There's no such thing as a free ecommerce lunch

This article considers the reliance on suppliers purchasing portals.

It's a common practice for mid-sized corporates to take the path of least resistance in their use of e-commerce systems. Faced with the need to minimise inventory, optimise time to market, reduce departmental headcount, and the backlog of work in IT, a supplier offering to provide an ordering portal seems to make a great deal of sense.

Stick with this policy and fast forward a few years and it turns out that many departments may have become reliant on suppliers in a way that they never expected. And one that threatens critical processes. If one of these suppliers hits the wall or is seen to be hiking prices beyond fair play then how soon can their portal be replaced, and at what cost and risk to the rest of the finely tuned process flow? If a vital ingredient for a food manufacturer can't be purchased because of a systems failure then does the rest of the production line stop? How does this affect other inventory orders, deliveries, cash-flow, retailers, etc?

And if this supplier's system is the store for corporate assets, as in the case of a DAM or other document repository, then how to retrieve them even if you know where they physically live?

The remedy is a tough one because, just as there is no free lunch, there is also no magic wand. First assess the situation. Look for the signs of failing suppliers and act on the weakest cases first. Find an independent solutions vendor you are comfortable with and implement their portal making your suppliers part of the trading platform. Now if a supplier goes down it's a relatively easy job to introduce another in its place. And because it's your process that they have to adopt there are some other benefits such as a shorter time to productivity, better options for supplier management and retention of order data and intelligence into the future.

Working as I do in a company that supplier such systems, you would be suspicious that I have my own agenda. I'll happily admit to that. Will you admit that you may have put your organisation at risk by relying on e-commerce solutions provided by suppliers?

Keep safe.

James

James Evason is Business Development Director at marketingunity, a software company specialising in B2B ecommerce systems for marketing collateral development, production, procurement, fulfilment and supply chain management.
www.marketinguntiy.com

B2B Catalogue Ordering 2.0

If you are considering implementing a system-based solution for fulfilment of marketing collateral it’s easy to assume that a simple, standard e-commerce platform will do the trick. This article examines the broader requirements for control that the client will demand. It is also intended to lay the seeds of questions that a prospective buyer of such a system should consider asking of their shortlisted vendors.

There must be few internet-savvy individuals who have avoided purchasing a music download, an image, an ebook, groceries or clothing on-line. All of these interactions would have involved exposure to a basic catalogue ordering system, the signature features of which would be:

• The user searches for products
• The user selects the desired products into a shopping basket
• The user goes to the checkout
• The system prompts for delivery and payment details
• The user reviews and gives confirmation for the order

This represents a well understood and recognised pattern for placing an order online. We're comfortable with this approach and ready to transact when we recognise it.

B2B Catalogue Ordering is an extension of this pattern, the extension being required because in business-to-business trading there are far broader needs than this simple 5-step process can fulfil. Let's take a look at the reason for this requirement.

Whilst the supplier (agency, printer or similar) and client organisations in a B2B scenario retain their own individual goals, there are fundamental alignments; the client wants to outsource provision of the service at reasonable cost and the supplier wants to win the clients business, also at reasonable cost. Once the obvious product costs have been negotiated, what remains is to manage the system administration overheads to such a level that both sides achieve their overall goals.

This is where the friction arises, driven by the clients secondary goal of achieving a level of administrative control which inevitable leads to management cost for the supplier.

A few examples of the client’s intentions will help to underline the point. These include:

• System must be accessible to validated users and only they should be allowed to order from it;
• Ensure that all orders are attributed to a valid cost centre in the client organisation’s chart of accounts. The client will be looking to the system to police this and to provide intelligence and reports to illustrate expenditure per cost centre, etc;
• Valid cost centre referencing to guarantee that only a user linked to a cost centre can attribute the costs of an order to it;
• Spend controls to control expenditure by user, by cost centre and by sub-company;
• Payment by invoice, charge card or credit assignment and charge-down;
• Quantity controls to limit the quantity of any product that can be ordered both per order, and in a defined period, with limits for user, cost centre and sub-company;
• Product access limits to restrict access per cost centres to each product;
• Order approval process with trigger thresholds and appropriate routing;
• Support a broad range of products regardless of fulfilment approach, including stock managed, downloadable and print-on-demand products.

The client will wish all of these controls and more to be in place – far more than the simple 5-point e-commerce approach.

