Why you need a bridge between e- and c-commerce

Why you need a bridge between e- and c-commerce

While many businesses are reaping the benefits of electronic supply chain, the tools to streamline workflow, automate processes and smarten up teamwork are reaching maturity.

New imperatives for smart businesses

When e-commerce failed to deliver the promised windfalls during the dotcom decade, wise businesses turned inwards to complete the job of integration, review strategies and create frameworks to prepare for e-collaboration. Rather than just moving data around, the goal is to integrate, automate people processes, standardise architectures and create common interfaces so employees, business partners and customers have access to information, applications and services. With one set of clean information flowing between back and front office systems, new opportunities open up for the supply chain to support each other’s businesses.

MIS sought advice from the following IT decision-makers and commentators:

Jenny Thorpe, management systems accountant, Kapiti Cheeses

John Donaldson, general manager IT, Progressive Enterprises [who is moving to a new roleAlan Hesketh, formerly of Brisbane City Council, takes over the general manager IT post this month]

Warwick Wright, general manager technical services, New Zealand TAB [now the Racing Industry Board]Malcolm Paul, enterprise solutions manager, Fonterra

Brett Priddey, strategic architect, Wellington City Council

Michael Brown, global supply chain managing director, Dimension Data.

Oil the squeaky chain

Another level of integration can simplify processes and leverage the openness of the internet.

Many have relied on enterprise resource planning (ERP), which promotes collaboration between key back office departments and functions, supply chain management (SCM) to optimise dealings with suppliers and customer relationship management (CRM) for marketing, sales and support.

However, true e-collaboration cuts across these traditional lines with another level of internet-based applications to create more open communications.

According to Michael Brown, global supply chain managing director for US-based Dimension Data, most organisations are focused on “static representations” of processes through data-centric approaches to ERP, SCM or CRM. He says collaboration requires a more process-centric dynamic, more clearly reflecting the nature of the business.

That means open electronic interactions between all relevant internal IT systems, secure enough to interact with the business systems of key partners at application level, sharing common services and providing visibility even across disparate systems.

Collaborators do it better

Getting closer to supply chain partners improves efficiencies, improves data and increases profit.

According to Deloitte Research, collaborative companies perform up to 70 per cent better than those that do not work together.

The winners in any category, it suggests, will be those who can:

Connect and automate processes with their partners, customers and suppliers

Diminish inventory inefficiencies and carrying costs

Reduce information and transactional latencies throughout their value chains

Develop new capabilities that improve service levels while decreasing costs

Make decisions about extended enterprise performance based on real-time organisational information

Increase profits, revenue growth, market share and investor returns

Standards form foundation

Getting the basic architecture right allows you to be more open with everyone.

Malcolm Paul, enterprise solutions manager with Fonterra, says collaboration is not something his organisation treats lightly. The dairy giant has a dedicated service team working through the various technologies and options for internet collaboration.

Although there are numerous projects underway – including e-procurement and supply chain optimisations based on the SAP enterprise system – Paul’s role is looking after Fonterra’s integration, business intelligence and web develoment.

He is looking at connections with partners and ways to expand the capabilities of in-house technologies to future proof for the next three to five years.

The goal is to create a standards-based enterprise applications architecture and a portal framework to help integrate multiple systems as part of a continuous improvement model.

“We’re trying to put in the software infrastructure to get information to the right people at the right time,” says Paul, “by standardising and focusing our skills on a smaller group of software tools in the enterprise application integration layer, portable frameworks, content management and business intelligence technologies.”

Fonterra knows where its integration strategy is taking it, says Paul, but there are dangers in changing too fast.

“If you try and do the big bang approach – especially with companies the size of Fonterra – you’ll fail. It’s a case of one step at a time, even if they’re bold and ambitious steps, and to have a long-term goal.”

Get the right combination of programs

Both users and systems get the efficiency boost.

The intent is to pull together processes and systems allowing sharing of ideas and information and to use tools supporting people’s behaviours. “Tools themselves do not make people collaborate unless they’re used properly and support business goals,” says Paul of Fonterra.

Early on in its emergence as a local dairy giant, Fonterra saw the power of the web for distributing information rather than jumping on the e-commerce bandwagon. Kiwi Dairy/ Fonterra began using the web as an information delivery tool through the Fencepost site, which acts as a front end for farmers, who are at once its shareholders and suppliers.

“We’re looking to provide central core engines for any web presence, so ideally we’d have one set of tools for creating our intranets, extranets and internet and move to a web services-based architecture where we can integrate with customers, suppliers and various vendors as easily as possible,” says Paul.

