In this Issue
Business Insights
Supplier Portal: Who benefits? Who pays?
Collaborating with your suppliers in real-time, eliminating
paper purchase orders, automating the flow of information directly into
your ERP system. The benefits are real, but who should fund the
building and running of the network?
Read More...
Optimizing the Value of Excess Inventory
How an eAuction can move excess, off-spec, or slow moving
inventory from a liability to a monetary gain. A specific example in
the wide-spec polymers.
Read More...
Connect to your Customers
If "being easy to do business with" is an important
characteristic for your company, e-commerce solutions should be part of
your strategy. How a customer portal can help capture orders from a
variety of sources, and provide real-time status to your customers. A
specific example in the lighting industry.
Read More...
New Customer: Klass Time
Klass Time has launched a strategic initiative to more
closely collaborate with its key supply chain partners. The goal is
simple: improve communication, reduce workload, and enhance service
levels.
Read More...
Supplier Spotlight: Smurfit-Stone
Smurfit-Stone uses Supply Chain Connect's order management
and inventory visibility applications to ensure that their customer has
sufficient inventory on-hand to meet their production needs.
Read More...
Thank You
Since
our inception in 1999, we have deployed over 25 private supply hubs for
companies of all sizes, in a variety of industries. Today, we are
processing over 30,000 order lines a month for customers all over the
world. Our customers continue to use our eNegotiation tools and
services to dramatically improve their negotiating power on the
purchasing and sales sides. We have conducted thousands of online bids,
which have delivered dramatic price improvements, as well as, manpower
efficiencies.
Against this backdrop, we extend thanks and appreciation to our
current customers. Through their continued input and support, we have
been able to expand and develop our offerings. If you have any feedback
or suggestions, please send us a note to: connections@supplychainconnect.com.
Michael Ereli – President & CEO, Supply Chain Connect
Business Insights
Supplier Portal: Who benefits? Who pays?
The benefits are real. Case studies have shown demonstrable savings to both
suppliers and buyers as a direct result of using Supply Chain Connect's Supply
Hub:
- Up to 50% reductions in
inventory and safety stocks
- 25% reduction in the total
cost of processing and filling an order
- 20% less time spent on
reconciling order, receipt, and invoice data
In our experience, the buyer is the initiator of establishing a
collaboration hub for its suppliers. The cost justification is typically a
combination of manpower savings, plus a significant, one-time capital
adjustment attributed to lower inventories. The capital adjustment usually pays
for the implementation costs several times over. However, as the suppliers come
on and begin to use the data and functionality available, they also derive real
benefits. Which brings up the question...Who pays for the on-going operation
and development of the network?
Before sharing some different funding models, we should review the scope and
features of a collaboration hub. A collaboration hub provides supply chain
partners with the ability to share critical real-time order, demand and
inventory information using both integrated and web-based applications.
Supply Chain Connect's interaction with existing systems and users is
typically as follows:
We extract purchase order
information, inventory levels, planning and forecasting data from our
client's ERP system. We are then
able to provide an integration interface where this information is shared
with selected suppliers. - Suppliers use our web-based
applications to view inventories, monitor demand forecasts, and respond to
orders. They can quickly see, or be automatically alerted, when a
stock-out condition is imminent. If approved by the buyer, the supplier
can even create a replenishment order, or a release against a blanket
order, to meet supply needs.
- We also provide the
capability to integrate into the ERP systems of suppliers for complete
automation of transactions.
Soon after an implementation, suppliers begin to realize benefits by:
- Spending less time responding
to orders and order changes.
- Better managing their own
supply chains by having a view into future demand of their customer.
- Faster payment due to fewer
invoice exceptions.
Supply Chain Connect has deployed over twenty five private supply hubs,
which support hundreds of suppliers. In all cases, the suppliers are funding
some portion of the development and ongoing operational costs. The models can
be a monthly subscription, a one-time connection charge, or a combination of
the two. Some buyers have elected to charge a flat fee to all suppliers, while
others base the charge on parameters like annual spend, monthly order volume,
or annual revenue of the supplier.
Optimizing the Value of Excess Inventory
As companies are faced with decreasing the amount of Capital that is tied up
in excess inventory, eAuctions are becoming a popular and effective way of
selling excess inventory to a designated segment of the market. In attempting
to dispose of excess, off-spec and slow moving inventory, new challenges often
arise - such as limited sales resources dedicated to this task, and the uncertainty
of the real market value of this inventory. An eAuction provides the seller the
following advantages:
- Fast Time to Results:
In an eAuction, the seller can negotiate simultaneously with many buyers
throughout the world. Typically, results are obtained within 2 weeks from
initiation of the process. Supply
Chain Connect handles the entire auction process from conception to the award
of business.
- Optimal Market Value: Through
the competitive bidding process, clients are able to obtain a maximum
value consistent with the market. Because the dynamics of each market
varies, Supply Chain Connect provides customized auction formats suited to
that market.
- No Additional Resources:
The entire auction process is outsourced to Supply Chain Connect. This allows the seller to free their
critical sales resources to focus on more strategic sales.
- Buyers are Pleased: Due to the equability and time efficiency of
the process, buyers are eager to participate in the eAuction events.
