Building a 21st century retail supply chain - the case for edi in retail -- spice technology group

SPICE Group, Inc. [email protected]

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Practical Innovation for Retailers, Manufacturers and Distributors

Building a 21st Century Retail Supply ChainThe “Case” for EDI in Retail

EDI – A Connected Supply Chain

SPICE Technology Group, Inc. 2

Simple I Fast I Affordable

Table Of Contents

Why EDI?

What are Best in Class Retailers Doing

What is EDI?

Wins for Merchandising, Finance, Supply Chain & IT

Common Retail EDI Processes

Developing a Business Case for EDI

Sample Roadmap for Implementation

Implementing EDI – “The Plan” & What to expect

Why EDI?


While ERP Streamlines (Internal) Workflow …

• Retailers benefit immediately by streamlininginternal workflow and communications

…Trading Partner (External) Data Not Addressed

• Reduces business case realization for ERP

• Paper, phone calls and faxes propagate

• Affects all departments dealing with Suppliers andalternate customer channels

Net Result –Still Paper, Spreadsheets, Faxes

• Merchandising affected

• Supply Chain and Logistics affected

• Finance affected

Most best-in-class retailers have automated supply chains with EDI/eBusiness

Disconnected Channels

What are “Best in Class” Retailers Doing?


What Best in Class Retailers Have in Place What Best in Class Retailers Plan to Do Next

What is EDI/e-Business


An automated exchange of business data

• Electronic Data Interchange (EDI) is a program wherebyTrading Partners (such as suppliers, transporters and others)send and receive data in different formats, directly to andfrom Retailer’s ERP systems and in accordance withRetailer’s business rules.

• This results in improved data exchange between by retailerand all Trading Partners. Benefit: a significant reduction inerrors, exceptions, manual work and lead times/safetystock throughout the supply chain.

• EDI is interchangeably described as e-Business and B2B(business-to-business ecommerce, utilizing moderninternet-based technology). They all mean the same thing.

Wins for the CFO


Accounts Payable

• Significant headcount reduction in labour

• Faster and more accurate 3-way match-and-attach process

• Savings from automatic checking of negotiatedcosts.

• Capture of early payment discounts

• Reduction in vendor inquiries

Evaluated Receipts Settlement (ERS)

• An advanced retailer-supplier workflow wheremerchandise is paid for based on issued PO &DC/Store Receipt (and not on invoice).

• AP headcount reduction and early paymentdiscount capture

Trade Allowances & Discounts

• Fast capture and reconciliation of specialallowances , discounts and promotions

• Streamlined management and settlement ofchargebacks and vendor deductions

Finance & Reporting

• Accurate and timely accruals of purchases

• Improved inventory & shrink accuracy

• Faster month end closings

Working Capital

• Reduced inventory due to shorter lead times

Wins for VP Merchandising


New Product Listing

• Automated and timely exchange of retailer-supplier datato reduce timelines associated with new product listings,get new product to market faster, improve online accuracy….and receive/process vendor merchandise quickly at theDC or store

Replenishment & Inventory Management

• Automated PO distribution to suppliers with POreceipt acknowledgements and delivery dateconfirmations significantly improves inboundvisibility, reduces ordering lead time and improvesin-stock positions.

Collaborative Forecasting & Sales Data

• Collaborative Forecasting and sharing of POS datawith suppliers significantly improves in-stockpositions and the customer experience.

Scan-based Trading (pay-per-scan)

• An advanced system of trading that allows suppliers tomanage replenishment of certain categories/SKUs.Significant cost reductions throughout system.

“Endless Aisle” & Drop-Ship Execution

• Tight EDI/B2B integration with vendors allows forsmoother consumer drop-ship program.

Wins for VP Supply Chain & Distribution


Smooth Inbound Logistics & DC/Store Receiving

• Automated inbound receiving using Advance ShipNotice (ASN); Significantly improves inboundvisibility and associated operating costs for internalDC or 3PL

X-Dock and Flow-through Logistics

• Significant reduction in system-wide inventory andDC Labour costs. EDI enables smooth X-dockprogram and enables functioning of a mechanizedDC.