Tools such as XML (eXtensible mark-up language), Simple Object Access Protocol (Soap), Universal Description, Discovery and Integration (UDDI), and Business Process Execution Language (BPEL) for web services are helping build cleaner and clearer links between systems and processes.

Identify how everyone can win

Ensure you and your partners receive clear business benefits from sharing.

Fonterra’s Paul says there is no room for second-guessing. “There’s a lot of hype around collaboration and e-procurement – we can do a lot of things, but we have to make sure we’ve identified what is of most use and importance to our business partners and deliver on that. We also have to keep monitoring that to see what is working and what is not and how we can improve things.”

John Donaldson, general manager IT, Progressive Enterprises, says closer relationships with suppliers came through expanding a calendar system originally intended for planning and commitment. “This was a process crying out for use of the internet.”

The application became the focus for the storewide annual promotional schedule. “We encourage the suppliers to promote their product, so we can allocate shelf space and media coverage based on the time they chose and their level of investment.”

The system is now more aligned with supply chain initiatives to both suppliers and members of Progressive’s 700-strong supermarket chain. “When we import products, we can now identify these to our buyers so they can order much earlier than previously. We’re increasingly integrating this kind of capability into our supply chain,” says Donaldson.

It has also streamlined the gathering of nutritional, allergenic and other information about products, which is required by law. “We are required to identify ingredients but, previously, suppliers would have to send this and we would key it in then re-check for accuracy.

With this collaborative system they key in the information.” The calendar system helps with future planning, reducing re-keying and uncertainty and has become a core methodology for general communications. “We’re continuing to identify better ways for handling the various processes across a raft of different systems.”

Prioritise data integrity

The road to competitiveness is paved with proper data utilisation.

Donaldson of Progressive Enterprises says there is huge pressure on retail chains to move to collaborative commerce, but the biggest challenge is achieving data integrity. “To get to the place where there’s one point of entry you need a system that doesn’t require information to be keyed in manually at each end.”

With a manual system, the buyer might agree on a certain day to drop prices on a product but the day may be keyed in differently by one of the parties, resulting in order disputes and more paperwork.

“Initially, the more systems you connect into, the more risk there is for error. So you trial this carefully before going live and then again in a limited group before it becomes a widely adopted process. The more effective we are, the cheaper it is to run the business.”

Progressive is now piloting electronic invoicing with a couple of its larger suppliers. “If we get it right, there’s more margin for us and the customer and we can be more competitive. I know all our competitors are looking at similar efficiencies using different approaches.”

Automation enables efficiency

Workflow technology can streamline people processes and approvals.

Not everyone is dealing with the movement of goods. The TAB (now re-named the Racing Industry Board) needs to deliver accurate, up-to-date information in a timely and secure manner.

It has 600 outlets around the country – 370 of them are pubs and clubs with point of sale terminals connecting back to the TAB’s host computers.

To streamline its own internal processes it uses a series of customised applications under Lotus Notes, which handles the electronic workflow, including accounts payable. Invoices are scanned and put into the system before being tagged for a two-stage approval process.

“It’s a very good system which reduces the need for paper shuffling, allowing us to know the history of each supplier. If we’re not sure something has been paid, we can simply look it up,” says Warwick Wright, general manager technical services.

The TAB makes extensive use of XML which enables it to be fairly flexible in its dealings with other organisations. “We mainly use it in data transfers of information we gather from the racing clubs about racing form, fields and entry lists of horses and dogs and where they’re running, which we send to newspapers.”

It also uses XML to provide odds and other information for television stations, including Sky TV, where it services the Skybet system. “There’s still a need to watch the transactions closely to ensure everything is in the right format. As soon as you start dealing with multiple organisations with different computer systems you can be sure that from time to time things won’t go according to plan,” says Wright.

The TAB has a transaction front end and a back office system which have a high degree of integration. “We don’t have the problems a number of organisations do, trying to get disparate applications to make sense of all the data gathered.”

A daily summary is sent into the reporting system, which calculates the commissions based on the type and volume of products sold at the various agencies, then a settlement statement is produced weekly and customer accounts credited over a secure wide area network. The TAB will continue to look at automating processes using its in-house developed systems to simplify and eliminate the potential for errors.

A common interface simplifies access

Overcome complexity by integrating disparate data to a common web interface.

Wellington City Council is also in the business of sharing accurate data between its own departments and ratepayers.

It is beginning to achieve that with a combination of mapping technology and the internet.

The first application developed by WCC following the adoption of the n-tier strategic architecture to simultaneously prove the practical business benefits of its J2EE approach is cityVIEW.

This provides easy web-based access to valuation, building consents, as well as ratepayer and owner details previously only available to specialist users from different expert systems. Added meaning is given to non-expert users via the use of maps and pictures.

