Published on Monday, 10 October 2011
I've been writing articles for ec-bp for several years now and most if not all of the articles have been around the value to the buying organizations. Certainly over the years these Buying organizations have been the driver of the electronic trading initiatives; much of that involves achieving an ROI. However the other partners can or are already gaining value or ROI on their side as well.
If you've been a partner that has been forced into supporting an electronic trading program with your customer you may disagree with my statement that there indeed is value to you. In working with many retailers' supplier bases, many initially indicated their opinion on these requirements. However as more and more of their customers have requested an electronic trading program be implemented, they have come to realize that they have, in a round-about way, achieved value. Many have seen improvements in their operations with regard to resources allocation, increased business with those partners, and a willingness to expand to a more collaborative relationship. For those that are still on the fence, let me layout a couple of things that I've heard -
ROI for suppliers
- Getting orders electronically is probably the biggest value to a supplier. One is that there is a more reliable delivery process in place so there are rarely issues with either party knowing if an order was received and processed. The quality of the data may have at first been an issue when automating a P.O., however as both parties work together with the cleanup effort, suppliers see fewer orders failing and requiring manual loading to their order processing system than ever before. The more PO's are automated the less need for resources to be allocated to manage the PO process. Lastly with the growing interest in E-Commerce and the need for suppliers to manage a higher number of smaller orders, and the growth around shipments directly to the end consumer, automation is a necessity.
- Nearly every retailer, Distributor, and now Grocer is looking for Shipping information from their partners. I've talked about this topic a couple of times and still hear some grumbling from suppliers that the ASN is one of their more disliked documents. I will say that there is a change in this thinking. Many of the suppliers I've worked with have stated that with the ASN requirement, they have needed to change their process for picking and packing, and have learned that as a by-product, the quality of the deliveries have been steadily increasing. Some of my clients have indicated that they had not realized how often they mis-picked an order, and without the packing valuation, would have shipped an order incorrectly. Certainly, getting the order shipped correctly adds value to the relationship with the customer, but improving what the supplier actually has in their physical inventory is as important. Companies spend thousands of dollars conducting physical inventories, however as automation starts to prove its value, many are moving to cycle-counting instead, and have been able to prove that automation and validation of the picking process has improved the reporting quality of their inventory.
- When talking about the invoice process, others have stated that the value of a supplier sending an electronic invoice to a customer means that they will get paid quicker, which we know may not necessarily be true... or is it? Maybe the invoices are not getting paid quicker but they are actually getting paid on time. So why is that? One obvious reason is quicker delivery. Sending electronically via EDI verses via mail can provide a gain of a few days. Also, through automation, the Retailer, Grocer or Distributor receiving an electronic invoice can reduce or eliminate data entry. This equates to reduced delays in being entered into those systems. When complimented by the delivery of an ASN, representing a receipt, means that there are less discrepancies with receiving, thus less invoice/shipment resolution. So those invoices can be processed through the retailer's 3-way match process (PO, Receipt, Invoice). Automation of an invoice may increase the cost of delivery through the VAN system, but that cost is generally much less than the cost of envelopes, postage and resources to manage the manual mailing of invoices.
- Lastly, from a general perspective, suppliers are agreeable to standardizing electronic trading with their customer. So while some may be using a browser based system there is still a more manual process. SaaS models are able to support not only the requirements of a given partner, but also support multiple partners using the same tool. This is important because the smaller suppliers are now being asked to utilize each of their customers portal sites. Where on-going hard dollar costs may be low, the on-going soft dollar costs, namely resources, is getting higher.
So, you're a supplier that has implemented automation with your customers; are you aware you can reach out to more and more of your customer to trade electronically making better use of what you've already invested? SaaS or Cloud based processes are not restricted the larger Retailers and can be utilized with smaller partners as well, thus allowing you to further leverage what you are already using. In addition, even a supplier of a retailer has their own supply chain. Every company should be looking at both ends of their supply chain... not just those that require a new process.
With the technology available these days there is no reason any partner within a supply chain could not participate in an automation process. Have you looked at both sides of your business? Are there opportunities your missing? Something to think about!