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FeedsHome: Issue 5 2009 › Cover Story › Global solution
Global solution
03/10/2009 | Channel: Manufacturing, Business, Logistics, Technology
A look into how technology can help retailers manage increasingly global supply chains
I believe that by working with partners and systems that can manage both global and local trade, retailers can be more responsive to their customers without adding either cost or complexity.
Companies have been told to think globally and act locally for many years now, but the true impact of this strategy has really only taken effect in the last ten years. By sourcing goods from overseas, chiefly Asia, in order to compete on price, retailers have also had to be responsive to customer demands for quality, rapid fulfilment, local sourcing, traceability and returns.
Balancing these global and local demands is not easy and can add to, rather than remove, costs making it a particularly sensitive issue in today’s economic climate.
Global sourcing can add complexity and therefore time and cost to a supply chain, as retailers deal with an array of different languages, cultures, regulatory and customs requirements in moving product from country to country. There is little evidence, despite the best efforts of many global trade organisations, of this process being made significantly easier in the near future, with an increasing number of companies facing penalties for lack of compliance.
Such are the demands on retailers, that it is becoming increasingly important to use a partner with local territory knowledge, as well as global trade expertise to manage the supply chain process. In particular, this partner should be able to automate the customs processes for each territory and provide data for consolidated reporting. The last few years have seen several customs procedures switch entirely from outdated paper-based processes to electronic processing. Within Europe, the Automated Export System (AES) was launched in 2006, and came into full effect in Europe on 1 July 2009, when customs authorities of all EU member states need to have adopted electronic export declarations to replace their
paper-based systems.
The European Commission has now laid the groundwork for the electronic processing of all European customs procedures with the Electronic Customs Multi-Annual Strategic Plan (MASP). The next stage of MASP is already on the horizon with the introduction of the Import Control System (ICS), proposed for 1 January 2011. These developments are being forced by the new customs code that makes electronic notification the norm and reserves paperwork for exceptional cases.
However, the introduction of harmonised IT processes does not mean that a single process will link up all European countries. In fact, every EU member state has created its own IT procedures and enables connections to other systems in the community in different ways in terms of both technology and content. For example, the export notification process mentioned earlier, which has been developed by European Commission workgroups, will not be uniformly implemented in all countries.
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This means that companies operating in several countries spend a large amount of time untangling local procedures. In Germany, for example, an export release is granted after sending notification and only then can the shipment get rolling. In the Netherlands, however, permission to load shipments is first received and only after the transport data has been sent separately, is the release to export issued. The procedure is different again in the UK where a Movement Reference Number (MRN) is only generated if the export is indirect, in other words if it is sent via another EU member state. In all other countries, however, the MRN is generally the main identifier for all exports – whether direct or indirect. These nuances highlight the challenges, which companies operating and moving products from multiple countries in Europe must deal with.
Despite initiatives to introduce consistency in customs communications, many administrative burdens remain. One solution to consider is an integrated global solution that will bring simplicity, local expertise and transparency to customs compliance in Europe, Asia and North America. A network solution can flexibly connect various local countries’ customs applications via a central technical gateway, without users having to get into the detail of various local requirements. If necessary, local support can be provided by the respective country partner, who is able to explicitly deal with the characteristics of the local customs administration and can draw on country-specific expertise accordingly.
Visibility
It is also essential for retailers to have visibility into all shipments and related documentation as goods are coming from all over the world, and mistakes cannot be rectified once they have landed at their final destination. Retailers need certainty as to where goods are and when they will arrive, in order to meet customer demand. The ability to see orders at any stage also enables retailers to identify problems and bottlenecks, so that adjustments can be made before they impact delivery schedules.
Once goods are landed, retailers will want to adopt the most efficient solution for replenishing their stores and cross-channel business, but again, manage the costs. The greatest exposure for any retailer lies in holding stock, so more efficient ways to reduce the stock-to-cash cycle-time must be explored continually.
For instance, direct despatch enables retailers to take orders without owning goods in warehouses; it’s cheaper and less risky for them and can still give them flexibility in order management. Widely employed by small to medium-size catalogue retailers that want to limit the amount of cash they have tied up in stock, the model is now becoming popular with larger retailers, across stores and e-commerce platforms.
