Fulfillment: Get What's Yours

[From iSource Business, March 2001] Long gone are the days when the words "logistics," "fulfillment," "supply chain management" and "procurement" would invariably elicit yawns from the mouths of insouciant CEOs. Rather, supply chain enablement, fulfillment and e-procurement are now the business world's hottest topics of conversation.

These days, corporate boardrooms pulsate with talk of cost-savings, reduced cycle times and streamlined operations because of powerful e-fulfillment tools. e-Marketplace founders endlessly debate the advantages of IT platforms and Web-based portals. Not to mention the volumes spoken by the findings of today's leading research firms.

As an example, International Data Corporation forecasts that the Internet-based procurement applications market will grow from $187 million in 1998 to $8.5 billion by 2003. And, in a study released in late 1998, Forrester predicted that U.S. B2B e-commerce will increase from $43 billion in 1998 to $1.3 trillion in 2003, accounting for a whopping 9.4 percent of business sales.

Such promising statistics are helping to fill the coffers of today's B2B supply chain and e-procurement solution providers. But that's not to suggest, however, that key players can simply ride this latest wave of technological innovation to business success. After all, the e-procurement and supply chain market is becoming increasingly crowded, customer expectations run high and adoption issues have yet to be resolved.

And then there's the matter of the unprecedented pressure being placed on B2B trading partners (buyers and suppliers) to better manage and procure direct materials.

Says Tom Harwick, research director of supply chain management at AMR Research: "If you can improve your purchasing of direct materials, you have a bigger impact on your cost structure, you have a bigger impact on how quickly you can bring products to market, you have a bigger impact on how effectively you can design products. So, it has a big effect on your competitive position."

What is separating the trailblazers from the tech-challenged? The courage to become a one-stop-shop, the ability to provide order visibility, the realization that speed is strategy, the willingness to outsource these factors can jettison a company from the ground floor of mere survival to the zenith of unprecedented success. This is super-charged e-fulfillment.

A Single-Handed Transformation

It's a reality that Yantra Corp. has wholeheartedly embraced. Founded in 1995, the Mass.-based supply-chain solution provider has single-handedly transformed itself from a warehouse management specialty shop into a company that boasts a comprehensive suite of services, from transaction management to reverse logistics.

It's a metamorphosis that has enabled Yantra to expand its roster of clients. Having once primarily catered to Internet pureplays, today the company's clients include stalwarts such as Honeywell and Motorola; Web-based retailers like Gaylord Digital; and B2B trading exchanges, namely Vertical Net and SciQuest.com.

However, such a spectrum of clients would not have been possible without the development of a configurable system that allows for customization and the ability to offer value-add services.

Says Mark Simmonds, Yantra's senior product marketing manager: "We needed to bring our supply chain expertise to bear and map out best practices in managing transactions but also recognize that our customers are going to have their own individual workflows or business processes or systems that they need to integrate into how each transaction is being managed."

It's for this reason that the company's IT platform, dubbed PureEcommerce, guarantees consistency in transactions by featuring a suite of e-business functions including delivery management, dynamic sourcing, order management, analytics and workflow management within a common infrastructure.

Reaping the benefits of Yantra's broad set of e-fulfillment services is SciQuest.com Inc., a scientific products B2B e-marketplace based in Raleigh, N.C. With 1.4 million products from more than 800 suppliers, the company approached Yantra in August of 1999 to deliver a back-office platform. SciQuest.com was in search of a system that would support a variety of interfaces with a number of suppliers, ranging from mom-and-pop shops to EDI-enthusiasts.

A tall order indeed, but in the end, SciQuest.com opted for Yantra's PureEcommerce platform, which is now linked to the company's IBM Net.commerce front-end technology. It represents a decision to eschew EAI middleware for e-procurement technology that has proved profitable. To date, SciQuest.com has been able to communicate electronically with all of its B2B clients' diverse systems, reduce the order processing cycle from four hours to a mere 30 minutes, and the company projects a ROI within the first year of operation.

But it's cost-avoidance not cost-savings that compelled SciQuest.com to seek the services of Yantra. By allowing even the least sophisticated suppliers and B2B buyers those armed with nothing more than a Web browser to track the status of packages, create pick lists and generate air bills on their own printers, the company has reduced the need for bloated call centers.

Says Antony Francis, vice-president of operations at SciQuest.com: "It's the people we haven't had to hire ... We now have 50 people in our customer care center. If we hadn't put Yantra in, we'd probably have 80 people in there today."

Subject du Jour: Give Me "Real-time" Viewing

The sight of empty seats in a customer support facility is not what Sameday.com had in mind when the company began developing its own "visibility" solution. The e-procurement industry's subject du-jour visibility involves providing buyers, carriers, suppliers, B2B buyers and e-shoppers alike with a global, real-time view of inventory availability, the status of orders, and the exact location of deliveries.

