Columbia Sportswear's Right and Left Hands Are Talking

When $1.2 billion Columbia Sportswear adopted the Tradecard platform in 2004, it approached the implementation as a finance project, with a goal of automating its financial transactions processes for a paperless and more efficient system, and improving its bottom line through early payment programs that would help its vendors while generating income for Columbia. "We didn't try to sell the implementation of Tradecard companywide," says John Bailey, director of finance. "We didn't say: 'ËœThis is Tradecard and it's going to solve all of your problems.'"
Nevertheless, Tradecard kicked off its relationship with Columbia by meeting not only with finance but also the firm's manufacturing and supply chain teams. And Columbia came away feeling that Tradecard "definitely understood our business, and could explain to us what they thought the synergies would be across the organization down the road," says Bailey. Some two years later, Columbia's financial supply chain has been automated -- "a very successful project," says Bailey -- and the company is finding that the benefits of its visibility and real-time data are spreading into other areas by allowing different departments and partners to plug in to what others are doing.

The automated supply chain

Automating the financial supply chain has brought consistency and better quality information -- for all parties involved -- to the procurement-to-payment process. Now, all data is accessible in electronic form, which "provides points of reference that we didn't have before," says Bailey.
Prior to the implementation, letters of credit (LC) were the m.o. for sourcing production. Vendors received paper-based purchase orders, then submitted one commercial invoice to draw on LCs and another for the importation process through customs. The multiple documents were inefficient, and created separate data points flowing though Columbia's system, says Bailey. Because the documents used to pay for product didn't always match the ones used for importation, it created problems during the reconciliation process. Now, information originates in the company's ERP system and travels via EDI to Tradecard. Because it is in an electronic format, one version of the data pre-populates an invoice that can be used for payment and customs clearance. As Columbia's vendor base has been migrated to TradeCard, the company no longer receives different paper based commercial invoice formats from each vendor. All the commercial invoices the company receives are identical and available in electronic format. Also, the system allows the company to send an EDI file of the invoice to its consolidator, keeping the consolidator up to date, and providing third-party verification for Columbia that the goods have been received, he says. Furthermore, the system has changed the way the vendors operate. With the old process, to avoid fees charged each time an LC was drawn upon, vendors often held invoices and submitted many at once. With the Tradecard platform, no such fees are incurred, and vendors invoice each shipment immediately, which improves vendor cash flow, and gives Columbia greater visibility into the process. "We don't have big periods of time where we can't reconcile what shipped and what vendors have drawn on LCs," says Bailey.

Moving closer to a well-oiled machine

From a financial standpoint, Columbia has generated significant savings from the early payment program it is now able to offer to its vendors. "We offer standard payment terms to all our vendors and when it makes sense for the vendors from a finance perspective, we'll pay them early and take a discount," says Bailey. Approximately 25 percent of its apparel vendors use this program. Since ownership of the goods has transferred to Columbia when payment is made, the incremental revenue from the early payment program is generated without additional risk.
From a supply chain perspective, the savings have come in the form of consistent data in a consistent format from all its manufacturers. When the import finance department talks to the logistics or customs departments, everybody's looking at one version of data, says Bailey. "That's been the most powerful thing. And we can make it electronic, so we can share it with anyone," he says. The system has brought finance and production closer together, says Bailey. "We can all work together and develop processes that work across departments. We don't have to look at things just from a finance perspective. We can reach out to other departments who are using this information on the same platform, and find reconciliation points that work for both of us." The result is that there is more visibility into what multiple departments are doing within Columbia, which provides an opportunity to eliminate redundancies and inefficiencies. The company can better determine now if two people are performing the same task, for example.

The next step

At press time, Columbia Sportswear was investigating Tradecard's new Sourceview solution, which can further integrate the financial and physical supply chains, offering visibility into the sourcing process from order through payment. Features include a supplier scorecard, for tracking key performance indicators such as order accuracy; scan-and-pack, which provides one version of data for use on labels and shipping documents; event tracking, for monitoring movement of raw materials through the supply chain, product shipping, etc.; and vendor chargeback management. With automation of the financial supply chain and consistent data across more of its locations and departments, Columbia's goal is to be able to grow its business at a rapid rate without adding head count. "We want to have our people involved in value-added activities," concludes Bailey.

Jordan K. Speer is senior editor of Apparel. She can be reached at [email protected].