Bad data may cost grocery sector $1.035 billion

A major report released by the not-for-profit supply chain standards and solutions organisation GS1 Australia reveals that the total cost of bad data in the Australian grocery supply chain will be AU$1.035 billion over five years.

The GS1 Australia Data Crunch Report, prepared by GS1 Australia in conjunction with IBM, highlights the impact of bad data on profits and consumer service in the Australian grocery industry.

The study compared data on grocery products held by three major supermarket retailers and matched this against product data from four major suppliers and has revealed that retailers are working with data that is inconsistent more than 80% of the time.

The report states that over the next five years, Australian grocery retailers and suppliers will experience over AU$350 million in profit erosion and AU$675 million in lost sales as a result of bad data. These are conservative estimates based on the combination of process inefficiencies, duplications and workarounds across the retailer and supplier’s supply chains, together with administrative shrinkage and shelf stock-outs caused by inaccurate data. These estimates are supported by previous independent research conducted over the past decade.

The study also shows that retailers and suppliers using data synchronisation through GS1net show significantly better data quality results than those who did not (fully) adopt data synchronisation.

The study was supported by Woolworths, Coles, Metcash, Kimberly-Clark, Nestlé, Procter & Gamble, Unilever; and the report was supported by IBM, the Australian Food and Grocery Council (AFGC) and Efficient Consumer Response Australasia (ECRA).

Commenting on the study’s findings, GS1 Australia Chief Executive Maria Palazzolo said, “This report highlights the importance of implementing data synchronisation which, through the elimination of manual processes and data errors, helps businesses reduce costs, speed up the order-to-cash cycle and improve trading relationships.

“The report clearly shows that many businesses have problems with the quality of their data. However, they are not giving data quality the attention that it deserves given the impact on their bottom line,” Palazzolo said.

The GS1 Australia Data Crunch Report can be downloaded from the GS1 Australia website: www.gs1au.org.