The Future for an E-sourcing Solutions Builder
Written By: Predrag Jakovljevic
Published On: August 3 2006
The Upcoming Attractions
2006 has been (and will continue to be) a year of sustained packaging in terms of the marketing message, and for product and service enhancements and delivery for TradeStone Software, Inc. (http://www.tradestonesoftware.com), a provider of collaborative e-sourcing solutions for Global 2000 companies.
Part Four of the series Collaborative Sourcing Solution Vendor Leaves No Stone Unturned.
For information on TradeStone's history, see Collaborative Sourcing Solution Vendor Leaves No Stone Unturned. Also see Well-designed Solution for Sourcing: Its Technological Foundation and How It Works, and Web-based Solution Steps Out for Cohesive Retailer Sourcing.
The five major functional modules detailed in Web-based Solution Steps Out for Cohesive Retailer Sourcing will eventually represent the three major logical areas:
- retail product lifecycle management (PLM), via extension of the TradeStone Product module
- global sourcing order management, via virtual merger of the TradeStone Sourcing and Order Management modules
- supply chain logistics management, via virtual merger of the TradeStone Logistics and Finance modules
Having certainly fared better than its previous incarnation as RockPort, in its third year of existence TradeStone now employs about fifty employees at its headquarters and offices in Atlanta (US), Bangalore (India), and London (UK), and staff growth will continue for the foreseeable future.
Furthermore, things seem to be looking up, since IBM recently selected TradeStone as the global sourcing and order management linchpin for its retail supply chain solution at the La Gaude Centre for Supply Chain Excellence, alongside SAP, i2 Technologies, Galleria, and DemandTec. The roster of customers has grown to about a dozen, now including such names as The Limited, JC Penney, Federated Stores, The Home Depot, Pacific Alliance, Stride Rite, KarstadtQuelle, and Guitar Center. Although the vendor's current management team and professional services organization have over 250 years of combined retail experience to ensure customer success, the up-and-coming commerce communities are expected to spur more quality control functionality, and some customers have already been recognized for their successful deployments and results.
As for ongoing product enhancements, early in 2006 TradeStone announced the availability of TradeStone Suite v. 3.5 (currently in production at several customer sites), which introduced several planning capabilities that bind existing sourcing and order execution functionality, and which features significant enhancements to the Finance and Logistics modules, with the idea of continuing to foster rapid adoption and deployment across expanding supply chains. The new features in Version 3.5 support retailers, vendors, and manufacturers in building out their own exclusive TradeStone Commerce Communities, whose members should benefit from the suite's ability to connect planning, sourcing, and order execution, with access across multiple applications. This should provide a financial and merchandise view of sourced and ordered items across all production phases, as the system captures committed-to quantities, approved quantities, and on-order quantities, by selling channels, production status, and financial commitment.
TradeStone Commerce Communities better unite retailers with their suppliers (for instance, Deutsche Woolworth with 2,000 suppliers; American Eagle with 400 suppliers; and Pacific Alliance with 800 suppliers), agents, and inspections. They provide specialized services for suppliers, including inspection services, quality testing facilities, documentation services, financial services, and so on. They also provide supplier and vendor report cards for better supply base rationalization, as well as visibility into available capacity.
Global Trade Infrastructure Building Blocks
Going forward, the vendor will continue to round out its global trade infrastructure, which on a high level, will consist of the following building blocks:
- a Fulfillment Center, to provide supply chain execution, global order management, e-document generation, invoicing, financing, dynamic trace and track, global cost calculator, and data normalization;
- a Trade Tools Center, to provide StepBuilder business processes, composite views across multiple systems, and collaboration across multiple parties;
- an Information Center, with vast data on standard codes, currency information, trade risk reports, government information, centralized corporate libraries, and international documentation templates; and
- a Community Center, to provide services such as registration, partner profiling, e-links to banks, agents, government, virtual trade missions, online showrooms, and logistics and IP providers. ("IP" stands for "information pooler," a service that aggregates and disseminates data such as new freight rates. It can be a static data pool or dynamic—one can pull information from it, or the source can push information into the community).
The idea behind the creation of TradeStone Commerce Communities is to reduce the cost of doing business globally by facilitating the movement of ideas, information, goods, and money. As described earlier, the TradeStone Suite provides buyers, merchandisers, suppliers, vendors, and banks with a single view of financial information across the entire purchasing process—from the initiation of an order, right through to final payment. From the moment a purchase order is entered into the suite, the order details are stored centrally, and are then used to automatically pre-populate subsequent standard forms, such as advanced shipping notices (ASNs), bills of lading (BOLs), commercial and service invoices, and payment information.
