Major corporations are increasingly turning to electronic supply chain technology to reduce costs and increase efficiency when dealing with their suppliers.

Last year’s rush to business-to-business technology has meant many larger firms have electronically enabled the buying and selling process with key partners and are ready to move deeper into the supply chain.

However, over the past two decades many companies have painted themselves into a proprietary corner adopting orphan systems dictated by offshore parents or back office solutions without the standards or connectivity the internet age demands.

Several surveys have shown that New Zealand businesses generally have been slow to get on-line or adopt e-commerce and increasingly they’re being disadvantaged by their stubbornness.

The only option left for many without back office technology or with disparate systems is to re-key data into a web interface or employ a third party message broker to translate their orders on the fly. Ironically for many small businesses, being connected to the internet still remains a foreign concept.

Channel Masters Calling the Shots

Just as corner stores were sidelined when big supermarkets moved into their territory a few decades ago, so large corporations may sideline the electronically illiterate when they go looking for stationary, office equipment, café supplies, alcohol, raw products, components or printing and other services.

Telecom wants to get closer to its preferred suppliers by dealing electronically where possible. Telecom’s manager of supply chain process technology Knut Stoyl says the telecommunications giant is choosing partners who share its vision of interacting electronically, in particular those companies involved in high volume, high value transactions.

This is about as close as you will come to anyone actually saying "get online and get big, or miss out" but the message is becoming clear.

However for Telecom to move to a fully electronic basis for communicating with suppliers there must be obvious benefits for both parties,” he says.

Telecom have Intelligroup is in the process of implementing EBT (enterprise buyer professional), which interfaces with its back-end SAP system. It provides specialised tools so suppliers can host their catalogues on Telecom servers. The conversion of forms and documents (purchase orders, invoices etc) relies on a combination of XML-based technology and Telecom’s own EDI implementation.

“Suppliers don’t need to do much, other than have email and browser access and ensure their catalogues are up to date,” says Mr Stoyl. Smaller or itinerant providers are required to raise an ordinary purchase order which can be converted to SAP format on the fly  “We don’t need to interfere manually and it increases our efficiencies because we don’t have to rework everything thereby reducing the sources of error,” he says.

Foodstuffs Preparing National Roll-out

Foodstuffs is also trying to get its suppliers on-line and sharing the same data.

“We have a national project underway redeveloping what we have so all our suppliers can do everything the same way, says IT manager Mark Baker.

Now Datacom is building a document exchange system for Foodstuffs based around Microsoft’s BizTalk with XML as the defined standard. “The idea is the supplier won’t need to worry about how the internal Foodstuffs’ systems look and visa versa. It’s working well for Auckland and the initial testing of the national system is also looking good,” says Mr Baker. The new system will go live for purchase orders in September.

Foodstuffs Auckland has been using a combination of website updates, direct FTP and HTTP formats to handle purchase orders, advance shipping notes and invoices from suppliers. Meanwhile, Foodstuffs companies in Wellington and the South Island have continued to use EDI. 

The new nationwide document exchange system will translate supplier forms whether they’re supplied by email, FTP or web forms or other formats into Foodstuffs Internet Based Ordering System  (IBOS).

“We put through half a billion dollars of transactions every year from 350 suppliers. The suppliers are stoked. It’s all too hard or them at the moment but having a common repository will simplify the business rules and interactions and result in savings all around,” says Mr Baker.

He says suppliers can provide their information in any format they choose.

“We’ve decided on a no cost or low cost barrier for suppliers to participate. All they need is a PC and an internet connection along with the item details, quantity and pricing.”

He believes the benefits overall will be huge. “We’ll get greater velocity through the supply chain and a significant magnitude of error reduction and over supply issues. The human factor is gone. If we order 10 things the supplier can only send us 10 things. At the moment they can bring 12 and we haggle over whether we want the other two.”


SellAgence Selects Third-Party Option 

SellAgence the agents for Gillette products in New Zealand has settled on a third party message exchange to take the pressure off in its e-commerce dealings with retail chains including Foodstuffs and Farmers. Once it’s got its new ERP system in place it will be looking to extend its electronic relationships with other outlets.

SellAgence has deployed Decode, the recently launched document exchange bureau offered by e-commerce specialist Conduit. “We take orders electronically from Farmers and Foodstuffs in the Edifact format and Decode translates this across to our legacy FourthShift ERP system. While we’re in the process of moving across to a new Oracle implementation, using Decode means we can channel our IT resource where they’re needed and makes it a lot easier dealing with e-commerce customers,” says SellAgence IT Manager Mark Emerali.

Once SellAgence gets its Oracle system up and running it’ll extend its electronic communications to include shipping notices and invoicing and actively target other customers to get e-commerce relationships established. “It’s fairly basic really, we just point our customers to Conduit or Conduit points its systems to them and away they go – it’s all quite seamless, quick and its not resource intensive from our point of view,” says Mr Emerali.      

Decode is built on Microsoft’s BizTalk and XML with an optional web interface for clients and trading partners who want translation and support without having full internal automated file management.  The service is offered in addition to more traditional EDI services and includes support for value added networks and any-to-any format translation including EDI (EDIFACT and ANSI) and XML.

By Keith Newman