Smooth Sailing - SaaS Offering Calms Supply Chain Waters for Boater's World
A retail purchasing manager generates a purchase order. He makes a printout, walks to a fax machine and transmits the order to the vendor. The vendor keys the purchase order into an order entry system, ships the product and generates an invoice for the retailer. The retailer’s accounting department receives the invoice in the mail a few days later and enters it into the company’s accounts payable system.
Bob O'Hern, vice president of information systems for Boater’s World, doesn’t mind recounting such a story these days. It used to be the way that Beltsville, Md.-based Boater’s World handled vendors’ orders for many of the products it sells through its 127 Boater’s World Marine Centers retail stores and its e-commerce site.
The second-largest U.S. marine supply retail chain, Boater’s World needed to improve its communication with trading partners and vendors, O’Hern says. That meant its computers needed to talk to partners’ computers through the process of Electronic Data Interchange (EDI).
What companies employing EDI know is that time and money are often wasted while awaiting transactional data and shipping instructions from sourcing companies. EDI gives the retailer the ability to receive more information on shipping closer to where the task occurs, thus shortening supply chain cycles.
“It increases knowledge of supply chain all around,” O’Hern says. “If a hot product is coming in, we can have our warehouse and stores prepared to handle it.”
Bolstering EDI is the emergence of Software as a Service (SaaS) applications, through which organizations are able to access business functions at competitive costs by eliminating the need to license applications. Remote hosting also reduces the need for superfluous hardware investments, and organizations are able to forego costly in-house installation, daily upkeep and maintenance of applications.
O’Hern says Boater’s World had EDI connections with about 50 of the 300-plus vendors in its supply chain, but lacked the ability to expand the use of the technology because of the toll it would take on the chain’s internal data processing resources. “We were struggling to add vendors,” he says, “because of the amount of time that it takes to go through the testing, configuration and certification process with each vendor.”
Boater’s World turned to Minneapolis-based SPS Commerce, a business-to-business integration company that specializes in outsourced EDI for retailers and suppliers based on the SaaS application model.
Approximately 65,000 suppliers use the SPS platform to connect with more than 1,200 retailers and distributors worldwide, including Costco, Foot Locker, Pacific Sunwear, Quaker Boy, Camping World and Sears.
“The beauty for us is that most of the relationship with the vendor is done by SPS,” O’Hern says. “We leverage their workforce and their expertise.”
Vendors of all sizes
Boater’s World’s global supply chain is complex, with vendors at varying stages of technology sophistication and adoption. “We have large vendors, but also smaller suppliers who make crab pots in their garages,” O’Hern says. Still, the chain was able to transition the majority of its vendors to the EDI platform within six months.
“We’ve sped up the [purchasing] process significantly, allowing the vendor to ship us product more quickly if they have it in stock,” O’Hern says. “After they ship it, we get the invoices electronically much more quickly so we can match those up to our receiving information more quickly and pay our vendors on time so we are eligible for more payment-terms discounts.”
Jim Frome, chief strategy officer and executive vice president of SPS, says the outsourced SaaS model for EDI assists retailers in completing the “integration handshake” with their suppliers. “Most people underestimate how much work is needed for supplier outreach,” he says. “It isn’t just one company that makes a change. Every single company needs to do a change on their end for that handshake to go forward.”
The outsourced SaaS model for EDI also provides cover to retailers who constantly have to alter their business processes amid competition, such as when retailers change fulfillment models or seek more visibility into transactions.
“You can always count on a retailer going on to incorporate a new level of integration targeting a specific business driver down the road,” Frome says. “It never really stands still. Then all of the suppliers need to make a change on their end for that handshake associated with that change to work.”
The outsourced model also means outsourcing the technology for retailers who may not have the financial wherewithal to continually refresh their platforms each time they make a change. “We keep the technology modern and upgraded so that they don’t have to be responsible for upgrading hardware or buying new systems,” Frome says.
During the course of the Boater’s World launch, SPS was able to dedicate 40 staff to the project, mostly to handle relations with vendors. “Once that spike of activity goes down, when the project is done, [the retailer doesn’t] need those 40 people anymore,” Frome says.
ASN advantages
As critical as the vendor outreach portion is to Boater’s World, the expansion of EDI capabilities also provides the ability to speed up information flow and accuracy through Advance Ship Notice information. For instance, Boater’s World warehouse and store managers receive more accurate information about merchandise that is in transit.
“It enables us to get a better feel of what’s inbound into our warehouses and have a better expectation of when to receive things,” O’Hern says. “It allows for more accurate receiving at all steps of the game.”
The SPS platform also offers a web-form option to create multiple ASNs for a single order. Based on the information entered into SPS’ online service to complete the ASN, the system can quickly print the accurate number of labels required for the entire shipment, resulting in an easier packing process.