Enabling Sameday.com, a Calif.-based provider of rapid-response product fulfillment services, to offer such time-sensitive capabilities is iShipper, the company's Web-based order management and supply-chain management platform. Coined "a supply chain dial tone," iShipper connects suppliers' Web sites to Sameday.com's back-end system, allowing increased visibility for all transaction partners on a round-the-clock basis, as well as the ability to pinpoint shipment delays.

Says Andrew Krainin, senior vice-president of marketing at Sameday.com: "By putting in the technology that enables visibility and control, you can push the frontier of the service level and cost trade-offs and improve on both dimensions with a technology that effectively enables better collaboration between members of a supply chain."

It's for precisely this reason that BuyNow Inc., a provider of e-commerce services to product manufacturers, recently formed an alliance with Sameday.com to expand the company's fulfillment options. By adding Sameday.com to BuyNow's e-commerce solutions, the company has been able to provide its clients with real-time inventory management, as well as rapid fulfillment and delivery options crucial features for today's B2B players.

Says Gary Bernard, a product manager at BuyNow: "A lot of customers who come to manufacturers are the small businesses who find [real-time inventory and order tracking] critical, especially when you're dealing with high-tech ordering. So Sameday's ability to turn [orders] around fast keeps us up to date with tracking information, and to make that information available online was very important."

New Jersey's Net-Transport Inc. has also excelled in offering a supply chain visibility tool. B2B buyers and suppliers can perform shipment tracking activities, carrier-performance monitoring, and manage their transportation intelligence through the company's Logistics-Net.com Web site. Net-Transport's technology simply gleans shipment data from carriers, and then makes this crucial information available through its Web site, which can be accessed simply by opening one's browser. No longer must supply chain information remain buried in black holes such as carriers' dispatch systems or cumbersome EDI networks. Instead, Net-Transport serves as a comprehensive clearinghouse, which is able to add new carriers to its network in less than a day.

Making the Leap of Faith

Still, the company has faced its fair share of naysayers, as have most e-procurement and supply chain pioneers. After all, it was not long ago that EDI was receiving rave reviews from industry pundits and research analysts alike. As a result, encouraging clients to make the leap from costly networks to Web-based portals has proven challenging.

Laments Dave Burns, chief executive officer of Net-Transport: "Most people think they have to buy a multimillion dollar software package or they have to go EDI or they have to bring in an Arthur Andersen and spend four or five million dollars to [guarantee visibility] and that's not true ... There is an option, there is an alternative."

Burns isn't the only e-procurement and supply chain player to call into question the efficacy of EDI. Jay Ramanathan, the chief technology officer of Concentus Technology Corp., an Ohio-based provider of process-based software, also views data-centered integration approaches as antiquated and far too resource-consuming.

"More and more, data movement is going to become obsolete," warns Ramanathan. "If you look at traditional approaches to interactions between corporations, we've moved large amounts of data between one location to another. But when you look at the profit-centric approach, you need the data where it is so the people within the process can access it when necessary. That is going to be a fundamental paradigm shift."

It's for this reason that Concentus' WorkBridge system is built on process servers that provide immediate access to data and applications. The system consists of a process engine and a process platform which, together, provide the agility needed to respond quickly to market changes and customer demands.

It's an appealing alternative to networks that simply route and reroute vital documents. What's more, unlike EDI and early e-procurement systems that typically work only within a single trading community of participants laying claim to the same technology, the Concentus solution can be configured to accommodate a company's unique business processes, as well as integrate any number of partners.

Just ask Powerway Inc: The Indianapolis-based company specializes in e-business solutions for improved engineering performance throughout the supply chain. However, when it came time for Powerway to launch Powerway.com, the company called upon the expertise of Concentus to provide an e-process engine. Powerway.com is a Web-based global utility that enables suppliers from the automotive industry to communicate product quality planning, documentation and process steps between members of a supply chain. According to Steve Scott, chief technology officer of Powerway, approximately 10 million quality process planning projects take place on any given day, the majority of which are conducted manually by nearly a quarter-of-a-million engineering professionals in the automotive industry.

"Being able to keep straight 10 million independent projects [through a Web-based utility], understanding their phases, what needs to be done next and who needs to do what is the real value that Concentus' e-process engine brings to Powerway.com," says Scott.

Although it's still too early in the game to assess Powerway.com's progress, Ramanathan says Concentus boasts technology that can reduce cycle times by a ratio of 13:1, guarantee process improvement, achieve deployment within a 30-day cycle and generate a ROI within 25 to 90 days.

Scalability Separates Us from the Pack

No one needs to tell Copera Inc. that speed is key in today's fast-paced world of complex supply chains, palatial warehouses and overcrowded call centers. With headquarters in New York, the company provides both e-tailers and B2B e-marketplaces with supply chain management and value-added fulfillment services including transaction management, customer care management, transportation management, collaborative planning, forecasting and supply chain replenishment.

