The e-retailer heads into the holiday shopping season behind a 30% increase in fulfillment spending and a widening net loss. North American sales increased ...
Procuring store equipment through an Internet portal saves cost and time in sourcing products and processing purchase orders. What’s more a mobile app lets managers track and confirm product shipments, vice president of strategic sourcing and procurement Dave Maley says.
With nearly 1,200 stores for which to procure equipment and supplies—and with each store needing tens of thousands of items from lighting fixtures to toilet paper—Kohl’s Corp. uses Internet-hosted applications to slash costs while expediting deliveries, Dave Maley, vice president of strategic sourcing and procurement, said at a procurement industry conference last week.
Maley was a keynote speaker at Ariba Live 2014 in Las Vegas, the 15th annual users’ conference put on by Ariba, a unit of German software company SAP AG. Kohl’s is among more than 2,000 buying organizations and some 1.5 million supplies that conduct business over the Ariba Network, an Internet portal where trading partners can find one another, negotiate contracts and exchange business documents.
Kohl’s uses Ariba software applications to source products from suppliers, including through reverse online auctions where suppliers bid to meet a buyer’s posted buying needs. “Strategic sourcing is the quickest path to value” in procurement, Maley said. Overall, Kohl’s has saved 18% in operating costs by using Ariba to procure products, he said.
At the same time, he added, the ability to share information on operating costs through the Ariba Network helps Kohl’s and its supplies to negotiate fair contracts, ensuring that both buyer and supplier are dealing with prices that keep their businesses financially healthy. “I want my suppliers to be making money,” he said. “I want to be working with good companies who will be there.”
Doing business on the Ariba Network has also slashed the amount of time it takes Kohl’s to process purchase orders, Maley said.
When remodeling one of its stores, for example—a task that requires procuring some 50,000 units of 1,900 distinct items,—the Menomonee, WI-based retail chain can now cut all of the purchase orders for a single-store remodeling project within three hours, down from three weeks under an older system, Maley said
At the same time, he added, Kohl’s managers can access Advanced Ship Notices from suppliers to check the scheduled delivery of ordered goods. Receiving goods for store remodelings, he added, must be carefully orchestrated, often at night, so as not to disrupt daily store operations. “Timing has to be precise,” he said.
When he asked Ariba if there was a mobile app Kohl’s could use to check shipments and delivery times, Ariba developed an app for the retail chain. The app makes it easier for store personnel to check on the status of ordered products, including such information as when certain products arrived and who signed for them, and it will send alerts to managers if items don’t arrived as scheduled.
The app also lets Kohl’s managers take photos of products and share them online via the app, enabling them, for example, to confirm with their superiors as well as with suppliers that the correct products were received.
Kohl’s is No. 26 in the 2013 Internet Retailer Top 500, which ranks companies by their annual web sales.
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