Consider the LARGE amount of buying and selling that takes place between grocery chains and their suppliers. The volume of data is overwhelming. As a result, grocers have long struggled to find an accurate way to keep track of invoices, rebates and any other financial issues that might arise during the multitude of transactions between the two parties.
One possible solution comes in the form of automated bill-back management. The automation of this process, in theory, assures that the money involved in any deal between grocer and supplier is identified and accurately billed, and that invoices are matched.
Additionally, automation eliminates any human error and reduces overhead by jettisoning the manual processes of matching SKUs to sales, as well as by calculating rebates and generating invoices.
"I was a frustrated merchant for many years," says Bill Smith, CFO of Country Store, a national specialty grocery chain. "Coca-Cola and Pepsi would come in and say 'here's what we owe you.' It really bothered me that I didn't have a way to confirm that."
The Problem It's been a year or so since Jill Jones, VP of merchandising at the Country Store, began phasing out the manual processes associated with bill-back management.
"We have a data warehouse system and front-end tool, so we know what products are selling in which stores at any moment," says Jill. "But the process to calculate the amounts and bill suppliers is manual and imprecise." Why? The specialty chain's bill-back management is handled by two employees who manually enter data into an array of spreadsheets. Given that somewhere between 500 and 600 items are on deal on a weekly or biweekly basis, that's quite a lot of data to input.
So Jill is looking for an end-to-end automated solution: an application that accounts for POS data, parses and stores the products that are on deal, calculates the appropriate amounts and generates invoices.
"If we had a database of input deals that were tied into the POS database and processed them overnight, we could determine what we are owed on the fly," Jill explains.
A potential complicating factor: Country Store's servers run on the Sun (www.sun.com) Solaris and Microsoft (www.microsoft.com) NT operating systems meaning that the grocery chain's CIO probably will not want to write any computer code, construct interfaces or add IT development staffers. The chain has already invested in various retail and enterprise applications, including:
A data warehouse that uses Oracle (www.oracle.com) version 8.17 and runs on the Solaris 9 OS. The system can track SKU product movements and build ad hoc reports.
PeopleSoft's (www.peoplesoft.com) HRMS for benefits and payroll and PeopleSoft Financials for GL, accounts payable, accounts receivable and fixed assets. These applications accommodate manufacturer data but not SKU-level data from point-of-sale systems that run on NT-based servers.
TCI Solutions' (www.tcisolutions .com) HQPM pricing software, which ensure that prices are optimized with user-defined rules and parameters.
MarketMax (www.marketmax.com), for preparing merchandise layouts and planograms.
Datavantage (www.datavantage.com), which helps keep track of voids, scan rates and any cashier anomalies.
Connect3 (www.connect3.com) promotion management, to house standard copy for ads and analyze the effectiveness of circulars and inserts.
The Options So, what are some of Country Store's choices for bill-back management? Jill initially favored a bill-back module from TCI Solutions, since the chain already runs TCI's HQPM pricing software, but the CIO said this module is only available in DOS version.
Jill also looked into SofTechnics (www.softechnics.com), which offers a price-management system with a bill-back module called Invoice Audit. The company claims that the module only works in accord with SofTechnics' item-management system, and Jill's understanding of the project after speaking to the software firm is that bolting the application into the chain's existing architecture would "require a ton of integration work."
OMI International (www.omiintl .com) provides an NT-based financial solution called Prompt, which has such features as tracking and reporting of deal data. Available as a fully integrated or a stand-alone system, Prompt would cost Country Store about $200,000 for a site license fee and between $100,000 and $150,000 in installation expenses. It would take from four to six months to install. The company notes that OMI will be writing an Oracle interface for Prompt, which will potentially make it more compatible with Country Store's data warehouse and enterprise applications.
FMS Solutions (www.fmsinc.com) believes its bill-back module could be up and running on the accounts receivable and general-ledger systems of Country Store's PeopleSoft platform in 90 days. The system allows merchants to keep track of the guaranteed costs of incoming products and items that are booked at the warehouse but held for delivery at a later date. This creates an invoice based on anticipated product movement, an important consideration for sellers of seasonal foodstuffs and general merchandise.
For Lawson Software (www.lawson.com) to be able to accommodate Country Store's needs, some integration work would be necessary, as would the development of a project-and-activity-accounting application that will house vendor item allowance rules and tie into the PeopleSoft general ledger. The ideal billing and revenue management tool would calculate amounts, generate invoices and link easily with accounts receivable in the PeopleSoft application. The company did not estimate how much such a project would cost, but said it could be completed in one month.
The Solution Since there does not appear to be one perfect fit for Country Store, Jill and the CIO have conceded that the chain is likely to incur hefty integration costs to buy and bolt on a bill-back management solution that fits into the existing IT infrastructure. A good first step will be to visit retailers who have installed the bill-back systems mentioned here as well as similar ones. Then determine the business need, benefit analysis, ROI, application infrastructure and, finally, select the vendor that best meets the needs.