Inbound/Outbound Freight

• Automated management oftransportation contracts andsimplified freight invoicemanagement.

Promotions Execution

• Ensure promotional items are in-store bypromotional date; reduce expediting costs, andimprove the customer experience.

Reverse Logistics (returns, recalls, repairs)

• Automated execution of return to vendor (RTV)process; fast execution of product recalls andstreamlined repairs and services.

Source-to-Shelf Visibility forExceptions

• Exceptions-based visibility ofproduct flow from overseas toshelf or consumer channel andall points in between.

Wins for VP Information Technology


Improved ERP Utilization

• Utilize several unused features of theERP with supplier data integration forimproved overall systems capability ininventory management, finance andwarehouse management

Improved Master Data Quality &Business Reporting

• Suppliers and other external partnersgenerate over 40% -60% of the data thataffects ERP. Data quality and reporting isa time-honored “IT headache!”

• Automated rules based exchange of datawith trading partners vastly improvesdata quality and reporting accuracy.

Modern EDI/e-Business is hassle-free …

• Cloud EDI/e-Business solutions from SPICE allows you tofully leverage your ERP investments, minimize ITdisruptions and rollout EDI/e-Business to your tradingpartners quickly and cost affectively.

…and now inexpensive and fast

• Innovative business models from SPICE allow youto have your trading partners participate in thecosts of EDI (since they benefit as well – and oftenrequire EDI).

• SPICE provides all the technology and servicesneeded to deliver a turnkey solution

• No hardware

• No software

• No new IT resources

Common Retail EDI Processes


Catalogue Update

POS Data

Freight Invoice

Application Error Advise

PO Change Acceptance

Text Messages

New Store Openings

Motor Carrier Shipment Status

Purchase Order

Purchase Order Acknowledgement

Invoice

Remittance Advise

PO Change

Advanced Ship Notice

Request for Pick Up Appointment

Freight PO

Developing a Business Case


1. Reduced Lead Times [Inventory/WOS]

2. Reduced FTE

3. Reduced Cost Per Case

4. Increased GMROI

5. Increased Turns

6. Increased Sales

7. Increased Margins

8. Increased Working Capital

9. Improved Franchisee Experience

Your Business Case

Building a Roadmap of Benefits


An Example of an EDI/B2B Implementation

Roadmap

Merch. Procure-to-PayPO, PO-Ack, ASN, MH-10 label, Invoice, Vendor Catalogue

Benefits: FTE, DC Labour, Inventory

CPFR & ERSPOS Data, PO Change, Supplier PO Change, Change Acceptance, Remittance Advise [eliminate Invoice]


Scan-based TradingImplement for certain categories

Supplier Score-carding


6-12 months

6-12 months

6-12 months

Capture low hanging fruit

Implementing EDI: “The Plan”


BUSINESS IMPACT

SET• Business Case• Usually a Pilot with a few large vendors• Either CFO or Chief Merchant (or both) provide an EDI

mandate to suppliers with timelines.

READY• A (business) Project Coordinator is assigned to manage

internal task coordination (Merchant or Finance Team)• SPICE Technical development and rollout tools

configuration• Inform suppliers of initiative.

GO• Go for low hanging fruit first• Test & enable suppliers• SPICE manages the heavy lifting - rollout to suppliers.

Technology Infrastructure Impact

• Outsourcing EDI to SPICE means SPICE will deal withcomplexities of “translating and transforming data” toand from the many supplier systems to Retailer’s ERP.

• Minimal IT impact to retailer - no hardware, software oradditional IT resources needed. Just need to integrateonce with SPICE Connect Cloud, we will manageeverything else from there on.

SPICE’s Set – Ready – Go EDI Implementation Framework & Vendor Enablement Tools reduce your effort and speed up timelines

Mirrored Case Studies

SPICE understands the complexities of supply chain integration


Building a 21st century retail supply chain - the case for edi in retail -- spice technology group

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