Analysis: Supply Chain Synergy

Bob Lewis

Over the past five years, our corporation has been successful in establishing EDI-based trading partner relationships with over 300 of our suppliers and distributors. Primarily, we exchange purchase orders, invoices, freight bills, etc. The cost savings that we originally anticipated have been realized through the need for fewer personnel, reduced paper costs and incidentals such as less postage.

All is well, right? Wrong! Along comes merger mania, and all the corporate and IT ground rules change.

As a result of a major change in the manner we do business, a whole new set of e-commerce data exchange problems has arisen. We are now required to receive sales and shipment data from 24 unique sources. The problem has become one of synchronizing, reconciling and scrubbing several million transactions on a weekly basis, and most importantly, converting 24 unique product identifiers to a single standardized item identifier.

Since a large part of our revenue stream depends upon the accuracy of the supplied data, there is a great importance placed upon that accuracy.

Our surveys revealed that there’s no standard item numbering schema among any of our distributors. One possible method of solving this non-standard identification is to build and maintain 24 separate cross-reference tables for over 4,000 separate items. After reviewing the forecast to support this function, we decided to look outside for a third-party solution.

Our search led us to Information Access Inc. (Cleveland, Ohio; IAI) which describes itself as “An outsourcing e-commerce service offering designed for participants in the consumer packaged goods industry and foodservice supply chain.”

In speaking to Daniel Andrew, COO at IAI, I described the type of information we were going to have to interchange, and also explained that not all of our 24 trading partners were up-to-date relative to e-commerce. In fact, several of our distributors still communicate via fax, or do not have the in-house staff to install newer, more sophisticated e-commerce systems.

Most IT Managers shrink from the term “outsource,” but in this case he got my attention. Andrew described one of IAI’s main offerings, the Synergy Service Center as, “a specific service that allows customers to outsource the complete purchase order and invoice process; including sales tracking, all the way through the supply chain.”

He then added that, “The Synergy service center allows trading communities to reach critical mass with all of their supply chain partners. Our software engine was designed for thousands of manufacturers and distributors allowing literally millions of iterations and the ability to receive and send data in an any-to-any format, regardless of communication protocol.”

By this time we had already completed an initial study as to the cost of maintaining an in-house staff to perform all the functions offered by Information Access and questioned the cost benefit of going the service bureau route. In rebuttal, Andrew replied, “The value of outsourcing offers focus, risk reduction, improved speed to market, access to world-class capabilities and new technologies and redirection of IS resources. Outsourcing can also help you grow your business, since it’s difficult to save your way to profitability. However, we’ve seen our customers spend between $25 to $50 per document. With the use of our service center, we can help reduce this expense between 60 to 80 percent.”

IAI’s customer reference list is impressive and includes such household names as 3M, Pillsbury, Procter and Gamble, Cummins Engine, Office Depot, Lever Ponds and Citrus World. Since this article, we’ve asked for a proposal from Information Access, spelling out the detail forecasted savings we expect from the Synergy Service Center. I’ll keep readers updated as the project progresses.