A Forrester report points out challenges faced by some business-to-business firms working online.
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In the fast-moving world of designer fashions, time to market is even more crucial than in other retail segments. “Even hours can mean money to us,” Howell says. But delays in getting products through Customs were adding several days to shipments. Yet Howell couldn’t just shrug his shoulders and blame delays on nitpicking Customs inspectors. He had to find a way to get the information on products and materials as well as shipment updates from suppliers and freight forwarders ahead of time, so that Neiman Marcus could prepare the data demanded by Customs before products arrived in the U.S.
To expedite this movement of Neiman Marcus’s imports, and appease Customs inspectors as well as merchandise buyers, Howell’s staff has implemented a new web-based Qiva Global Logistics Control System that enables Neiman Marcus to pre-classify imports before they get to a Customs checkpoint. (Qiva recently was acquired by global logistics software provider TradeBeam Inc., San Mateo, Calif.)
The Qiva application integrates Neiman Marcus’s order management system with its global logistics system. When it’s ready to place an order, Neiman automatically forwards electronic purchase order information to the web-based Qiva application, which checks to see if suppliers have submitted information on country of origin for each ordered product. Suppliers enter that information directly over the web, but in case they haven’t, the Qiva system sends an automated e-mail alert to Howell and his staff once a purchase order is processed. The alert gives Neiman Marcus several weeks to contact suppliers to make sure they all provide the country of origin information before the order is shipped. The web-based system replaces a slower and more error-prone method of manually entering purchase order data into an order management system, and then checking that data against separate files of product details from different suppliers.
The web-based system enables Neiman Marcus to file product shipment entry papers with U.S. Customs as soon as a shipment leaves its country of origin. Retailers are required to tell Customs which plane their shipment is arriving on, plus the harmonized tariff code associated with each shipment. In the past, Neiman Marcus had to wait to get all this information from suppliers until well after shipment had started, which added to delays in getting through Customs. The Qiva system, which integrates with suppliers as well as with worldwide flight schedule data, alerts Neiman Marcus and its customs broker that a shipment is on the way as soon as a plane or ship begins its journey. It relies on suppliers and freight forwarders to enter shipment schedules directly into the Qiva system, which forwards e-mail alerts on these schedules to Neiman Marcus. To compensate for any changes in schedules, Neiman also receives e-mail alerts that the Qiva system forwards from automatic feeds from air and sea carriers. “Now we know what the harmonized tariff code is as soon as the wheels are up on the plane,” Howell says.
And because the logistics system has also enabled Neiman Marcus to clarify product classification information well before shipment, there is little likelihood of other disruptions. “We no longer have to try to classify a product when it’s en route to the U.S.,” Howell says. “Now we know that information before anything ships.”
The Qiva system also checks if a particular product has been handled by shippers known to have violated international trade laws by, for instance, switching “Made in China” labels to “Made in Canada” labels to benefit from lower trade tariffs. The Qiva system automatically checks supplier information against a government database of known law breakers, then sends automated alerts to Neiman if any are identified. Neiman Marcus can then decide whether to cancel the order or check to see if a legitimate supplier’s identity may have been confused with another’s. Customs will confiscate any shipment found to have been touched by law-breaking suppliers.
Profiting from pain
The result of using the web-based Qiva system is that Neiman Marcus has been able to meet its planned delivery dates and meet sales targets, even though it is constantly ordering different merchandise based on current fashions. “We haven’t missed one deadline since the new system’s been up,” Howell says. He notes that this has helped Neiman maintain its policy of shipping each merchandise order individually and as quickly as possible, instead of consolidating shipments, in order to get merchandise into stores in time for peak selling periods.
He adds that the Qiva system was simple to set up internally as well as with suppliers and freight forwarders, who can all access the Qiva system for information related to their shipments. Other than the purchase order system interfaces built into the Qiva system from Neiman’s three retail channels-stores, catalog and web-implementation required 15-hour training courses, conducted by Qiva, of two Neiman employees as well as custom brokers and carriers. The trained Neiman employees pass their skills onto co-workers.
In addition to the help the system provides in dealing with Customs, it also provides visibility into order status and events that occur throughout the supply chain. “It reduces our costs and complements our vision for logistics control,” Howell says.
There may be a silver lining for retailers in the new challenges posed by the latest global concerns because targeted efforts to overcome particular problems can be a good way to get started on a more effective and broader web-based supply chain system. Retailers are often slow to invest in new technology until they are forced into it by competition, trading partners or government regulations. Although Neiman Marcus had already planned to roll out a broad global logistics system to handle more than just the Customs issue, it’s still deploying it in stages that allow it to see the value of individual phases before proceeding to the next.