The systems and processes to enable orders to be fulfilled by the supplier can now make this process simple and secure, as well as guaranteeing the promise that retailers make to their customers. Existing EDI networks have now developed to the point where retailers and suppliers operate as partners within an intimate community, where stock management, orders, promotions, pricing and labelling and returns can be managed with a large degree of automation, backed by alerts to ensure that exceptions can be ironed out before they impact the customer.
These systems can also impose a single version of the truth across all channels to market – store, internet, mail order – so that it is the customer order that is managing the way that the retailer and the supplier’s supply chain reacts.
Systems like direct despatch brings benefits to all parties. Customers are offered a wider selection of goods delivered through the channel or channels that suit them best and response is rapid. Risk is dramatically reduced for the retailer, who no longer has cash tied up in stock that he may not be able to sell – although some retailers will do deals with suppliers to ring fence a certain volume of stock so that they know that customer demand can always be met. For the supplier, they can increase their market reach and build a network for fulfilment that will make them more attractive to other retailers they are hoping to sign up.
')";>
Both the retailer and the supplier have greater visibility of orders and stock by using an automated direct despatch system; this enables them to forecast activity much more accurately by analysing previous performance, monitoring current activity and planning promotional activity much more quickly to meet market opportunities.
Local sourcing
In order to be even more responsive to their customers, retailers are also having to embrace local sourcing, be it for clothing, food products, toys and crafts, homewares or alternative therapies. This requires retailers to work with a much greater number of suppliers, many of them very small and most of which do not have the resources to join the EDI network of big companies. Retailers need to work with partners that can embrace every kind of supplier communication – paper, fax, phone, letter, email – and convert it into a standard message that is recognised by the retailer’s supply chain systems.
Case Study
Leading direct home shopping company, JD Williams, has derived a raft of bottom-line business benefits following the implementation of a supply chain management solution in its direct despatch business.
Up until three years ago, the company simply did not have the systems and processes in place to support its ambitious growth plans. David Schofield, JD Williams direct despatch manager, explains: “We wanted to be an industry leader in this area and our previous systems would not have enabled this to happen. We were a long-established user of EDI but the fees were quite high, something that deterred some suppliers from doing business with us. We also recognised that new developments in EDI technology using the internet offered us significant opportunities.”
JD Williams chose an order management software solution, which enables buyers and suppliers to collaborate dynamically, working on products, ranges, merchandising, pricing, fulfilment and returns.
The solution incorporates key areas of the supply chain: order management, despatch management, delivery management, stock management and invoice management.
David says: “We have a better understanding of what is happening at any given moment because we are sharing the same information as our suppliers, meaning we can both improve our efficiency. We have improved control of the process more than ever before and we can now identify and alleviate issues much earlier in the process.”
With our previous EDI system, suppliers were faced with relatively high start-up costs, which deterred many of them from signing up. JD Williams has been able to make the new system mandatory for suppliers because even the smallest supplier only needs a PC. Training is provided onsite and suppliers can be up and running within a matter of days. As David explains: “The system allows us to add new suppliers swiftly and the ability to promptly adjust our supply chain, which means that we can take advantage of new business opportunities very quickly. We now have over 250 suppliers on the system and our supplier base has doubled over the past two years.”
The system has also been used to support JD Williams’ introduction of new brands, such as ‘viva la diva’, a high fashion ladies footwear website that has emerged as one of the leading direct despatch footwear businesses on the internet.
Kewill plc
Global businesses face ever-increasing complexity across their supply chains including decisions on sourcing, customs, compliance, transportation, storage, finance, visibility and connectivity; Kewill delivers solutions that simplify global trade and logistics.
Inefficiency in any of these areas will lead to supply chain delays and result in increased costs. Kewill has a suite of software solutions that significantly simplify the management of the most complex global supply chains for enterprises and logistics service providers.
www.kewill.com
Rob Smith
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European vice president of marketing, Rob Smith is responsible for Kewill’s European marketing. Rob has rich marketing experience within the technology sector and began his career at Microsoft, where he was responsible for managing Microsoft UK’s customer support website. Rob joined Marconi in July 2000 as online communications manager and following the successful rebranding of Marconi’s website, he was recruited by IBM in August 2001. Whilst at IBM, Rob held a number of marketing leadership roles within IBM’s software and services businesses. Rob joined Kewill in November 2006 to lead Kewill’s UK marketing and took up his current role in April 2008.