The supplier, faced with this list of requirements, will be in jeopardy from either not being able to provide the ‘value add’ that the represent, and on the other hand by the cost of providing them!

To win the supplier must do both. The key is in the selection of the e-commerce package. Selecting too simplistic a system will lead to a disappointed client. The only course open to the supplier is to identify or develop a system meeting the client’s requirements but with enough sophistication to make living with them at affordable and minimal cost endeavour.

In this article we’ve looked at the agenda of the two parties in a B2B arrangement, and the criticality of system selection. But we've only skimmed the surface - from here we could focus on the needs of multi-currency trading, users speaking multiple languages, multi-territory considerations, order routing to production partners, and dealing with marketing partners, each of which I aim to cover in upcoming articles.

Keep safe.

James

James Evason is Business Development Director at marketingunity, a software company specialising in B2B ecommerce systems for marketing collateral development, production, procurement, fulfilment and supply chain management.

www.marketinguntiy.com

Removing risks in coursework generation and production by linking POD & DAM

Take as a sample case a situation related to training course materials. The coursework author is in charge of keeping the course content up to date - let's assume that course content might change as new techniques are adopted or as new legislation is passed. The author is making fairly frequent and ad hoc changes to the final content of the course books. Meanwhile, trainers who deliver the course are planning their workload, and as part of this they are ordering training course materials to be printed, to be handed out to the students. The assigned print manufacturer receives these orders and, ideally, prints the latest content received from the author, before inserting it into binders with tabbed separators, etc.

Between the three parties - the author, the trainers and the print supplier, there is one issue - the timely presentation of the latest course material to the printer so that it can be delivered to the trainer for onward presentation to students in the course itself. And this is typically where the risk of late delivery of content comes in.

You see, once a trainer has received an out-of-date set of course notes and either had to deliver the course knowing the content was out of date, or has had to cancel and re-schedule a course, their confidence has taken a knock and their trust in the process, not to forget the trust of the students in the training organisation, is injured, possibly irreparably. This hurts the training organisations revenues by reducing booking numbers and giving credits.

So where does the risk lie? The author will be working on some DTP tool and producing a file - usually of significant size since its content justifies the value of the training course for the attendees. And the author is usually distant from the print supplier, meaning that there has to be a physical or electronic transfer process. That means either a courier or a file transfer by email, ftp or similar. The trainer ordering the printing of course materials will be doing so in a separate process - either an emailed requisition or an e-commerce approach.

Here comes the issue. Because the print supplier’s staff receives the content and production request via different channels, the order is separated from the content. Realistically, the order will quote a reference number for the content in order to avoid trivial mistakes. But some mistakes will be made. Typically some holdup in delivery of content, of its being misfiled by printing staff means that a previous revision is used.

And this risk is magnified with the increase in rate of change of content or reduction in the time between the order and the printing deadline.

The alternative that mitigates this risk is to combine the storage of content with the ordering system – a hybrid of DAM and e-commerce - so that with every order comes a link to the latest delivered content, and to make that content delivered by the author directly into the target of that link. The benefits of this approach are many, chief amongst them that as the trainers place orders they can see course content and confirm to themselves that the correct version is being ordered, and the print supplier's staff have direct access to latest content without the need for it to be delivered via a separate process, meaning they cannot lose of misplace the current content.

I've seen this scenario in a number of business cases over the years. And if you are thinking that I am oversimplifying the picture to make my point then I humbly agree. Where this type of production is done at pace there will be significant safeguards and process to reduce issue to a minimum. But, it's undeniable that these mistakes do happen to some degree and the approach still holds water in terms of reducing the risk of error and increasing the confidence of the trainers as consumers of the service and representatives of their training bodies.

Boutique software v's big consulting and internal IT

Is your corporate IT shop set up as a fortress, with a policy of owning all IT projects but failing to actually deliver fast or frequently enough?

I recently spent some time talking to a prospect at a big corporation about a small software project that would bring great efficiency to his team. He was looking for business case to justify going outside the internal IT shop AND the preferred supplier, one of the big consultancy players.

This got me thinking that Corporate or large SME business people have a tough decision when it comes to having a small or even mid-sized business software project run. They have three choices - ask the internal IT team, hire a big software consultancy, or hire a boutique software team.

