SPS Commerce Inc. rolled out three new multi-channel order management packages as part of its supply chain integration service on Tuesday.
The new Direct-to-Consumer, Buyer-Managed and Vendor-Managed Inventory packages are designed to improve e-commerce transactions between large buyers and their small and mid-size suppliers in the retail and distribution markets, according to company officials.
While retailers and distributors have found new avenues such as Web storefronts to expand their sales, these channels often require suppliers to deliver goods directly to the consumers. However, delivering directly to consumers bypasses the buyer’s warehouse inventory control, making it difficult for enterprises to control purchase order, billing, and delivery data, said Jim Frome, SPS’ chief strategy officer.
“Most retailers and distributors have more than one way of managing their orders,” Frome said. “A lot of them started off this dot.com thing, and now they’re [saying] ‘We need to mainstream it and make it a more profitable sales channel.’ Maybe the e-store is 5 percent of their business now, but it’s the sales channel that is growing the fastest. Some of the traditional operational controls are starting to be applied to what a year ago was a pretty crudely run channel.”
SPS’ Direct-to-Consumer hosted Internet service is designed to enable suppliers and buyers to electronically share order, tracking, and payment information for low unit per order shipments, reducing costly inventory overhead and fulfillment lead times of all orders regardless of size or destination, Frome said.
SPS is providing this new service to several companies, including W. W. Grainger, a Chicago-based provider of maintenance, repair, and industrial supplies.
SPS’ support for multiple order management models is appealing to Grainger for communicating documents electronically to both the drop-ship and ship-to-inventory portions of its business, said Fred Loepp, Grainger vice president of product management.
The new Buyer-Managed Inventory service is designed to allow retailers to directly manage their inventory where suppliers ship their orders to inventory at the warehouse, distribution center or to the store. The Vendor-Managed Inventory service is designed to empower suppliers to be responsible for placing orders that keep their retail and distribution customers inventory level at an optimal level.
“Both sides agree that the supplier has a much better idea when Kmart needs product than Kmart does,” Frome said. “They set up the environment to allow the supplier to place the order.”
SPS’ supply chain services are designed specifically for small to mid-size enterprises that have traditionally exchanged product information with large buyers via phone, fax, or e-mail. Suppliers who use SPS’ Buyer-Managed and Vendor-Managed Inventory services pay a flat monthly fee. The Direct-to-Consumer service incorporates a pricing model designed to that take into consideration the unique nature of the direct-to-consumer order process, where the cost of processing low unit per order transactions is reduced.
