Buy-and-Build E-Procurement Solution
An e-business procurement solution at office-products company Corporate Express results in smooth online transactions for $4 million worth of products a day.
When you're in a business in which the cost of executing a single transaction can easily exceed the value of the customer's purchase, you need to cut transaction costs.
The office-products business involves a high volume of transactions and small order sizes, says Wayne Aiello, vice president of e-business services for Corporate Express in Broomfield, Colo. With conventional ordering methodsdirect mail, fax, telephonebuyers' order-processing costs can easily exceed the value of the supplies they've ordered. Things aren't much better for the supplier: Order-entry, invoicing, returns and other costs can cut deeply into margins.
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Automating those processes and reducing processing costs have driven six years of e-commerce development at the b-to-b office supplier, which has annual sales of $5 billion in North America. At the core of the company's e-commerce efforts is a constantly evolving e-procurement infrastructure that Corporate Express calls E-Way.
E-Way started life in 1996 as a CD-ROM catalog with hooks to an electronic ordering system. A year later, the company migrated it to the Internet. In the intervening five years, it has grown in both features and popularity. Today, the company has about 400,000 active Internet customers at nearly 30,000 organizations who order $4 million worth of goods a day35 percent of the company's office-products business. (Corporate Express also operates computer graphics supply, business forms, promotional products and IT asset management businesses in which E-Way plays no part yet, but may soon.)
Driven by the Database
E-Way is database-driven. Based on business rules set by individual customers with the help of local Corporate Express service reps, the system generates a personalized catalog for each account, one that factors in product preferences, contract pricing and purchasing constraints such as approvals, maximum order sizes, and so on. Customers can even specify look-and-feel optionsincluding the corporate logo, for example.
"Since the personalization is built in at the database level, we don't have to support 25,000 versions of the code or 25,000 versions of the GUI. It's all driven by the database," Aiello notes. "Configurations are done by our people in the field using the site with administrative privileges. They can go in and select various options, set up the approval chain, add users, and specify which user reports to which person in the organization. All those things are contained within the administrative function of the site."
Buy and Build
E-Way is a carefully blended mix of home-brewed and purchased applications. When Aiello's group can't find the functionality or robustness it needs in third-party products, it builds its own. When commercial software can do the job, Corporate Express integrates it into E-Way. After debating the buy-versus-build issue, "we decided to move to a buy-and-build mode," Aiello says. "You buy the things that make sense, then you integrate them in using an integration system."
Too many companies, he adds, buy expensive e-commerce solutions, get mired in implementation, then find out two years later they're only getting a fraction of the functionality they need. "That's really not a very smart way to approach things in the e-business world."
A key third-party software product is webMethods, an application integration system from a company of the same name in Fairfax, Va. webMethods was used to link E-Way to a back-end distribution system called InVision, which Corporate Express created around the same time it began work on E-Way. It's also used to integrate E-Way with customers' e-procurement systems and to tie point solutions from other software vendors into the E-Way suite. The EAI approach, Aiello notes, lets the company hold onto its legacy applications and saves it the time, effort and dollars it would otherwise have to spend updating back-end systems.
A product information management solution from Trigo Technologies Inc. in Brisbane, Calif. tracks and publishes all product-related informationdescription, units of measurement, picture links and so forthout to its online catalogs. The Trigo product is also used to integrate information from multiple sources, and Aiello adds that Corporate Express is discussing the possibility of using Trigo to prepare its print catalogs as the developer moves further in that direction.
Documentum Inc. in Pleasanton, Colo. supplies the company's content management system. "It's a repository for all the things we do with reporting and billing," Aiello says. "It's also our content management system, so the graphics, the text, and all the site content are stored within Documentum. Finally, Corporate Express is testing an online help system from Austin, Texas-based Motive Communications that will supplement the live help desks in Broomfield and its 37 regional locations.
Aiello says E-Way acts as an e-procurement ASP for companies that don't have systems of their own or prefer to run their office products purchases outside those systems. For customers that use purchasing platforms such as Ariba, Commerce One, SAP and so on, Corporate Express offers E-Way integration, usually via the procurement system's pass-through option (Round Trip, PunchOut and so on).
Because office products are almost universally used, they're often the first items addressed by new e-procurement implementations, and Corporate Express has been on the ground floor of many of them. So far, Aiello's crew has completed more than 150 integrations with customer systems and industry-specific market sites, and it's been able to cut the time it takes to do them from several months to 10 to 20 days. "We did one in a day for a very standard integration with an Ariba customer recently," Aiello says. "Most of the time now is spent on helping the customers through their side of it and gathering the information necessary to do the configuration."
It's All About Service
The proportion of the company's business done on the Web grows by a few percentage points every month, and Aiello reckons a target of 70 or even 80 percent isn't out of reach. "There are always going to be people out there who want to use a multi-channel approach, like phoning or faxing orders in," he says.
The company is about to roll out a series of reportsproduct usage, performance summaries and morethat will be available on the Web. The reports are currently available, but customers have to request them. Aiello's organization is also looking at a system for online payments.
"The overlying theme is customer self-service," he says. "There are a lot of customers out there that want to have access to the information and want to be empowered with it."
Team Leader: Wayne Aiello, vice president of e-business services
Location: Broomfield, Colo.
Web Site: www.CorporateExpress.com
Goal: Develop a comprehensive, scaleable e-business platform that provides users a wide array of services and options.
Scope: Currently supports approximately 400,000 active users in nearly 30,000 businesses; handles $4 million daily in transactions.
Equipment/Platform: 10+ SunFire 15K servers running Solaris 8, Oracle 8i and Oracle Application Server.
Solutions: An e-business infrastructure (E-Way) supporting: ordering controls, online billing, user access to account records, custom product selection, e-procurement platforms and e-market sites.
Trigo (product information management)
webMethods (enterprise application integration)
Documentum (content management)
Motive (online help software, currently in pilot stage)
EMC (RISC storage)
Costs: Parent company Buhrmann N.V. has invested 100 million euros ($94 million) over the past two years in e-commerce development at Corporate Express.
Results: Corporate Express currently does 35 percent of its office products businessabout $4 million a dayover the Web, with a goal of 80 percent. Internet ordering saves process costs, significantly reduces returns, and builds customer loyalty by offering online control and accounting functionality.
Lessons Learned: Buy-versus-build debates led to a blended approach to development. The company buys off-the-shelf software when it can, brews its own when it has no other options, then integrates everything using application integration software.