Mistakes cost money and the larger retailers in particular are sick of bearing the brunt of incorrect deliveries, which take time and administrative effort to sort out. There’s talk in the industry of penalties being imposed on those who continually get it wrong, either by rejecting shipments, fining repeat offenders or culling them from the preferred suppliers list.

Tougher times ahead
Reliable insiders spoken to by iStart confirm they’ve seen the letters, heard the threats and are aware of tougher times ahead in the supply chain if the documentation and subsequent delivery of goods isn’t improved.

The Warehouse for example is in the middle of a project designed to find out who is delivering on time and who isn’t. “We’re making sure our arrangement with our suppliers meets our commitments,” says chief information officer Owen McCall. “If we order 100 boxes of something, then we want to ensure we get 100 and that they’re delivered on time.”

Progressive Enterprises general manager of merchandise and packaged goods, Mark Brosnan, denies rumours the chain is about to drop suppliers that continually deliver wrong orders to its warehouse. But that’s not to say Progressive isn’t on top of the issue, as the company (which operates the Foodtown, Woolworths and Countdown chains) has reserved pride of place in its head office foyer for a ‘worst suppliers’ notice board.

On the board is a list of the 25 suppliers who have fallen short of Progressive’s expectations (on a positive note, there’s a ‘best’ board as well). The boards serve as a grim reminder for poor suppliers every time they visit, that they’re in the bad books. “That’s our industry measure,” says Brosnan. “It works for us because nobody wants to be on the worst board.”

The list changes every month, based around cases ordered versus cases supplied. “If over a month we order 100,000 cases and are supplied 90,000 cases then the service level is 90 per cent. Our objective is to exceed 97 per cent service level.”

Collaboration preferred
Still, the chain knows it’s a two-way street, and Progressive is working closely with suppliers to try to improve its hit rate to at least a 97 per cent service level, by involving suppliers in an ongoing co-managed inventory process.

“Goodman Fielder, for example, send in a representative to work with us on our inventory management computer systems,” says Brosnan. “They bring in laptops with their data to ensure forecasts and data are accurate so they can see both sets of data and how it works.”

This process will ultimately contribute to establishing a full electronic supply chain with all suppliers required to work electronically through a central system, he says.

B2B ecommerce looming
The drive to deploy this kind of system often comes from business pressure to cull the cost out of transactions, or because competitors are already moving to streamline collaboration in the supply chain – and receiving preferential treatment because of this.

According to fast moving consumer goods (FMCG) consultant Nigel Cranston, the major supermarket chains are all moving toward ecommerce and increasingly dictating how they want their invoices delivered. Rather than sending delivery data by hardcopy they’re electronically delivering this at a certain time each month.

Cranston says everyone loses when inaccuracies appear in orders. “It costs the supermarket that ends up carrying more stock than they wanted or they don’t receive enough stock so they run out.” A trial of electronic invoicing is now underway at Progressive. “We’re trying to work with the industry to get the right product to the right place at the right time and I’m sure electronic commerce will help us get there. We’ll start with electronic invoicing before we move into the full loop,” says Brosnan.

The chain of ‘red sheds’ is also reviewing supply chain effectiveness in a bid to optimise its internal processes. There are a number of small pilots under way to automate some supplier relationships including electronic invoicing and matching and electronic transportation of purchase orders. “A lot of this is about making sure we have the data and the information to help drive our decision making processes,” says McCall.

Foodstuffs and Farmers are also increasingly requiring purchase and sales orders to be handled electronically. Distributor SellAgence represents Gillette, Braun, Oral-B, Wilkinson Sword, Duracell, Ferrero Rocher, Tic Tac, Nutella and Kinder Surprise brands in New Zealand – and uses supply chain hub Conduit to handle document translation between the retail chains and its Oracle ERP system.

When Conduit moved from a proprietary system to Microsoft BizTalk, SellAgence was its first client. “There are so many different fi le formats out there so you really do need a BizTalk or something in-between to map those files to your internal systems to expand customer-based ecommerce,” says IT manager Mark Emirali. He warns ecommerce shouldn’t be rushed.

“We began taking purchase orders and creating sales orders and importing this through our systems. You don’t want to go with a full automated functionality unless you’ve got a lot of in-house resources. With Conduit there are minimal set up costs and you only pay per transaction. We thought we’d get two or three customers to understand this whole ecommerce thing then when we had seven or eight it may be cost effective to bring this in-house.”

“When they’re ready we’ll get involved.” He says the market seems to be reaching a level of maturity with an increasing number of templates around to help map data between systems without needing to get the coders in.

Typically it’s the receiving company that benefits from electronic document exchange, as they are the ones avoiding the re-keying and extra admin of processing paper.

March 2004

By Keith Newman

From looming to booming
While B2B ecommerce is gaining ground with many major retailers, many mid-market players have been even quicker to seize on the benefits. In the hardware industry for example, merchants like Mitre 10 and PlaceMakers exchange either purchase orders (POs), invoices or both with dozens of suppliers, most of whom engage with retailers via a hosted hub running on IBM technology and managed by NZ Post subsidiary ECN Group.

Suppliers find they can let ECN know how their system can receive POs and send invoices and, once established for one retailer, they are then automatically ready to transact documents with Mitre 10, PlaceMakers, Bunnings/Benchmark, ITM and Carters.

Mobile to the rescue
Suppliers, distributors and retail chains however must ensure their own data is accurate before they start passing it on. One way to achieve this is to equip sales and service people with mobile devices and specialised applications that integrate into back-end systems.

