Improves collaboration with suppliers, lowers financing costs
New York — January 19, 2005 — Drugstore chain Rite Aid has tapped TradeCard, a provider of financial supply chain products, to help automate trade transactions with approximately 200 international suppliers, from purchase order delivery through payment.
Rite Aid operates 3,400 drugstores and is ranked number 128 on the Fortune 500. The company has approximately 72,000 full and part-time employees, and it reported total sales of $16.5 billion at the end of its 2004 fiscal year.
The company has brought about 85 of its international suppliers onboard with TradeCard's Web-based platform, which automatically creates, routes, matches and stores trade documentation — such as electronic purchase orders, supplier invoices, freight receipts and other information — to facilitate payment and financing.
Each party has appropriate access to view and amend documents as a transaction progresses, payment decisions are automated based on supplier compliance to purchase order terms and conditions, and discrepancies are systematically flagged and managed online, according to TradeCard.
The benefits to the drugstore chain include streamlined procurement processes, the elimination of costly letters of credit and improved supplier relations, according to the solution provider. Rite Aid's remaining suppliers — most of which provide seasonal merchandise — are to be connected over the coming weeks, when Rite Aid requires their goods, TradeCard said.
Jerry Cardinale, Rite Aid's senior vice president for category management, said that the company evaluated a number of solutions from banks and technology vendors, considering both their hard and soft benefits, before settling on TradeCard. "Our team unanimously preferred TradeCard's Web-based platform, primarily because of the visibility it provides," Cardinale said. "With minimal capital investment, Rite Aid and its suppliers can see the status of their transactions in real time. We expect our savings to be significant."
Eliminating Letters of Credit
Issued by banks, letters of credit guarantee payment to suppliers once pre-set conditions — such as a buyer's receipt of goods — are met. Many suppliers rely on letters of credit not only for this guarantee, but also to obtain export financing from financing providers.
"We have to open up a letter of credit for our international suppliers, so that they can go into production," explained Cardinale. "This requires preparing documents, resolving discrepancies and going back and forth with banks and suppliers. It's a costly, labor-intensive process, both for our organization and our suppliers. All those inefficiencies trickle back into the cost of goods."
To remedy these issues, TradeCard and its financial partners provide integrated services over the platform, including settlement and automated early payment discount programs, as well as credit protection and pre- and post-export financing. Cardinale noted: "Our suppliers can access the financial services they need with the click of a mouse. Meanwhile, we don't have to tie up our credit lines or take on more administrative work. TradeCard is permanently removing costs from our supply chain."
Smooth Rollout to Suppliers
Cardinale said that while Rite Aid was evaluating TradeCard, the retailer found that the solution provider had consistently high supplier acceptance rates and satisfaction. "We've now seen this firsthand, as our suppliers are quickly signing on," he said. "Between the visibility and more efficient financing, TradeCard is a win for them and for Rite Aid."
In Hong Kong, TradeCard recently led a seminar introducing the platform to Rite Aid's international supplier community. "TradeCard's resources on the ground, in the places where Rite Aid trades, are critical to expediting supplier adoption," added Cardinale. "Localized support is available if a supplier needs it."
For more information on the challenges and opportunities presented by increasingly global supply chains, see the special in-depth report in the August/September 2004 issue of Supply & Demand Chain Executive, which includes the following articles:
For more information on security issues in the global supply chain, see "Building the Secure Supply Chain," the Net Best Thing article in the June/July 2003 issue of iSource Business (now Supply & Demand Chain Executive) magazine.
New York — January 19, 2005 — Drugstore chain Rite Aid has tapped TradeCard, a provider of financial supply chain products, to help automate trade transactions with approximately 200 international suppliers, from purchase order delivery through payment.
Rite Aid operates 3,400 drugstores and is ranked number 128 on the Fortune 500. The company has approximately 72,000 full and part-time employees, and it reported total sales of $16.5 billion at the end of its 2004 fiscal year.
The company has brought about 85 of its international suppliers onboard with TradeCard's Web-based platform, which automatically creates, routes, matches and stores trade documentation — such as electronic purchase orders, supplier invoices, freight receipts and other information — to facilitate payment and financing.
Each party has appropriate access to view and amend documents as a transaction progresses, payment decisions are automated based on supplier compliance to purchase order terms and conditions, and discrepancies are systematically flagged and managed online, according to TradeCard.
The benefits to the drugstore chain include streamlined procurement processes, the elimination of costly letters of credit and improved supplier relations, according to the solution provider. Rite Aid's remaining suppliers — most of which provide seasonal merchandise — are to be connected over the coming weeks, when Rite Aid requires their goods, TradeCard said.
Jerry Cardinale, Rite Aid's senior vice president for category management, said that the company evaluated a number of solutions from banks and technology vendors, considering both their hard and soft benefits, before settling on TradeCard. "Our team unanimously preferred TradeCard's Web-based platform, primarily because of the visibility it provides," Cardinale said. "With minimal capital investment, Rite Aid and its suppliers can see the status of their transactions in real time. We expect our savings to be significant."
Eliminating Letters of Credit
Issued by banks, letters of credit guarantee payment to suppliers once pre-set conditions — such as a buyer's receipt of goods — are met. Many suppliers rely on letters of credit not only for this guarantee, but also to obtain export financing from financing providers.
"We have to open up a letter of credit for our international suppliers, so that they can go into production," explained Cardinale. "This requires preparing documents, resolving discrepancies and going back and forth with banks and suppliers. It's a costly, labor-intensive process, both for our organization and our suppliers. All those inefficiencies trickle back into the cost of goods."
To remedy these issues, TradeCard and its financial partners provide integrated services over the platform, including settlement and automated early payment discount programs, as well as credit protection and pre- and post-export financing. Cardinale noted: "Our suppliers can access the financial services they need with the click of a mouse. Meanwhile, we don't have to tie up our credit lines or take on more administrative work. TradeCard is permanently removing costs from our supply chain."
Smooth Rollout to Suppliers
Cardinale said that while Rite Aid was evaluating TradeCard, the retailer found that the solution provider had consistently high supplier acceptance rates and satisfaction. "We've now seen this firsthand, as our suppliers are quickly signing on," he said. "Between the visibility and more efficient financing, TradeCard is a win for them and for Rite Aid."
In Hong Kong, TradeCard recently led a seminar introducing the platform to Rite Aid's international supplier community. "TradeCard's resources on the ground, in the places where Rite Aid trades, are critical to expediting supplier adoption," added Cardinale. "Localized support is available if a supplier needs it."
For more information on the challenges and opportunities presented by increasingly global supply chains, see the special in-depth report in the August/September 2004 issue of Supply & Demand Chain Executive, which includes the following articles:
- Making Global Supply Chains Work Supply and demand chain practitioners take on the challenges and opportunities of world marketplace.
- The Hidden Costs of a Global Supply & Demand Chain - Veteran industry observers warn of potential hidden costs of offshoring.
- Mastering the Complexity Challenge in the Global Supply Chain - While many companies are acting globally, they are still thinking locally.
- Ensuring Security of Supply in the Lean Supply Chain - Balancing the demands of security with the requirements of today's lean supply chains
- The World Is Enough - Making the global high-tech supply chain more accessible.
For more information on security issues in the global supply chain, see "Building the Secure Supply Chain," the Net Best Thing article in the June/July 2003 issue of iSource Business (now Supply & Demand Chain Executive) magazine.
