Global Logistics and Supply Chain Strategies - May 2008 - (Page 12)

GL&SCS EXCLUSIVE these purchases from thousands of teachers, without dealing with thousands of vendors, which makes it very difficult to create long-lasting relationships. So we want a big enough number of vendors to let us have sufficient variety from which the teachers can select materials and also to provide some competition amongst vendors so we get the best pricing. But at the same time we want the number of vendors to be small enough so that we have purchasing power and can build a good relationship. Word and send that to the vendor either by fax or email or sometimes via xml. Currently, we don’t get a purchase order receipt notification or any status reports on the purchase order, so we really don’t know if it was received or is being filled unless we call and ask or until we hear from the teacher that the material was received. So it is very difficult for us to keep track of the status of these purchase orders. Actually, we used to get a lot of inquiries from teachers about missing products— basically asking, ‘where is my stuff?’ We really needed some way to confirm that materials had been received, or, at the very minimum, that the purchase order had been received at the vendor’s location. So the vendor and will give us updates when the order is in process and when it has shipped. We will automatically receive a shipment tracking number so we can track shipments and provide that information to the teachers for self-service tracking, which will minimize the number of customer service inquiries that we get. In phase two we will plug into Ariba’s electronic invoice presentment and payment system (EIPP). I mentioned earlier that today we receive paper invoices from our vendors. With Ariba’s EIPP, we will receive invoices electronically. We also will be able to electronically reconcile the invoices against the purchase orders— today we don’t do that at all. Finally Ariba’s EIPP will allow us to review every single invoice and approve it electronically and have the payment sent electronically to the vendor instead of us having to send checks manually to the vendors. Phase three is more long-term and will focus on procurement content. This part of the solution will allow teachers to sign into a website that will direct them to catalog content of the actual vendors when they are ready to order materials for funded projects. They will use Ariba’s software to browse through all the content that is available and to select the materials that they need. Q: Are you using Ariba to help with this type of supplier management? Bocanegra: Yes. We have selected 36 vendors to integrate with us through the Ariba platform. We will add more vendors as we go along, but will start with these 36. Once they are plugged into the Ariba platform, we will be able to streamline our processes and become a lot more efficient in a way that is very scaleable. Our vendors cover a wide range. We have large companies like bookseller Barnes & Noble, which is one of our biggest vendors, and Best Buy, which provides all the electronics for the classroom and things like LCD projectors. Then we have many mid-sized and smaller vendors and also some vendors that we use to handle customized requests, such as for musical instruments or equipment. We have a lot of music teachers out there seeking violins, pianos, band suits—all kinds of musical things from us. So we are hoping to include one or two preferred musical vendors in the 36 that we initially integrate into the Ariba platform. Q: How did you handle all this before Ariba? The idea is to balance the purchasing power we get by aggregating purchases from thousands of teachers without dealing with thousands of vendors. one of the things that we implemented is to have two employees whose full-time job is calling the vendors to confirm that they received all of the purchase orders we sent over the past week and to re-send any that were missing. You can see what a cumbersome and manual process this is. Bocanegra: Well, we are still in the implementation phase so what we are doing now is basically our ‘before’ picture. It is a very manual process. When a project gets fully funded we first send a confirmation email to the teacher. The average wait time is about four months, so we need to make sure that nothing has changed in the interim and that the materials are still needed and still available from the vendor. Once the teacher confirms that the material is still needed, we go to our current e-procurement system to make sure the materials are still available, but that is a very manual process right now. We have to generate a purchase order manually via Microsoft Q: So this should reduce your administrative costs? Bocanegra: Yes. We knew that to help us get to that next level where we are spending a very small percentage of our donation dollars for administrative expenses, we needed a solution like Ariba. Moreover, Ariba was a must-have in order for us to scale nationally. Until last month, we only were in a limited number of cities and states, but we now have expanded to all 50 states and we couldn’t have handled that without more automation. Q: Ariba will streamline all of that? Q: What is the timeline on your impleBocanegra: Absolutely. We will mentation? implement Ariba in three phases. The first Bocanegra: Phase one and two are phase will automate purchase order generation and routing as well as a system for monitoring the status of POs. That phase also is when we plug into the Ariba Supplier Network. The Ariba Supplier Network will actually generate the purchase order and route it to the appropriate vendor. It will also provide us with confirmation that the purchase order has been received by scheduled for [completion in] the spring of 2008. For phase three, we are looking at the summer of 2008. To access this article online, visit The Digital Edition at www.SupplyChainBrain.com. Resource Link Ariba, www.ariba.com 12 MAY 2008 www.SupplyChainBrain.com http://www.SupplyChainBrain.com http://www.ariba.com http://www.SupplyChainBrain.com

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Global Logistics and Supply Chain Strategies - May 2008

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