Industry Success - Non-price Plastic Resin
Sales
Commodity and specialty plastic resin manufacturers are using Supply Chain
Connect eAuctions to sell excess inventory to the secondary market. This is composed of traders, brokers, and
resin distributors. Scheduled weekly, monthly or quarterly, these auctions
allow the seller to move excess inventory fast at prices that often are better
than the prevailing market indexes. Sales staff and 1-2 FTE’s that were
formerly dedicated to the sales of these products through traditional means are
free now to concentrate on strategic customers. The result is the seller has a
clear indication of market value and has sold their excess inventory quickly
and efficiently.
Connect to Your Customers
The customer portal has evolved. Initially manufacturers, distributors, and
retailers of all sizes sought to quickly leverage the reach of the internet to
improve customer service. Early implementations of customer portals were simple
shopping carts with static product data and basic order status checking. Now
expectations have changed:
- Customers expect simple
self-service ordering for configurable products and services.
- Sales representatives,
channel partners, and customers want access to the status of orders and
available inventories as products move through the supply chain.
- Sales representatives require
accurate product knowledge when quoting solutions to their clients,
whether they are connected or offline.
- Sales personnel demand access
to information that allows them to outpace their competition – faster
turnaround time from inquiry to quotes, product cross-over information,
and rebates/discount calculations.
One business segment where these needs and expectations have grown
considerably is with the wholesale distributor. As many have come to realize, a
wholesale distributor IS a supply chain company. The visibility of order and
demand data is essential for success. Unfortunately, most of the early customer
portals were not well-suited for one of the most critical links in the supply
chain: the distributor. The large manufacturers initially deployed customer
portals to accept orders and check status; however, the distributor had more
complex needs than a typical end-customer. Managing the dozens of different portals of
manufacturers only created more work. Many distributors made the investment in
EDI infrastructure to communicate with the manufacturers. Unfortunately, many times, this proved costly
and error-prone. Another challenge was the distributor needed a web presence of
his own to improve the level of service to his customers. Some of the larger
software vendors provided a way for customers to enter a portal and complete
some basic functions like checking stock, or order status. But these solutions have all proven to be
incomplete.
Distributors require a comprehensive solution: one that will aggregate the visibility of
order and demand data from ALL of their supply chain partners, regardless of
the availability of EDI; they need the flexibility to connect to new and old
legacy systems, without the disruption of implementing costly new software; and
finally, information should flow seamlessly to all of their own customers.
This gap is one that our collaboration hub fits extremely well. As an
example, we are working together with several manufacturers, distributors, and
reps in the commercial lighting industry to create a solution that will
dramatically improve supply chain efficiency for everyone from the factory to
the end-user.
Initially, this collaboration hub will automate the flow of quotes and
orders from the reps and distributors, back to the manufacturer. Inventory
levels, order status, shipment information, and eventually invoice data will be
made available back to the reps and distributors. The unique aspect of our
collaboration hub is that all parties can continue to use whatever information
system and communication method they have already invested in. The
collaboration hub serves as a central repository, and universal translation
engine for all information. On the "spokes" of the hub, companies use
PC-based software, web-based screens, or large database driven systems like
SAP, or Activant to process the information. We like to think that we are
changing the industry, without forcing people to change the tools they like to
use.
New Customer
Klass Time Distributor Portal
Since opening its Houston
headquarters in 2000, Klass Time, Ltd. has quickly become a leader in the U.S.
Hispanic Food and Beverage market, reaching an impact of more than 5 million
predominantly Hispanic consumers per week. To further expand its reach in the U.S., Klass
Time has launched a strategic initiative to more closely collaborate with its
key supply chain partners. The goal is simple: improve communication, reduce
workload, and enhance service levels.
With the help of Supply Chain Connect, Klass Time will build a first class,
in-house Web Portal to gather and consolidate demand and inventory data from
its partners. A single view of data from dozens of disparate systems across the
country will enable Klass Time to more effectively manage product levels and
assign resources where they matter most. More importantly, Klass Time's
partners will not be required to install new software or make changes to their
existing processes.
"What I like about the Supply Chain solution is that it enables us to
share our success with our partners. Our growth is tied to their success, so we
see this as an investment in our relationships." – Alejandro Cantu, VP of
Sales, Klass Time, Ltd.
To learn more about Klass Time, visit: www.klasstime.com
Supplier Spotlight
Smurfit-Stone
As the world's largest manufacturer and supplier of corrugated boxes,
Smurfit-Stone is a critical link in the supply chain of its key customers.
Recognized as an innovative market leader, Smurfit-Stone has joined General
Cable in an initiative to make their supply chain more efficient and
cost-effective.
As a key supplier to General Cable, one of our collaboration hub customers,
Smurfit-Stone uses Supply Chain Connect's order management and inventory
visibility applications to ensure that their customer has sufficient inventory
on-hand to meet their production needs.
In mid-2002, General Cable adopted a private supply hub from Supply Chain
Connect to enable them to achieve impressive financial and operating goals.
These goals include the reduction in raw material inventory by 50% over three
years, the doubling of inventory turns, and
the complete elimination of EDI costs with suppliers. Additionally, Supply
Chain Connect enables General Cable to reduce costs associated with the manual
processing of all traditional transaction documents associated with the
purchasing process. Smurfit-Stone was enthusiastically supported General
Cable's initiative with Supply Chain Connect and has been extremely satisfied
with the benefits that they have enjoyed. Shane Fraley, Account Manager for
General Cable, has found the system not only helpful but also easy and
intuitive to use.
To learn more about Smurfit-Stone, visit: www.smurfit-stone.com
Overview