The following upgrades available in the TradeStone Suite v.3.5 should further automate this process:
- Letter of Credit Processing: This feature will unite the buyer, supplier, and their financial institutions, as this virtual link will allow the supplier to collect new orders and present them electronically to the financial institution or financing partner in order to receive any necessary drafts or cash advances to pay for raw materials, new machinery, or any quality assurance tests necessary to begin work on the new orders.
- Packing List: In order to save time and eliminate redundant data entry, suppliers build customized packing lists from original purchase orders for each shipment. The packing list includes information on bar codes, radio frequency identification (RFID) tags, and containerization specifications, and also ensures suppliers are in compliance with buyers' documentation requirements. Accurate, timely, and standardized documents in turn mean faster clearance through customs.
- Logistics and Finance Documentation: All shipping and banking papers will be automatically pre-populated with order information drawn from original purchase orders, thereby saving valuable time by using data that is already available in the system. These documents and their detailed information regarding carriers, shippers, country of origin, export country, import country, and final destination, are essential for global trading security standards and for clearing customs without delay.
- Payment Builder: Once a buyer or merchant approves an invoice for payment, other TradeStone users in the finance department will be alerted, and use this feature to authorize payment, eliminating inter-office memos, cutting checks, and other manual procedures. The Payment Builder will be automatically updated with any pre-payments, change orders, and advanced shipments, so that there is never a question of what to pay, or when.
- Payment Summary: When a payment is made, a payment summary report is automatically generated, providing a view into each payment and the related invoices, and allowing the buyer to link back and forth between payment records and original invoices to a concise reconciliation of each transaction. This information is critical for chief financial officers (CFOs) looking for one report to show the reconciliation between the items that have been committed to, the items that have been manufactured towards the plan, and the items that have been paid for towards the season's plan.
Product Lifecycle Management for Retail
Early in 2006, TradeStone also announced that it had added PLM capabilities to the TradeStone Suite. The TradeStone PLM for Retail module (which is also in development testing now, with key customers) will address the specific needs of the apparel, footwear, and hard lines communities, by providing the collaboration tools necessary to automate and more easily manage the product development process, from initial concept through to delivery. It will also provide the tools to enable a retailer and its suppliers to collaboratively develop new products, better manage the quality testing process, meet milestone deadlines, and rate each party's responsiveness with scorecards. All this should enable products to speed up through the supply chain and reach the sales floor faster.
TradeStone's PLM module will address the fashion industry realities with a series of vendor collaboration tools designed to facilitate the more accurate communication of design iterations between the technical design group, merchandising, and the factory.
For an extensive discussion of global retail sourcing, see The Gain and Pain of Global Retail Sourcing, The Intricacies of Global Retail Sourcing, and The Fashion and Apparel Retailers' Conundrum.
The solution will thereby monitor the progress of a product, and assure quality throughout the process, starting with the design concept, the product brief, the technical package, the request for quote (RFQ), the order, and all phases of testing, right through to delivery. Such tools can speed up the product design phase, while making the manufacturing and testing phases up to 30 percent more efficient, which can shave significant length off the supply cycle time. The tools will include a number of components:
- Time and Action Calendars: Since quality assurance (QA) and control milestones are key to product design and production, keeping tabs on those benchmarks is critical to the entire process, and the product will accordingly enable alerting, thereby promoting real-time collaboration to resolve issues and keep product moving toward the store shelves. Pervasive time-and-action calendars for buyers and suppliers automatically assign production milestones (for everything from fabric samples, lab dips, and washability tests, to final product quality assurance testing), while master calendaring layers in additional work in progress (WIP) milestones for manufacturing (including bill of materials [BOM] receipts dates, piecing, assembly, and finish trims). The order status visibility function provides statuses on BOMs and WIPs, along with approval workflows across designers, merchants, and factories, which all can view and reconcile orders per any selling channel.
- BOM Aggregator: Testing fabrics and trims begins before garments are ever assembled, and continues throughout delivery. By understanding where common components—such as fabrics, trims, and accessories—are used throughout the collection, retailers should be able to swiftly address any quality testing failures across multiple products.
- Component Library: Retailers traditionally work off a base of approved configurations for a given season or for product families, and this feature will enable them to have a growing database of approved designs, as well as configurations or pieces (such as fabrications, buttons, zippers, trims, and embellishments). With bulk purchases of these key components, merchants should not only be able to receive better pricing on raw materials, but should also be able to take advantage of leftover fabrics and trims to create additional items, such as accessories or limited edition specials.
- Packaging Specifications: All too often, packing specifications are left up to the supplier, arriving at the retailer's distribution centers only to be rejected. To that end, hang tags, care labels, and inventory control tags will be specified in advance, stored in the component library, and used on multiple garments.
