VENDORNET IS A WEB-BASED communications network that manages and tracks the order and delivery cycle between the retailer and the supplier. The company seems to have solved the mutually exclusive objectives of providing an electronic, multi-party interface that is inexpensive, intuitive, and simple for suppliers to use, is still sophisticated enough for large users, and does not require custom integration.
The VendorNet program, which runs on a Microsoft NT 2000 SQL Server platform, was founded by Sharon Gardner and several expatriates from catalog management software firm Ecometry (formerly Smith-Gardner). As of July 2003, VendorNet had 35 clients, most of them Ecometry users, and had interfaces in development for CommercialWare’s Mozart system and a few other CMS programs.
DROP SHIP MANAGER
There are presently two basic modules available through VendorNet. The most widely used module is the Drop Ship Manager, and the other is Stock Purchase Orders. The Drop Ship module is used to track the ordering and fulfillment of items that catalogers do not keep in their own inventories. The merchant relays orders to the supplier, who ships the product directly to the customer. VendorNet’s electronic link allows the cataloger or retailer to upload orders for drop-ship items to the VendorNet site on a daily basis. Suppliers are automatically notified that they have new orders available. Vendors can review orders on the Web site and either print them directly or download them.
STOCK PURCHASE ORDERS
In my opinion, the greatest potential of the VendorNet system lies in the Stock Purchase Order module (SPO), which might be described as the Drop Ship Manager on steroids. The SPO communications, tracking, and updating process is essentially the same, except that it handles larger quantities and has some additional features.
The SPO module forces vendors to acknowledge every purchase order and confirm the cost, stock availability, and the vendor’s ability to meet the ship date. When changes are needed, the program alerts the buyer. It also provides automatic three-way invoice matching of the purchase order, the invoice quantity, and the quantity actually received. If all match, the invoice is automatically processed. If not, it is kicked into a bucket for review.
The SPO module allows a retailer to take advantage of advance shipping notices from virtually any participating vendor, and it enables vendors to provide the specific quantity and number of cases for every SKU on orders shipped. As a result, retailers can dramatically reduce handling and expedite the check-in process. All that’s necessary is an Internet connection.
SOMETHING FOR EVERYONE
One of the most appealing aspects of VendorNet is that it is effective for virtually any level of sophistication. The service and software were designed to be totally independent of retailers’ and vendors’ systems, relying on fairly straightforward file mapping to pick up and drop off the appropriate transactions.
If you think this sounds a lot like EDI, it is, except it’s nowhere near as costly or complex to manage. Users do not need to deal with the cumbersome templates, extensive interfaces, and expensive value-added networks typically required for EDI. Essentially, VendorNet provides an entire order management process for purchase orders and drop shipments. After the initial order is generated to the vendor, VendorNet provides a tracking system for both retailers and suppliers to monitor the status of the orders. It automatically generates updates and/or messages to the appropriate party when various milestones occur, such as orders received, orders shipped, invoices generated, and exceptions.
Jon Barker, vice president of distribution for Cornerstone Consolidated Services Group, lightheartedly refers to VendorNet as “EDI for the common man.” Cornerstone has implemented both the drop-ship and stock purchase order modules of VendorNet, and has nothing but praise for the results. “We require an ASN for every receipt,” he says. “VendorNet has been an extremely effective way for more vendors to comply.”
Fred Chambers, logistics and warehouse manager for Miles Kimball, can’t say enough good things about VendorNet. Miles Kimball processes 400-1,800 drop shipments a day, a task that used to require at least two full-time employees to manage. Now it takes only one person, who has spare time available for other assignments — and Miles Kimball has only half of its 52 vendors live on VendorNet. “Vendor compliance has come way up,” says Chambers.
A FEW SHORT HOURS
All the users I contacted confirmed VendorNet’s claims that it really is relatively simple to set up, for both the cataloger and the vendor. In most cases, it takes no more than a few hours to get a vendor set up and live on the system. Because the system is Web-based, no software is required.
Eighty percent of current VendorNet clients host the application site themselves, although VendorNet can also host it. Many subscribers pay the vendor a modest price to perform the setup, simply to expedite the process, even though setup is usually less than a few hours’ work.
Suppliers seem to be just as happy with VendorNet as the retailers. The improved communication and electronic tracking offered shorten the payment cycle considerably. Added expense to each supplier is minimal — usually just the cost of a laser printer and some labels. The retailer or VendorNet provide any required maintenance.
In a compelling example of VendorNet’s ease of implementation, one new VendorNet client started implementation of the Drop Ship tracking module in mid-October 2002, and wanted to be live by the end of the month. By that deadline, the client was quickly processing several hundred drop-ship orders a day through VendorNet, and successfully shipped over 50,000 drop-ship orders through the system in the following two months.
Pricing of the various modules is based on the number of vendors used. The Drop Ship Manager module starts at $1,000 per vendor for less than 20 vendors, and prices go down from there to as low as $400 per vendor for several hundred vendors.
Surprisingly, fees are even lower for the Stock Purchase Order module. Both modules have an annual maintenance fee of 15%. Although most clients are capable of supporting their vendors directly, some do ask VendorNet to support the suppliers for an additional 10% of the maintenance.
Just say ‘wow’
Benchmark Brands and the Footsmart catalog use both the Stock Purchase Order and Drop Ship modules. COO Greg Ton has nothing but praise for the service. “VendorNet is one of only four or five things in my career where I just really have to say ‘wow,’” he says. “The impact of VendorNet on our ability to manage stock has been incredible.”
Obviously, it’s impossible to cover all the features and benefits of the system in this column, but suffice it to say that the potential impact of a program like this on virtually every firm in the industry is profound.
BILL KUIPERS is a principal of Spaide, Kuipers & Company. He can be reached at (973) 838-3551 or at email@example.com.