Companies have been told to think globally and act locally for many years now, but the true impact of this strategy has really only taken effect in the last ten years. By sourcing goods from overseas, chiefly Asia, in order to compete on price, retailers have also had to be responsive to customer demands for quality, rapid fulfilment, local sourcing, traceability and returns.
Balancing these global and local demands is not easy and can add to, rather than remove, costs making it a particularly sensitive issue in today’s economic climate.
Global sourcing can add complexity and therefore time and cost to a supply chain, as retailers deal with an array of different languages, cultures, regulatory and customs requirements in moving product from country to country. There is little evidence, despite the best efforts of many global trade organisations, of this process being made significantly easier in the near future, with an increasing number of companies facing penalties for lack of compliance.
Such are the demands on retailers, that it is becoming increasingly important to use a partner with local territory knowledge, as well as global trade expertise to manage the supply chain process. In particular, this partner should be able to automate the customs processes for each territory and provide data for consolidated reporting. The last few years have seen several customs procedures switch entirely from outdated paper-based processes to electronic processing. Within Europe, the Automated Export System (AES) was launched in 2006, and came into full effect in Europe on 1 July 2009, when customs authorities of all EU member states need to have adopted electronic export declarations to replace their
paper-based systems.
The European Commission has now laid the groundwork for the electronic processing of all European customs procedures with the Electronic Customs Multi-Annual Strategic Plan (MASP). The next stage of MASP is already on the horizon with the introduction of the Import Control System (ICS), proposed for 1 January 2011. These developments are being forced by the new customs code that makes electronic notification the norm and reserves paperwork for exceptional cases.
However, the introduction of harmonised IT processes does not mean that a single process will link up all European countries. In fact, every EU member state has created its own IT procedures and enables connections to other systems in the community in different ways in terms of both technology and content. For example, the export notification process mentioned earlier, which has been developed by European Commission workgroups, will not be uniformly implemented in all countries.
')";>This means that companies operating in several countries spend a large amount of time untangling local procedures. In Germany, for example, an export release is granted after sending notification and only then can the shipment get rolling. In the Netherlands, however, permission to load shipments is first received and only after the transport data has been sent separately, is the release to export issued. The procedure is different again in the UK where a Movement Reference Number (MRN) is only generated if the export is indirect, in other words if it is sent via another EU member state. In all other countries, however, the MRN is generally the main identifier for all exports – whether direct or indirect. These nuances highlight the challenges, which companies operating and moving products from multiple countries in Europe must deal with.
Despite initiatives to introduce consistency in customs communications, many administrative burdens remain. One solution to consider is an integrated global solution that will bring simplicity, local expertise and transparency to customs compliance in Europe, Asia and North America. A network solution can flexibly connect various local countries’ customs applications via a central technical gateway, without users having to get into the detail of various local requirements. If necessary, local support can be provided by the respective country partner, who is able to explicitly deal with the characteristics of the local customs administration and can draw on country-specific expertise accordingly.
Visibility
It is also essential for retailers to have visibility into all shipments and related documentation as goods are coming from all over the world, and mistakes cannot be rectified once they have landed at their final destination. Retailers need certainty as to where goods are and when they will arrive, in order to meet customer demand. The ability to see orders at any stage also enables retailers to identify problems and bottlenecks, so that adjustments can be made before they impact delivery schedules.
Once goods are landed, retailers will want to adopt the most efficient solution for replenishing their stores and cross-channel business, but again, manage the costs. The greatest exposure for any retailer lies in holding stock, so more efficient ways to reduce the stock-to-cash cycle-time must be explored continually.
For instance, direct despatch enables retailers to take orders without owning goods in warehouses; it’s cheaper and less risky for them and can still give them flexibility in order management. Widely employed by small to medium-size catalogue retailers that want to limit the amount of cash they have tied up in stock, the model is now becoming popular with larger retailers, across stores and e-commerce platforms.
