An executive from Rainbow Shops discusses email marketing tactics and results at Shop.org.
(Page 2 of 3)
Web-based trade settlement can change all that, advocates say. “Retailers and suppliers look at the same documents, electronically, and at the same data to arrive at the same version of the truth,” says Connolly.
The biggest challenge in moving to a trade-settlement system, Rosenblum says, is dealing with the cultural change required in getting retailers to try a new way of doing things. But because they use increasingly common web-based tools like automated e-mail alerts and browser-accessed web pages, trade settlement systems can be expected to quickly become common tools of retailers and suppliers, she adds.
Notiva, founded by CEO Tom Furphy, former vice president of finance for supermarket chain Wegmans Food Markets Inc., focuses on collaborative match and reconciliation services. Retailers have the option of deploying Notiva’s Retail Trade Edge software on their own web servers behind a firewall, with a link to a Notiva-hosted application for collaborating with suppliers, or using a completely hosted system to which both retailer and supplier subscribe.
Notiva uses IBM Corp.’s Websphere platform to integrate with a retailer’s back-end software, enabling it to pull data from purchase orders, invoices and delivery receipts from general ledger, accounts/payable and other applications into the Notiva Retail Trade Edge application. Integrating that data at the start of system implementation takes 4-6 weeks, Connolly says. Algorithms in the Notiva system look for discrepancies in pricing, ordered quantities and product descriptions, according to tolerances and thresholds set by the retailer.
A retailer can configure the Notiva system, for example, to alert managers when invoice prices are more than 1% above purchase order figures. Any invoices that come within the 1% would be automatically forwarded to the retailer’s accounts-payable system for payment. Invoices with discrepancies remain on a web page for the retailer’s review.
The alerts regarding discrepancies, which can be programmed as e-mail to computers or other messages to cell phones or PDAs, tell a retailer to check the details in the web application on unmatched invoices. A retail manager or clerk can then check particular line items from an invoice to call up the related purchase order to see if there was a reason for the discrepancy-for example, because half the lot of an item was ordered in extra-large containers, requiring a higher price than was reflected in the purchase order-or whether the retailer should challenge the invoice and seek a deduction. Because the application can be accessed by multiple managers simultaneously through a web browser, the overall review process time can be sharply reduced, experts say.
When a retail manager receives an e-mail alert from a trade-settlement application that information on invoices and delivery receipts don’t match details on purchase orders, he logs onto the web application to collaborate with the supplier on reaching acceptable terms. “The importance of the web to collaboration can’t be underestimated,” Rosenblum says. “Without the web, there are too many things managers can’t do. Collaboration is totally enabled by the web-based application.”
From hours to minutes
Parts of these review processes that once took several hours can be cut to a matter of minutes, Connolly says. To realize the benefits from the Notiva system, retailers will pay within a broad range, from $500,000 to $5 million for a software license to install Trade Edge on their own web servers. The price goes up along with the retailer’s volume of transactions, Connolly says. In addition, suppliers pay an annual subscription fee ranging from $10,000 to $50,000, depending on the number of retailers to which they connect.
Lawson and TradeCard offer similar functionality, though with different integration options. Lawson is different from Notiva and TradeCard in that its trade settlement software operates as the Payables Management module within its Lawson Financials software suite, which integrates with its full suite of enterprise resource planning software for overall retail operations.
Lawson, whose enterprise applications also include accounting and accounts-payable software, provides an immediate integration between its Payables Management module and these back-end applications for its enterprise suite customers. “Once an invoice is reconciled, its information automatically updates the retailer’s general ledger accounting software and goes to the accounts-payable module,” says Rob Wilson, product marketing manager. Lawson’s licensing fee for its invoice match and reconciliation tool starts at $50,000 for customers already using Lawson enterprise software.
With TradeCard, which unlike its competitors offers trade settlement software only as a hosted application, retailers can extend the purchase order and invoice match and reconciliation services to integrated supply chain financing. If the TradeCard system finds no discrepancies among business documents, the system can automatically remit the invoices to a third-party financing partner.
In addition to alerting retail managers of discrepancies in purchase orders, invoices and delivery receipts, the TradeCard system will also alert retail managers when invoices are good to pay, letting retail finance managers keep their funds in high-interest-bearing savings accounts as long as possible before transferring funds to payment accounts, Bruu says. In addition, TradeCard provides online management of financing imports, allowing retailers and suppliers to avoid paying the fees related to bank letters of credit typically used to assure payment in import transactions.
Using the web-based TradeCard system in lieu of a letter of credit, Bruu says, each supply chain buyer pays only once for each transaction with its seller regardless of how many changes they make to invoices. By comparison, she adds, bank letters of credit would impose fees each time a change is made to a business document. Combined with the savings in using TradeCard as a tool for matching and reconciling purchase orders and invoices, “We estimate $3-$6 million in savings per $1 billion of procurement,” Bruu says.
The trade settlement vendors say their web-based systems are easy to learn within a training period that, in TradeCard’s case, according to Kolber, is about a half day. Although TradeCard usually sends a product manager to a customer’s site to train users, it also provides training through webcasts. In addition, the systems can take 4-6 weeks to implement, depending on the amount of integration a client wants with partners and its own back-end software applications.