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When Australian Convenience Store News first looked at e-procurement systems about 18 months ago, we recommended you “use them, find out what they can do for you, and keep your options open”. Well, our advice hasn’t changed, but the systems have evolved, if a little more slowly than expected.
There are many different models in convenience retailing, from the big networks with integrated back offices to small corner milk bars. There is no one system to suit everybody in such a fragmented channel. Electronic systems are tools that can give you a competitive edge, but you need to be in control.
And, suppliers and distributors know it.
“ Our philosophy is that all customers are free to choose the best option that suits their needs,” says Gary McCall, Business Development Manager, e-Orders. “Suppliers can provide greater service by offering choice. Customers now have the option to order by telephone, fax, or electronically.”
Richard Lloyd, Managing Director, James Dickson & Co, agrees: “We have to remain relevant within the supply chain and that means responding to retailers needs. Many retailers still use paper and pen, so electronic ordering is just one of the options in procuring an order.”
“ There are lots of ways to do things,” says Peter Friday of BP Friway and BP multi-site franchisee. “The key is to find an electronic solution that suits you.”
With more than 4,000 retail users in petrol, convenience, route and news agencies, Quatro is focusing on integrated systems. With more than 4,000 retail users in petrol, convenience, route and newsagencies, Quatro is focusing on integrated systems, and has completed integration with all the major POS (point of sale) providers.
“ The key challenge is changing behaviour, not the technology,” says Dave Levine, Chief Marketing Officer, Quatro Four Retail.
“ Now, we can deliver confirmations by SMS. The retailer does not have to go to the internet to get confirmation. We can communicate through the POS and by mobile phone. It’s all about communicating across various technologies, not just the internet. POS users are growing faster than internet-based users – many retailers prefer a POS system and don’t want to use the internet.”
e-Orders already links to all major POS systems and is integrating the back office systems of its 36 suppliers.
“ It’s like the blades of the scissors,” says Gary McCall, Business Development Manager, e-Orders. “You need both sides to cut.”
“ Ideally suppliers would like to have their own system but this would be too costly. Retailers don’t want to have to use different systems for different suppliers. e-Orders offers each supplier their own look and feel with customized trade and promotions pages.”
These tools are increasingly being used by distributors.
“ We have been in the distribution business for 150 years and we have a good reputation for customer service and professionalism,” says Richard Lloyd.
“ Our aim is reliability, consistency and accuracy. With electronic ordering being one of the keys, it is 99.9% accurate. Consequently, out-of-stocks are now mostly due to the manufacturer being unable to supply. You need to use a system that can deliver the majority of the products in your store, such as Quatro or e-Orders.”
“ Retailers can use both systems to take advantage of what they both offer,” adds Gary McCall. “It is still better than having lots of suppliers with their own systems.”
Accredited Distributors accepts all electronic orders in any format then converts the order into its own format for processing. Although you can go online and create an order with The Distributors, it is best to use an integrated system such as e-Orders or Quatro.
“ We supply Coles Express through Quatro,” says Brad Mays, Administration & IT Manager with Accredited Distributors.
“ We used to get a 20 to 30 page fax that had to be manually loaded. Now it is processed immediately with no keying mistakes.”
It’s no surprise that suppliers are running special promotions to encourage electronic ordering.
Rather than being reliant on third parties, Metcash is developing its own systems to support its Campbell’s convenience store distribution processes.
“ Ordering on-line is not practical for some retailers,” says Mike Martyn, General Manager IT, Metcash. “It can be time-consuming to load a large order onto a web page.”
In addition to developing a Campbell’s Web Portal (due for launch in August 2004), Metcash is developing hand-held (mobile) technology, thus allowing the retailer mobility within their store. The hand-held device uses laser technology to scan the item’s bar code, leaving the retailer to then input the order quantity required. The retailer transmits the order electronically and has the ability go onto the website later and view the order and its status. The retailer will also have the ability to download an electronic version of the invoice prior to the load being delivered.
“ We developed this system because it reflects the way we, and the retailers we supply, operate,” says Mike Martyn.
“We are less concerned about POS integration because few of our convenience retailers have integrated back office systems.”
The convenience and route channel is highly fragmented. Whereas, a major oil company network may have hundreds of sites using an integrated POS system that generates inventory reports and orders centrally, most smaller stores do not have back office integration and can’t take advantage of these systems. For example, of the 1,100 IGA stores, only about 10% generate orders from their POS system. The most common model for single stores and small networks in convenience is a separate inventory and ordering process.
“ The main advantages of an electronic system are speed and accuracy,” says Mike Martyn. “It allows us to shift our focus from taking an order to understanding and driving sales. We have used the time saved to contact retailers to tell them what’s available and offer alternatives. They were pleasantly surprised when someone took an interest in their order.”
For some retailers, electronic invoicing is a reality, as in the Metcash model and through the Quatro system.
“ The retailer’s POS and the supplier need to be ‘invoice-integrated’ to Quatro,” says Dave Levine. “Both are simple processes in the Quatro model.”
For some, the invoice is the last hold on paper in the process. Electronic payment is also becoming a reality with most systems.
However, no ordering system can be fully electronic from inventory to payment and not all products suit this style of ordering. For example, there is no point in ordering milk electronically, and we have not yet found a machine that can check if your order has arrived as ordered, put it on the shelf for you and update your inventory. Even if you use hand-held laser technology to record the delivered boxes, how do you know the box contains what it says it contain? No matter how integrated your system, you still need to check that order and stack in on the shelves.
The Mobil network uses Breeze for POS and back office systems to generate orders, and is linked to e-Orders and Quatro to place electronic orders.
“ The orders are generated at each site then sent to head office for checking,” says David Evans, Managing Director, Priority One Management P/L, Mobil. “But, the order is still checked manually. We could use a hand-held scanner but sometimes the bar code on the outside of the box is not the same as the contents. We still have to open the box and check the code and the quantity.
When the order is generated it sits in the system till the quantities are keyed in.”
Peter Friday, who manages the 10 MSF sites for BP in Brisbane’s western suburbs, agrees.
“ Ordering is getting sophisticated but delivery is still old-fashioned,” says Peter Friday.
Systems providers agree that the future is about customisation for both supplier and retailer. Systems will be increasingly personalised to suit you. You can already receive important information about specials and promotions from suppliers.
Recent enhancements for Quatro and e-Orders means that the web pages look like that of the suppliers.
In Quatro’s more recent release, the SMS alert feature includes regular notification of up-sell, cross-sell or substitution promotion opportunities.
“ Retailers can be constantly aware of specials and the latest product news,” says Dave Levine.
The next step will be systems that generate reports that tell you how well different products perform in your store. You will be able to share that information with your suppliers.
“ A lot of valuable data is generated by the systems,” says David Evans.
“ We could collect the data to generate rebate and points systems as a marketing tool.”
“ e-trading is only limited by the imagination,” says Gary McCall.
“ The question is, ‘Is it useful in the marketplace and is it practical?’ If there is a call for it and it makes common sense then it can be done.”
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