Breaking this down, the first question is ‘internal or external’.

Don't get me wrong it you are a hard pressed internal IT guy – the issues are fundamentally out of your hands. The facts are that you can't scale the internal IT operation to meet all of the requirements of the business, so you have to form an orderly queue.

But it's a fact that the guy at the back of the queue knows a guy who knows a gal who's a whiz with Excel macros and forms and they just aren't going to wait 12 months until you finish that OraSap Version 36 upgrade and the other 25 priority projects ahead of them in the queue. And why would they dare step outside the policy of centrally controlled, in-house development? It’s simply because they can see a means, via this new system, to improve their output right now in a way that will impact their appraisal next year. Would you wait?

So if it's not the internal IT team then the options are for one of the Big Software Consultancies, or a boutique IT shop. You may think that the best option is the Big Software Consultancies because they represent a safe pair of hands, a backside to kick when things go wrong, and no-one ever got fired for hiring...you know how it goes.

But let's examine the case for boutiques - they generally specialise in some niche, they usually have a real interest in the success of the project, they are almost all owner-run so their decision making layers are few, they can turn on a sixpence when your needs change mid-stream, they commit totally to the success of the project, and they generally stay available after the project goes live to keep the system running and updated. Put it another way – they’re interested in the people and the success of the project because their future depends upon it.

Look back at the Big Software Consultancies - their staff are on a conveyer belt, your system requirement will be a big deal to you but a small one to them, they will want to document everything to the point of standstill and deliver against the document you signed off, their fees will mean you have to escalate the decision to start the project, and you will never meet anyone higher than your account manager.

This has been a tongue-in-cheek look the options, and there are other pros and cons in all of these cases, but actually the likelihood of initial and ongoing success for your project hinges on none of these ideas.

Instead, the outcome of a small project depends on the development team. That's right, the people. If you've been lucky enough to see a good software project succeed then you will know that the team was instrumental in the success.

But people do not scale. And you are most likely to find the people that will make your success happen now and be there to support and extend the system into the future, working in your corporate IT department and in those boutique software houses.

So, if you’re sitting wondering how to get that system built - the one that will make all the difference, don’t rule out boutique software houses on company size or history - your success just might be in their hands.

Single print supplier relationships put core operations in jeopardy

In a healthy general economy a single print supplier relationship can yield benefits in the form of reduced costs, high brand consistency, print quality, and time to market and so on, so it is a low-risk proposition.

However, when the economy declines, various inherent aspects of the print manufacture business conspire to magnify the risks associated with this strategy.

Print suppliers, working on a low gross margin, must accommodate considerable investment in large equipment, have significant material and resource costs, typically operate 90+ days credit terms, rely on loan facilities for operating capital and have low credit ratings. This gearing means that they are highly susceptible to recession in the general economy.

Though print has been commoditised over recent years, it remains a critical operational component for many businesses. Without print you cannot effectively drive marketing, billing, point-of-sale and many internal operations.

The failure of a print supplier can therefore be a critical business issue. But because of some of its specialist considerations, sourcing a new supplier may not be very easily or quickly achieved.

How then to insure against these risks? In this climate, it is absolutely crucial to adopt a multiple overlapping supplier strategy, never allowing yourself to represent more than 25% of the suppliers’ turnover, and to use an e-commerce purchasing management system to route requirements and orders to suppliers. In this way, if a print supply business fails, the print requirements usually routed to that failed business can be routed to another with little disruption to your core business activities.

In terms of e-commerce systems, businesses should particularly be wary of reliance on a system that has been developed internally and provided by a print supplier, for the following reasons: firstly, because the implementation of such systems across your business is a significant disruption to day-to-day operations and to have to repeat it would be costly; and, secondly, the failing print supplier will usually take the system down with them, resulting in the loss of important operational and analytical information that will be very costly and time-consuming to replace.

A best practice approach is to review print supplier relationships, identify reliance on single suppliers, implement an e-commerce print procurement system and expand the print supplier base to ensure overlap in identified critical areas. A business case for the investment in the e-commerce system would also include a host of benefits – beyond the offsetting of the risk of single-supplier failure.

James Evason is Business Development Director at marketingunity, a software company specialising in B2B ecommerce systems for marketing collateral development, production, procurement, fulfilment and supply chain management.

www.marketinguntiy.com