Strategic architect Brett Priddey says it has changed the focus of the process from, ‘How do I get this piece of information?’ to ‘What do I want to know?’

“This is one of the first solutions in the world where a GIS spatial product has been used with the J2EE platform. The combined technologies create cityVIEW, which is greater than the sum of its parts, which are the various disparate databases,” says Priddey. The open standards-based system, still going through a proof of concept stage, has created a bridge to connect internal systems and reach customers and suppliers without them needing specific training.

The application has significantly reduced the time and cost of preparing for collaboration. The technology – designed by an in-house development team comprising Java and GIS developers, architecture and database experts – means applications can be deployed over the internet to the public; and especially the residents and ratepayers of Wellington City.

Core data comes from the master property parcel database at Land Information New Zealand (LINZ), which today is loaded into the council systems manually in a time-consuming process. As part of its proof of concept, WCC’s direct link to LINZ servers was initially tested for internal delivery of data, but has now been extended to public facing applications.

Priddey says staff members are empowered through real time access to expert systems, as well as reduced duplication and cost of data.

The business case must be proven

Break projects down into bite-sized chunks to pave the way forward.

“There is plenty of interest in collaboration. However, it is difficult to move beyond interest to action. A proof of concept using limited resources has given a general idea of what the true business requirements are and proved the technology is not a problem,” Priddey says.

This prompts people to think in terms of the new capability. “We arrange meetings with the business owners to show them what’s possible and capture their ideas about how to apply the technology to our business problems, which generates real enthusiasm and user buy-in.”

He says enabling internal applications by using open systems and a common language is essential. “This enables you to move from concept to reality efficiently. With open standards you only need to build interfaces once to interact with many different customers and systems.”

Internal processes pave the way

Streamlining in-house systems with a view to collaboration provides a head start.

The requirements for small to medium-sized business to move into collaboration are no less challenging. Kapiti Cheeses, a boutique manufacturer which was recently purchased by Palmerston North business United Milk, is eager to streamline its internal processes. But, like many smaller businesses in New Zealand, it finds many of its customers prefer face-to-face interaction.

While not yet automated, Kapiti Cheeses (which sells Aorangi Brie, Kikorangi blue cheese and its own brand of gourmet ice cream), is working with its suppliers to get more accurate forecasting and is looking at opening up electronic communications with a number of those.

“We get a fantastic amount of packaging coming in and deal with several invoices a week, so there’s some potential there. But our focus at the moment is on getting our internal processes efficient,” says management systems accountant Jenny Thorpe.

At the heart of that is the newly installed MFGPro manufacturing-based package from Australian-based QAD, which has a number of modules to enable different levels of collaboration. For example, opening the way for electronic payment of accounts on presentation of packing slips. “This would take a step out of the process by removing the need for invoices.”

While the average chef or buyer in the hospitality business prefers to make a phone call to replenish stock or deal with reps face-to-face, there is less need for this with larger customers. Kapiti Cheeses is about to arm its supermarket sales force with hand-held computers and cell phones to place orders onsite using Telecom’s GPRS network.

It is only through re-evaluating and improving collaborative processes that businesses can meet the challenge of increasing revenues, improving service level and customer satisfaction in competitive markets.

Strategies and tools to enhance integration and support collaboration beyond the company walls are reaching a level of maturity where it is possible to realistically gauge return on investment (ROI). Consequently, many organisations are taking another look at how they communicate internally and with partners. </ol>

Laying foundations

Consultant Greg Woolley, managing director of Certus, claims certain fundamentals are required for e- and c-commerce to bond well.

Sort out internal systems before you look outside

Internal systems and processes must be integrated first, otherwise external collaboration may create work, not reduce it.

You must have a culture of mutual gain

The key to collaboration is finding the win-win situations, and successful collaborative-commerce initiatives devote significant effort to consensus building and benefit sharing.

Model the processes across the supply and value chain

All parties need to understand and endorse end-to-end collaboration and how this adds value to specific business processes. Model the collaboration so all parties can see the value defined.

Don’t underestimate the challenges

Integration with customers and suppliers, legacy ERP systems, lack of standards, ensuring benefits for all participants in the value chain are not insurmountable challenges but need to be considered.

C-commerce enables e-commerce

Initiatives such as UCCNet in the USA have demonstrated significant downstream e-business benefits as a result of c-commerce prior to e-commerce. UCCNet allows suppliers and retailers to maintain product and item synchronisation for new products and updated products, ensuring that suppliers order the correct products, thereby eliminating all of the e-commerce costs associated with incorrect orders, out of date products and so on.

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