Synchronization

This is the creation and continual updating of an item catalog between an individual manufacturer and retailer. It creates a common language on items between the trading partners and has a direct impact on OOS (Out-of-Stock Items), CPFR (Collaborative Planning, Forecasting and Replenishment) and supply chain costs. It’s interesting to note that only Wal-Mart, Wegman’s and Shaw’s have thoroughly implemented Data Sync, even though we’ve been talking about this since the 1970s when the bar code was introduced. Lest we forget, Wal-Mart implemented Retail Link in 1992.

Data Sync is, perhaps, the key enabler to any trading partner relationship. Without that common language it is almost impossible to create a meaningful joint reengineering initiative. ABC is the same. It provides a common language based on something very simple, the costs of key activities in the common consumer supply chain.

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