This has previously required cumbersome and expensive systems but now mobile devices and applications are becoming more affordable. Anyone from a sales rep generating orders at store level to a person delivering stock direct from a truck can make use of these, says Cranston.

The supermarket industry in particular wants to get away from manually written dockets. For suppliers with distribution systems that means electronically generating orders and capturing signatures at store level rather than writing and handing out delivery dockets. “That makes the whole process more efficient from the suppliers’ points of view. It does away with all the re-keying and potential mistakes and they don’t have to go back and give credits,” he says.

Cranston points to Ponsonby-based French Country which runs stands at trade shows in Australia as a company making the most of mobile sales automation. Traditionally it took 6-8 weeks to process orders for its imported furniture, now it starts shipping while orders are being taken.

IT Link sales director Luigi Cappel says mobile sales automation frees up administrative staff who might otherwise be involved in repetitive work such as collecting and re-keying fax orders or writing down phone orders.

“These people can then be redeployed to generate income through telemarketing or contacting customers who haven’t placed an order for a while or chasing delinquent debtors. Even a company with only three sales people would typically employ staff for 20 hours a week just to re-enter orders. In many cases the savings will totally pay for the investment,” says Cappel.

Local mobile sales apps worldclass
New Zealand companies appear to be at the leading edge when it comes to developing mobile sales automation applications. Christchurch-based developers iTouch, for example has around 11,500 people using its sales, service and logistics solutions across 120 different companies.

“The cost of running a salesperson is really very high. If you want them to get another call in per day, get the cost of cellphone bills down and deliver better customer service, our solution drives it very quickly,” says sales director Dave Ffowcs Williams.

iTouch has developed a range of applications including iSell and iDeliver for the local and international market which back-end into financial systems. “The most popular is our freight logistics application,” he says, “with around 7000 people using it including Mainfreight, Tranz Rail, Courier Post and Australia Post. The applications are handling about 100 million signatures a year now.”

Cut cost and errors
Another area the company is focusing on is the industrial market for sales of parts and equipment. “Our generic iSell application is being used by about 15 companies, with many saying they need to reduce their costs and stop making as many mistakes in their orders.”

The software back-ends into about 50 different systems, with much of the customising done by iTouch itself or integration partners.

Sales force automation is one of the fastest growing sectors for Vodafone. “A lot of companies are very interested in getting more to their handsets,” says Vodafone mobile business devices product manager Bruce Fowler.

Its offerings include smart phones like the Sony-Ericsson P900 or Handspring Trio – which ship with desktop syncronisation software that can extract email, contacts and calendar information from Microsoft Outlook – and work with sales specific applications from Saleslink, iTouch and Orbiz. Clients using the Vodafone network and phones with solutions developed by third parties include Orano Orange Juice, Montana Wines and Tip Top.

ASP model is back
Telecom is developing both an ASP model and a packaged customer-hosted option for customers. After initial trials last year it is preparing to deliver mobile applications to the sales and service market via an ASP model, targeted at small to medium enterprises.

“There’s a growing awareness of the cost of getting it wrong,” says Telecom’s mobile products and solutions team manager Julian Sharplin. “The electronic approach dramatically improves accuracy and cuts out a lot of manual processing which can be a major productivity boost.”

Meanwhile the customer-hosted Saleslink mobile package trialed in November is now available and geared to companies with five or more reps on the road. The entry level bundle includes a Kyocera 7135 smartphone and data plan, sales automation software developed by IT Link and a helpdesk for $250 per month.

Cookie Time is a high-profile local customer saving time and paperwork for its 44 franchise distributors. Saleslink in its unbundled form is sold through developer IT Link and is currently being used by 300 companies in Australian and New Zealand who have between them more than 2000 reps on the road.

Cappel, says it makes life easier when billing is simply a line item on your telephone account versus a capex type scenario. “It’s a whole different ball game. We’re way ahead of the rest of the world in developing out of the box solutions like this,” he says. “What’s been missing is packaged software for small to medium businesses. While the bundle we’ve done with Telecom requires serious commitment, it is a low risk investment and already interfaces to 29 different accounting packages.”

Sales automation plus
Cap Gemini CRM and mobility manager Gareth Berry says what used to be sales force automation now comprises three specialised applications running on hand held devices. For example ‘merchandising packages’ are slowly replacing the old manual clipboard, so one person can quickly order new product, replenish shelves and set up promotions across a chain of stores.

“Account management packages focus on mobile customer relationship management (CRM) software for longer sales cycles to manage daily appointments, quote on jobs, arrange credits and take orders,” says Berry. “Mobile sales packages focus more on taking orders and making on the spot sales, meaning an office products company rep for example might better manage 30 companies a week using handheld applications, taking orders, pushing new product and processing credits or returns.

These tools are now starting to make the transition across from the desktop or laptop to the smartphone or PDA in a more integrated way. Previously you had to go to several suppliers to get the full suite for account managers, merchandisers, order takers and service software.”

Cap Gemini is in the process of releasing the Dexterra suite of mobile sales automation products to the New Zealand market which integrate into SAP, PeopleSoft, JD Edwards and other back end systems, with minor customising. With the drive now starting to come from major retailers, New Zealand’s supply chains look set for a productivity boost this year. Look out those suppliers that don’t take heed. Fortunately, we’re now well equipped with the technology tools and services to cope.