But it's Copera's scalability that separates the company from the rest of the pack. By offering end-to-end solutions such as expansive warehouse facilities, a multi-faceted transaction hub and Web-based infrastructure management tools, Copera has managed to add USBid.com and K-Swiss Inc. to its roster of clients. In fact, it was precisely the company's scalability that convinced Take To Auction.com Inc. to seek Copera's services. The Florida-based start-up provides entrepreneurs access to a warehouse of goods to sell at auction. If an item is sold, Take To Auction.com handles payment, shipping and customer service. But it is Copera's offering of crucial warehouse space and fulfillment services that has not only enabled Take To Auction.com to enroll more than 6,000 auction entrepreneurs and eBay enthusiasts, but to grow at a daily rate of one percent.

Says Mitch Morgan, chief financial officer of Take To Auction.com: "Copera allows us to grow very quickly. If we need warehouse space overnight ... we call Copera and say, 'Tomorrow we need 100,000 square feet;' and they're able to provide that immediately."

Furthermore, while Take To Auction.com does operate its own Miami-based warehouse facility, Copera only charges the company for the space it uses to stock merchandise, all of which represents an enormous cost-saving given the high price of fixed rental facilities.

Says Gary P. Smith, chief executive officer of Copera: "You have to have enormous scale in payment processing to be able to cover the fixed costs associated with buying the payment processing software, all the maintenance costs of the data connections to FDC and you have to be able to pass an FDC audit on security. You would have to literally spend $400,000 just to get up and running on payment processing."

Outsourced Solutions: It's a Value Proposition

SubmitOrder.com also knows the value of offering e-commerce, outsourcing solutions to both retailers and manufacturers. Launched in August of 1999, the company has joined hands with industry stalwarts such as Oracle, Sun Microsystems, Cisco and Lucent Technologies to develop a system comprised of IT consulting and integration services, fulfillment and distribution and client-specific data mining capabilities. Clients include K-Mart's e-commerce arm BlueLight.com, the toy company Haystack Toys Co. and department store retailer Belk Inc. Even Martha Stewart, notorious for keeping a tight reign on her do-it-yourself empire, has agreed to relinquish control and place the fate of her fulfillment operations in the hands of SubmitOrder.com.

But according to Dennis Spina, chief executive officer of SubmitOrder.com, the decision to outsource has less to do with abdicating control than it has to do with recognizing a company's e-commerce limitations.

Says Spina: "Martha Stewart has no facilities. She is a pure marketing company. She has no distribution centers as other brick-and-mortar companies have and has no retail outlets ... Now for someone like her ... to spend $165 million to build a distribution center to equal ours, as well as an IT infrastructure, what advantage would that be to her?"

Getting its feet wet in the B2C arena has proven to be a wise entrée into the e-procurement industry for the Ohio-based company. After all, click-and-mortar operations such as Levis.com have struggled to streamline their online operations. The jeans giant was forced to pull the plug on sales from its Levi's and Dockers Web sites, citing the overwhelming costs of running an e-business. But it was the company's decision to prohibit retail partners from selling its merchandise over the Web that eventually led to its demise. By establishing a stranglehold on all of its online sales, Levi Strauss created channel conflict industry parlance for the competition that can arise between a manufacturer and its selected retailers. Left out in the cold, these retail partners focused on pushing private brand offerings, leaving Levi Strauss to play the unfamiliar role of direct merchant. Ill-equipped to handle customer support and single deliveries, Levis.com soon crumbled under the weight of its own ambition.

Going Global

Despite the advances made by today's e-procurement and supply leaders, there are still many complexities that must be addressed if a company is to succeed within a global marketplace. According to Forrester Research, 85 percent of firms say they can't fill international orders because of the complexities of shipping across borders. And thanks to confusing taxes and tariffs, many suppliers simply refuse to ship globally because they cannot provide accurate, landed cost data to customers when they order goods. All of which presents a serious problem to e-business players whose sophisticated IT infrastructures, supply chain enablement and e-procurement strategies risk being rendered insignificant if, in the end, their merchandise can't cross international borders.

Promising to alleviate such concerns is the fledgling tariffic.com. Recently launched by Bill Foss, co-founder of Netscape, and Jim Shaver, former Secretary General of the World Customs Organization, the company aims to provide businesses online access to cross-border tariffs, taxes and duties.

Whether such a service will ease the procurement and fulfillment process for logistics departments, manufacturing corporations, freight forwarders and trading exchanges remains to be seen. What is certain, however, is that suppliers and carriers are now demanding that their trading partners find their way onto the Web by any means necessary. Issues such as network compatibility and the integration of legacy systems are finally taking a backseat to the weightier concerns of visibility, speed, comprehensive solution sets and ROI. Cost-savings, reduced cycle time and streamlined operations are now considered business essentials rather than possible perks. And today's e-procurement and supply chain leaders are expected to be everything to everyone, from picking and packing experts to brand management gurus.

It's a daunting task but one that must be accomplished if the words "logistics," "fulfillment," "supply chain management" and "procurement" are to remain in the everyday lexicon of today's cost-conscious CEOs and progress-seeking purchasing managers.

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