Automating Procure-to-Pay at Columbia Sportswear

Outdoor apparel company streamlines financial transactions, collects early payment discounts using TradeCard solution

Outdoor apparel company streamlines financial transactions, collects early payment discounts using TradeCard solution

New York  May 4, 2005  Columbia Sportswear Company is using a solution from TradeCard to automate trade transactions with its international suppliers from purchase order delivery through payment, the solution provider announced this week.

TradeCard said it also automates Columbia's early payment discount program, which gives suppliers the option to select early payment in exchange for a discount off their invoice.

"Our benefits include lower transaction costs with our suppliers, streamlined procurement processes and improved information flow across our supply chain," says Bryan Timm, chief financial officer with Columbia, which is the largest seller of skiwear in the United States and one of the world's largest outerwear brands. "In particular, TradeCard helps Columbia to monetize our entire relationship with suppliers, so that we can assess the cost-efficiency of our transactions. That has enabled Columbia and our suppliers to eliminate costs from the supply chain."

To date, the implementation spans eight countries and represents over 50 percent of Columbia's total sourcing volume. These results  the first phase of an ongoing project  were achieved in less than 20 weeks, with TradeCard and Columbia teams in the United States, China, Hong Kong, Korea, Vietnam and Taiwan orchestrating the rollout to suppliers. Over the next year, Columbia plans to migrate additional sourcing volume to TradeCard.

Extending the Value of ERP

TradeCard said that its Web-based platform automatically creates, routes, matches and stores trade documentation  such as electronic purchase orders, supplier invoices 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 the terms and conditions of purchase orders. Discrepancies are systematically flagged and managed online.

At Columbia, TradeCard integrates with a J.D. Edwards enterprise resource planning (ERP) system, sharing information with this technology while remaining transparent to most staff. Columbia's suppliers access TradeCard over the Web or, if they prefer, by integrating the platform into their own back-end systems.

Early Payment Discounts a Win-Win

Timm said that when Columbia's suppliers submit an invoice on TradeCard, they can opt for full payment on standard payment terms, or for discounted early payment. "TradeCard's ability to automate and manage this program is something we found to be unique," Timm said. "We are using it to improve our return on working capital."

A common roadblock to traditional early payment discount programs is time-consuming negotiation with individual suppliers. "What's great about TradeCard's approach is that it eliminates the need to negotiate discount terms," Timm said. "We can simply offer early payment as an opt-in program."

Suppliers also benefit from the program, as they gain a new source of operating capital  one that does not draw down their bank credit lines. Timm noted: "About 30 percent of our suppliers now use the program. We expect that number to increase as we bring the rest of our trading community on board. The program actually gives us an advantage when dealing with new suppliers, as they're excited for access to early payment."

Through TradeCard, companies can fund early payment discount programs with their own cash or via third-party financial institutions.

Global Supply Chain Visibility Vision

Timm added that the TradeCard solution has helped keep the company's suppliers and its own finance, import and procurement departments all on the same page. For instance, TradeCard automatically creates and populates invoices, packing lists and other documentation for suppliers based on the information in Columbia's purchase orders. The benefit for Columbia is standardized supplier documentation from purchase order through logistics, customs and finance, along with a reduction in supplier re-keying errors.

"Each phase of the TradeCard implementation brings us closer to recognizing our vision for complete visibility and information sharing across the entire supply chain," Timm concluded.

Additional Articles of Interest

For more information on the current state of the payment solutions market, see the article "The Analyst Corner: Payment" in the December 2004/January 2005 issue of Supply & Demand Chain Executive.

 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 the global supply chain, with a focus on security issues, 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.