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Focus: Supply Chain Trends/Issues

Feature Article from Our Supply Chain Trends and Issues Subject Area - See All

From SCDigest's On-Target E-Magazine

 

April 27 , 2011

 
Supply Chain News: Second Annual ASN Study by Auburn University Professors Finds Retail Practices and Results Vary Substantially

 

Actual ASN Accuracy Averages 93% in Survey Respondents; Retailers Expect 98-99% Accuracy

 

SCDigest Editorial Staff

 

For the second straight year, Dr. Brian Gibson and Dr. Brent Williams of Auburn University have released research on the practice and success of Advanced Ship Notices (ASNs) in the consumer goods to retail supply chain.

An Advanced Ship Notice is a form of electronic communication (EDI 856 transaction) sent from a supplier to a customer that details what goods are coming in what shipments before they arrive at a customer's distribution center or factory. While the specifics of an ASNs' contents can vary by industry or even individual supplier-customer relationship, in the consumer goods to retail sector ASNs generally involve carton-level content detail tied to GS1-128 (formally UCC-128) serialized bar code labels on each carton.

SCDigest Says:

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Of the 22% of retailers that currently do not require ASNs, 90% say they plan to add that requirement in the near future.

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The benefits of quality ASN data are many , including increases of 20-40% in receiving productivity, support for flow-through DC processing, the ability to pre-allocate merchandise to stores, improved supply chain visibility, and other enhancements to supply chain performance.

The report data was based on two rounds of surveys, one on-line and one in-person at an industry conference, ultimately involving about 100 retail respondents cobined. That data was supplemented by analysis of detailed supply chain information from two retail customers of Compliance Networks, a supplier of compliance optimization technologies that in part provides a data repository of vendor performance against a retailer's vendor guide requirements, including ASN performance.

The full study by Gibson and Williams is available here: ASNs in Retail Benchmark Report 2011.

78% of retail respondents said they required ASNs at some level, with 22% not requiring ASNs. But only 30% of retailers require and receive ASNs from 100% of suppliers. 30% require ASNs from all suppliers but are unable to achieve 100% compliance, while another 18% do not require ASNs from all suppliers.

However, of the 22% of retailers that currently do not require ASNs, 90% say they plan to add that requirement in the near future.

Of course, simply receiving ASNs is only half the battle. The value of the ASN clearly drops dramatically as ASN accuracy declines.

 

(Supply Chain Trends Story Continued Below)

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So what is the level of ASN performance? According to the survey, ASN accuracy by retailer ranged from a low of 73% to almost 100%, with a average of 92.9% and a median of 97%. (See the graphic below.)


 

Source: An Analysis of ASNs Benchmarks and Best Practices 2011,

Gibson and Williams

 

The report defines ASN accuracy as being not just that what is on the ASN is what is received, but also that the EDI transmission meets the retailer's technical requirements and can be processed automatically. As best as we know, there is no clearly accepted way to define ASN accuracy across the industry. For example, it does not appear this survey includes the ASN being received after the shipment is received as being an "inaccurate" ASN.

The report says that "there is widespread agreement regarding accuracy standards. Near perfection is the goal for 60% of the retailers who believe that an error rate greater than 1% is unacceptable. An additional 38% indicated that an error rate greater than 2% is intolerable."

The detailed analysis of data from the two Compliance Networks customers provided good news, showing how a focus on ASN compliance, accuracy and technology-enablement can lead to continuous improvement. Combined ASN accuracy for the two retailers whose transaction detail was studied for the report increased from 85% in 2006 to 97% in 2010.

How are retailers looking to close the gap between their goals and expectations for ASN accuracy? The chart below from the report shows that retailers are using a combination of techniques to close the ASN accuracy "gap" - though apparently 11% are doing "nothing."


 

The report concludes with a brief financial analysis of the impact of ASN inaccuracy, based on the 5.8% level of average ASN inaccuracy found in the detailed data analyses of the two case study retailers.

The report notes that "If a retailer handles one million cases annually, 58,000 cases will be inaccurate relative to the ASN. If the average value of each case is $100, then $5.8 million of inventory will be impacted."

What is your reaction to this ASN related data? Do the levels of ASN requirements and/or accuracy sound right to you? How can improvements best be made? Let us know your thoughts at the Feedback button below.


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