- Party Scorecard: Retailers and manufacturers want to build their relationships with confidence in the quality of their raw materials and finished goods, even when trading partners are located across the globe. This tool will enable retailers to pre-qualify suppliers for a particular order based on their previous work and certifications, and to grade them on the quality of new orders received. The scorecard is also a 360-degree evaluation tool for suppliers, enabling them to rate retailer timeliness with feedback, problem resolution, and payment information.
- Integration with Google Earth: Integration with Google's geospatial locator application will mean that retailers and vendors will be able to identify, on the spot, their network of approved testing facilities to speed product through the rigors of testing. This should also reduce travel expenses by auto-assigning resources based on commodity expertise, inspections locations, and resource availability.
The year 2006 also marked the debut of TradeStone for Trading and Product Development Companies, the latest addition to its TradeStone Suite. Through a series of customer-driven enhancements, it supports organizations in the collaborative development of their products and brands, allowing them to create product line and product collection offerings to their customers or internal departments. As buyers narrow their selections to a collection within the line, the results on buying budgets and initial mark-up within a delivery and floor set is dynamically presented.
Central to TradeStone for Trading and Product Development Companies is the collection review capability within the Virtual Showroom, a secure online workspace that enables local retail buyers and merchants to select pieces, as well as attributes (cuts, colors, sizes, and packaging) from a general collection, so they can create local brand extensions of private-labeled merchandise. The Virtual Showroom provides a sophisticated way for buyers and merchants to examine the line by collection, summarized by selling channel, delivery period, class, and sub-classes. The visual presentation of product lines and collection portfolios gives buyers the speed to market they require in order to make changes that influence and determine future flows to stores at the color, size, and style level, based on market trends. The central buying group at the trading company or the product development company can collect all the local orders in real time, compare selections, and make recommendations based on known volume discounts. Understanding what their local stores want to sell during the season, trading and product development companies can adjust mark-up percentages, compare the projected selling price to the estimated landed cost, and forecast margins per item by distribution.
Too often, many brands become locked into generic product portfolios, not by design, but by the necessity of serving a multitude of markets. Product portfolios are often developed around a "most common" denominator—a specification or attribute that will serve the largest demographic contingent. This generic offering can erode a brand—or worse, interfere with quarterly earnings opportunities. This is in a sharp contrast to the necessity of delivering fresh and innovative products, on trend and on time, to unique geographies, consumers, and product development companies. For this, retailers need tools to work collaboratively with their global manufacturers and their global outlets. TradeStone recognizes the changing roles of retailers and trading companies as they take on the challenges of developing products and of acting as their own private-brand companies. TradeStone for Trading and Product Development Companies aims at addressing those changes, and providing a platform and functionality to meet those needs. For instance, orders for product within a collection can be grouped and split into factory orders, where factories and trading company buyers and product managers collaborate on the orders to refine product flow (by color, size, pre-pack, and so on) as changes to market demand impact customer order flows. These modifications and change orders are automatically date-stamped, creating a complete order history. This change-tracking is critical, as it provides a financial and merchandise view of sourced items across all production phases. The plan/buy list provides a comparison between financial plans, the execution of pre-buy requested quantities, and on-order commitments for a period by department, class, or sub-class.
In addition to the Virtual Showroom, TradeStone for Trading and Product Development Companies includes a series of usability enhancements to provide greater insight into all activities within the buying process:
Regulation: This enhancement simplifies viewing the changes made to any transaction by anyone within the supply chain, a critical feature when demonstrating compliance with regulations such as the US Sarbanes-Oxley Act (SOX) or BASEL II (a set of banking industry recommendations by influential banking representatives from the thirteen countries of the Basel Committee on Banking Supervision).
Security: In order to fit easily into existing corporate security policies, this enhancement features many security enhancements, including hierarchical permission structures, password protection, and change-tracking.
Dynamic Data: This enhancement features Smart Tags, an interactive hyperlink utility that drills down to critical information, enabling users to display more detailed information at the click of a button.
Also in the first half of 2006, TradeStone extended its TradeStone Suite for delivery as an on-demand service (see Software as a Service Is Gaining Ground). Offered via the software as a service (SaaS) delivery model, small-to-medium retailers, apparel product development companies, and their global suppliers can now access the core functionality of the TradeStone Suite at a lower price point, without the investment in an IT and software infrastructure. According to TradeStone, the new service offering extends the vision of unified, borderless commerce, connecting even more retailers, manufacturers, suppliers, and product development companies in a global network that spans geographies and technologies. On the supplier side, TradeStone's aforementioned virtual product showroom and production collaboration capabilities support vendor offerings, demonstrating that even the smallest factories can provide credible information flow and quality products to multibillion dollar organizations. This service model strives to enable these companies to have the software up and running in as little as two weeks, and prices range from $100 (USD) to $300 (USD) per user per month.