When you’re offering everyday basics at low prices, there’s little room for rising costs and inefficiency in the supply chain.
With 5,500 small neighbourhood stores across the middle and southeastern U.S, Dollar General receives
multiple shipments from more than 2,000 suppliers each week.
Numbers like that translate into numerous challenges in keeping track of shipments. And even in today’s technology-driven marketplace, it means processing an overwhelming number of paper invoices every week from perishable food and other packaged good suppliers.
“”Our number of stores and low price, consumable basics strategy presents us with a lot of supply chain challenges,”” said Dennis Krautsack, director of information services, for Nashville Tenn-based Dollar General.
Early last year the company began an initiative to link Dollar General to its vendors and improve key supply chain challenges such as the enormous amount of paper invoices, rising EDI VAN (Value Added Network) costs and the importance of securing transactions over the Internet.
About 20 per cent of trading partners today are EDI enabled and part of the reason for that low rate of adoption is the cost of the VAN, according to Mike Jones, vice-president of sales for Newport Beach Ca.-based IPNet. He said a number of Canadian companies are using the software, but wouldn’t disclose any names.
“”It makes it prohibitive for a lot of companies,”” Jones said. “”A lot of these companies (80 per cent) are connecting the old fashioned way – manually, in very unsecured, error-prone faxing of information. The day to day management of these partners is resource intensive.””
Jones and Krautsack spoke Wednesday during an IPNet Webcast: Improving Your Supply Chain with Trading Partner Communication, highlighting IPNet’s new connectivity and data exchange software BizManager TradeLink. The product is designed to connect retail and consumer packaged goods (CPG) companies with their supply chains partners. BizManager is the server-based solution for large hubs and large partners.
But IPNet proposes that it can connect 100 per cent of trading partners whatever their size, even if they are using fax for outbound purchase orders or return invoices.
IPNet has a technology called configurable transaction routing (CTR) which allows a company to connect with trading partners in a variety of ways based on the type of document and method they want to connect with each other.
The software is a Java-based solution and features a tiered suite of products enabling a company to meet the requirements of varying sized partners.
For example, it allows for a mailbox function for smaller partners where they can import and export information based simply on a URL provided to them.
“”On the data side, it doesn’t matter if the information is in EDI format, XML, spreadsheet, Word document, any type of flat file – we can move that and the transport method can be any of the standards out there today,”” said Jones.
Dollar General’s goals were to automate manual transactions including paper faxes, e-mail and telephone, provide electronic solutions for partners of all sizes and all capabilities and speed up response times for key suppliers. The company also wanted to improve partner relations by reducing EDI costs, exploring VAN alternatives and reduce cycle time in critical supply chain functions.
Dollar General looked at several vendors to help build the portal structure and selected IPNet for several reasons.
“”They had the only solution already implemented at other leading retailers such as Lowes and Myer, and they had flexible standards that allowed us to provide multiple ways of doing business with suppliers with low cost to them and us,”” said Krautsack.
Rollout of the software began in two areas: perishable food vendors and transportation carriers.
“”These areas provided good opportunity for quick ROI for us,”” said Krautsack.<P.For example, in transacting with three of their perishable food partners, Dollar General uses eBizTransact over a VAN going direct with AS1 and AS2 (Applicability Statement 1 and 2) communication technology.
“”We can do this seamlessly without any changes to our host systems at Dollar General,”” he said.<P.The company has reduced the paper costs for itself and their vendors including postage, processing, key entering transactions – all have been eliminated and invoices are checked and edited with their host systems and fed directly into accounts payable systems. That means invoices are processed faster, vendors are paid sooner and inventory systems are updated quickly. As an added bonus the company says it has improved data integrity.<P.The second rollout was with the company’s transportation carriers. Dollar General has over 2,000 load tenders per month. Prior to the implementation of IPNet they were done by phone, fax and e-mail with their transportation carriers. A load tender occurs when Dollar General has determined where it is going to pick up merchandise and deliver it. They then offer it to several transportation carriers so they can get the best price. This function was previously done manually up until implementation of IPNet.
“”This is a costly and time consuming process,”” said Krautsack. “”We had very slow response times to our load tender offers – sometimes up to three days and these load tenders, previous to our implementation, were not automated with the carrier’s dispatching systems.””
The solution was to use the IPNet software to send transactions via Internet EDI to these carriers.
“”In the beginning we used Web Forms with all of the carriers to get the project implemented very quickly and get the ROI we were looking for. Then, one by one we shifted them over to Internet EDI for those carriers that already had that capability and integration with back end systems,”” says Krautsack.
The system has reduced paper transactions and almost eliminated paper faxes. Carriers receive tenders in real-time and have two hours to respond to our tender offer, receiving response in one hour – cutting cycle time dramatically.