Serving the Chicago area Midrange for over 20 years. Application Integration and Business Systems Improvement

Vendor Collaboration System

Business Background

Infoware’s client is a $150million manufacturer of consumer electronics products for the home and automobile. The majority of their manufacturing is done offshore, mostly in China by half-dozen major vendors and a dozen additional vendors. These order amount to more than $3million in monthly expenditures 

Demand for each product is determined by a SPI (Sales – Production - Inventory) system.  In an effort to streamline their Supply Chain Systems, our client asked us to analyze the existing process and make recommendations for improvement.

Technical Systems Problem

SPI uses data from the Inventory, Orders and Sales Forecast on the PRMS / Sales Tracker systems. SPI then manually calculates demand and makes suggested quantities for purchase.  The SPI reports are reviewed during the monthly scheduling meetings and manual adjustments are done at that time.  The requirements are then approved and sent to purchasing for entry. Purchasing enters the Purchase Requisitions into the AS/400 PRMS purchasing system, and Purchase Order documents are printed.

The requirements are also entered into Excel spreadsheets to summarize the orders sent to each vendor for that month. The process of communicating with vendors via spreadsheet was not standardized; it was used differently among the vendors that actually used them. Formats and information included on the spreadsheets differed among vendors. Also, vendors may not enter the item number in the required manner. These inconsistencies caused excessive manual work to interpret and resulted in errors in communication.

Solution

Infoware automated the process of creating “proposed vendor schedules” by selecting data from the current PRMS purchasing system and creating a vendor schedule report. These schedules will be used to communicate with the vendors via the Internet or VPN. 

A Jacada application allows the offshore vendors to view real-time Purchase Order data and to enter date and quantity transactions in a controlled manner with security controls. Verification logic controls the parameters allowed, such as date windows and quantity limits. Our client’s employees have immediate access to all vendor orders for review and update.

A new “Vendor Scheduled Shipment” exception report is printed daily. This report shows any order that is past due from its scheduled vendor shipment date. A “Vendor Ship Date and Expected Arrival Date Change” register report is also printed daily that alerts purchasing and operations of any changes in shipping or arrival dates.

Business Results

By providing PO's in a standardized format to their 20 offshore vendors, errors of three kinds have been reduced dramatically:

• Incorrect product produced through misinterpretation of product ID;
• Delays in starting production caused by misunderstanding of product ID or shipment schedule;
• Re-transmission of PO required due to vendor mishandling of data in raw spreadsheet format.

By providing real-time, Internet-based, data-entry forms for offshore vendors, significant savings are achieved:

• Vendors make fewer errors in reporting shipment quantities and dates, resulting in less distribution management issues and better retail customer satisfaction;
• Real-time, on-line data on scheduled production and shipments, in a consistent time frame allows better planning of replenishment to distribution centers and store shelves;
• By reducing error rates on production and shipment data by 2%, PO requisitions of unneeded inventory in the subsequent ordering cycle has been reduced by over $500,000 annually.

Our client’s older system evolved over time as they gradually moved production offshore.  Having gotten to the stage where most production is offshore and probably for the long haul, it became a certainty that an investment in more-efficient systems would have an immediate and long-lasting payback.

For Additional information contact Rainmakers at 847/251-3327 or click here – mailto:jon@rainmkrs.com