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Upstream Supply Chain - GUSI

Global Upstream Supply Initiative (GUSI)

The term “upstream”, when used in a supply chain context, refers to the relationships between manufacturers, their raw materials and packaging suppliers.

Since the late 1970’s the use of GS1 standards in industry have considerably reduced costs in the downstream supply chain. The use of unique product numbering, pallet labelling, barcode scanning and electronic business messaging have streamlined supply and demand chains and improved traceability globally. More recently RFID is being used to track product and exchange information on higher-value goods.

The Case for integration

The development of the global supply chain, as well as a wider variety of products, often in smaller quantities, has led to the time between design and delivery to final consumer becoming shorter and shorter. This puts pressure on the “upstream” part of the supply chain and drives the need for integration - more reliability of the information flow and greater visibility of the physical flow.

The GCI Response

The Global Commerce initiative (GCI), an international user group consisting of manufacturers, suppliers and retailers, in 1999 turned their attention to the Upstream Supply chain and established the Global Upstream Supply Initiative (GUSI).

GUSI (the GS1 & GCI Solution) addresses the challenges in the Supply Chain Integration between manufacturers and their suppliers. Upstream Integration is about improving the processes by electronically sharing information and improving visibility of demand, demand changes and inventory.

The case for implementing the Global Upstream Supply Initiative (GUSI) is compelling. It completes the supply chain integration using GS1 standards from start (raw material) to finish (consumer). It is essentially the eComm solution for upstream supply chain, enabling manufacturers to efficiently manage their incoming material processes more cost effectively.

The initiative has been implemented across Europe and Australia, multinationals such as Unilever, Kraft, Nestle, P&G, Crown, Smurfit Kappa Group and many more are realising the benefits. The initiative is made possible by the use of standards – specifically GS1 standards in eCommerce.

GS1 Ireland is ready to support member trading partners to implement this Global Upstream Supply Initiative (GUSI). A simple “Plug & Play” suite of implementation tools has been developed which includes, an integration model, the business case outline and the implementation guide for each of the pre-determined electronic business messages.

Given the present economic climate in Ireland, competitiveness in industry is a key challenge, the adoption of GUSI is seen as an opportunity to add efficiency and gain advantage on competitors.

Many of the operational and financial benefits are outlined below. The un-measured benefit is in the improvement of the trading relationships as participant companies learn to trust one another with their inventories and forecasts.

Operational Benefits

Operationally GUSI brings transparency into the upstream supply chain.

It eliminates paper-work by implementing GS1 standard eComm messages and the ability to scan product into back office systems, in turn significantly reducing admin costs and eliminating data alignment errors.
It allows for the reductions in inventory holdings due to the rapid computer notification of actual events (no more waiting for someone to key-in the information).
It facilitates a reduced life cycle, as the manufacturer and the supplier have transparency of stock holdings and quality control outcomes.
It also allows for easier and more informed changes to bills of material and thus these can occur more rapidly and lead to a significant reduction in waste.
New products can now have a shorter time-to-market.
It reduces stock-outs enabling full supply chain visibility, with both inventory held and sales forecasted information available to all.

Financial Benefits

Overall there are significant financial benefits, mostly in the areas identified in the Operational Benefits.

Inventory levels reduced by between 10 and 30%
Sales Admin costs – reduced by 5-10%
Finance Accounts Payable Admin – 80% reduction
Lead Times – reduced by 40-50% (in on-site requirement time)
Stock-out situation reduction – 10 – 30%
Service level increase – now averaging 99.5% customer service level.

It is conservatively estimated that cost savings in the region of €1 per pallet is not exceptional. This saving falls on both sides of the supply chain and increases and decreases based on how standard practices were utilised prior to GUSI implementation.

Manufacturers - Call your top suppliers now and start the discussion that will quickly realise real quantifiable cost savings for you and your supplier.

Suppliers - Don’t wait for your manufacturing clients to call you – be proactive – insist on savings – implement GUSI now.

The lessons have been learnt already, the tools are already available, the case studies are there to examine, NOW it’s time to agree objectives with your trading partners and ACT.

ATTACHMENTS (Click on the filename to download):

GS1 Upstream Integration Brochure