Softening the BlowBy Larry Barrett | Posted 2002-11-01 Email Print
Wal-Mart is forcing its suppliers to follow its lead. UPS is forcing its rivals to react. How do you protect yourself if you're not the technical leader in your industry?
Softening the Blow
To make life a bit easier on its suppliers, Wal-Mart is partnering with secure trading-software developer iSoft Corp. to provide trading-community-management software at a discounted price to Wal-Mart suppliers. Wal-Mart also has teamed up with software vendors IBM and Sterling Commerce to provide integration services for the IP-based secure communications infrastructure.
"This isn't to say that suppliers have to use iSoft or the integration partners Wal-Mart has recommended," Kenney says. "The point is, if you want to do business with Wal-Mart, you have to figure out what strategy and partners best suit your needs."
Determining which vendor and technology package best fits your organization is the real challenge.
"There are as many ways to do it as there are businesses," says Sterling Chief Operating Officer Sam Starr. "We're talking about integrating a transport mechanism into a company's back office."
Suppliers have until next October to comply with Wal-Mart's demand. But that still doesn't make them happy.
"It's not such a big issue for large suppliers because most of them are already using AS2 with their own suppliers," says one industry analyst who asked not to be named. "But for the mid-tier and smaller companies, this is a real pain in the neck." Other leading retailers such as Kmart and Target will likely watch to see how well suppliers and Wal-Mart adapt to the new standard before requiring it of their own suppliers, according to Kenney.
Meanwhile, at FedEx Corp., it's the competition that has set the pace. The company last month announced that it had finally installed the software needed to manage all of its procurement services and transactions electronically. The company says its invoicing process has been reduced from seven steps to three fully automated steps, and that it expects to see a substantial return on investment within the first year.
This commitment to e-procurement comes after competitor UPS completed its own electronic overhaul, which consolidated more than 84 separate financial centers into one main hub with 15 smaller satellite centers.
"Today we have about 18,000 users on Oracle's workflow and self-service purchasing system," says UPS spokeswoman Donna Barrett. "We had more than 70,000 U.S. vendors and desperately needed to streamline our financial and purchasing operations. We realized that it was almost impossible to keep track of costs using a mix of electronic and paper records."
The pressure to keep or set the pace in an industry with so few major competitors, or so few major customers, is the single greatest challenge facing technology managers, analysts say.
"We absolutely knew we had to be aware of what our competition was doing and perhaps even become a pioneer," Barrett said. "It was the obvious next thing to do when the technology was available to do it. I'm sure we'll see more of this as the technology evolves."