The systems and processes to enable orders to be fulfilled by the supplier can now make this process simple and secure, as well as guaranteeing the promise that retailers make to their customers. Existing EDI networks have now developed to the point where retailers and suppliers operate as partners within an intimate community, where stock management, orders, promotions, pricing and labelling and returns can be managed with a large degree of automation, backed by alerts to ensure that exceptions can be ironed out before they impact the customer.
These systems can also impose a single version of the truth across all channels to market – store, internet, mail order – so that it is the customer order that is managing the way that the retailer and the supplier’s supply chain reacts.
Systems like direct despatch brings benefits to all parties. Customers are offered a wider selection of goods delivered through the channel or channels that suit them best and response is rapid. Risk is dramatically reduced for the retailer, who no longer has cash tied up in stock that he may not be able to sell – although some retailers will do deals with suppliers to ring fence a certain volume of stock so that they know that customer demand can always be met. For the supplier, they can increase their market reach and build a network for fulfilment that will make them more attractive to other retailers they are hoping to sign up.
')";>Both the retailer and the supplier have greater visibility of orders and stock by using an automated direct despatch system; this enables them to forecast activity much more accurately by analysing previous performance, monitoring current activity and planning promotional activity much more quickly to meet market opportunities.
Local sourcing
In order to be even more responsive to their customers, retailers are also having to embrace local sourcing, be it for clothing, food products, toys and crafts, homewares or alternative therapies. This requires retailers to work with a much greater number of suppliers, many of them very small and most of which do not have the resources to join the EDI network of big companies. Retailers need to work with partners that can embrace every kind of supplier communication – paper, fax, phone, letter, email – and convert it into a standard message that is recognised by the retailer’s supply chain systems.
Case Study
Leading direct home shopping company, JD Williams, has derived a raft of bottom-line business benefits following the implementation of a supply chain management solution in its direct despatch business.
Up until three years ago, the company simply did not have the systems and processes in place to support its ambitious growth plans. David Schofield, JD Williams direct despatch manager, explains: “We wanted to be an industry leader in this area and our previous systems would not have enabled this to happen. We were a long-established user of EDI but the fees were quite high, something that deterred some suppliers from doing business with us. We also recognised that new developments in EDI technology using the internet offered us significant opportunities.”
JD Williams chose an order management software solution, which enables buyers and suppliers to collaborate dynamically, working on products, ranges, merchandising, pricing, fulfilment and returns.
The solution incorporates key areas of the supply chain: order management, despatch management, delivery management, stock management and invoice management.
David says: “We have a better understanding of what is happening at any given moment because we are sharing the same information as our suppliers, meaning we can both improve our efficiency. We have improved control of the process more than ever before and we can now identify and alleviate issues much earlier in the process.”
With our previous EDI system, suppliers were faced with relatively high start-up costs, which deterred many of them from signing up. JD Williams has been able to make the new system mandatory for suppliers because even the smallest supplier only needs a PC. Training is provided onsite and suppliers can be up and running within a matter of days. As David explains: “The system allows us to add new suppliers swiftly and the ability to promptly adjust our supply chain, which means that we can take advantage of new business opportunities very quickly. We now have over 250 suppliers on the system and our supplier base has doubled over the past two years.”
The system has also been used to support JD Williams’ introduction of new brands, such as ‘viva la diva’, a high fashion ladies footwear website that has emerged as one of the leading direct despatch footwear businesses on the internet.
Kewill plc
Global businesses face ever-increasing complexity across their supply chains including decisions on sourcing, customs, compliance, transportation, storage, finance, visibility and connectivity; Kewill delivers solutions that simplify global trade and logistics.
Inefficiency in any of these areas will lead to supply chain delays and result in increased costs. Kewill has a suite of software solutions that significantly simplify the management of the most complex global supply chains for enterprises and logistics service providers.
www.kewill.com
Rob Smith
')";>')";>European vice president of marketing, Rob Smith is responsible for Kewill’s European marketing. Rob has rich marketing experience within the technology sector and began his career at Microsoft, where he was responsible for managing Microsoft UK’s customer support website. Rob joined Marconi in July 2000 as online communications manager and following the successful rebranding of Marconi’s website, he was recruited by IBM in August 2001. Whilst at IBM, Rob held a number of marketing leadership roles within IBM’s software and services businesses. Rob joined Kewill in November 2006 to lead Kewill’s UK marketing and took up his current role in April 2008.
