In retailing, empty shelves mean lost sales. Ocean State Jobbers Inc., a midsize retail chain, keeps its shelves stocked by keeping its supply chain full of lower-cost housewares, gardening supplies, sporting goods, toys and home décor from around the world.
Keeping the goods in the pipeline means buyers must remain constantly on the lookout for hot items and suppliers that can fill the bill. So the North Kingstown, R.I., company is implementing the namesake collaborative e-sourcing software suite from startup TradeStone Software Inc.
The Web-based suite can speed up the identification of suppliers, the negotiation of contracts and the creation of shipping manifests, according to TradeStone officials in Gloucester, Mass. The software includes the Java 2 Platform, Enterprise Edition development platform for customizing the applications.
OSJ, which runs about 70 Ocean State Job Lot stores in New England, needed supply chain automation software to replace the homegrown sourcing platform that CIO Hisham Aharon developed a dozen years ago to run on a Wang Laboratories Inc. system.
The TradeStone system will be used initially with vendors in China, the source of 20 percent of OSJs goods. The software will enable OSJ buyers to send requests for bids to suppliers it has done business with before as well as new ones it is just identifying. The initial request goes out as an e-mail that includes a hyperlink to an OSJ Web page backed up by TradeStone software.
Suppliers can respond with quotes, which the system organizes and presents to OSJ buyers in a dashboard. Buyers can see summary quotes and drill down on those that seem the most promising. At that point, a buyer can accept a bid, ask a bidder for clarification or negotiate further with a bidder via e-mail. The bid is then turned into a purchase order that can be imported into OSJs merchandising system, Aharon said.
Focus on global product sourcing
The search for qualified sources of goods and services absorbs about 53 percent of the sourcing cycle
Automating sourcing processes can reduce cycle costs by 30 percent
Documentation for international compliance adds $300 to $500 to the cost of each international shipment
Aharon said the process will streamline the existing workflow, which includes a redundant mix of faxing, e-mailing and rekeying information. Aharon doesnt have data to confirm how much time the software will save, but TradeStone cites studies saying that automating international sourcing can cut almost one-third of the time it takes to source a product.
"We do the same thing now but on paper," Aharon said. "Its going to speed up everything. When you deal with faxes and e-mail, things get lost. [With TradeStone, suppliers] can see exactly what we want and can negotiate instantaneously with usand finalize the deal in minutes, not days."
To entice suppliers into using the system, TradeStone enables them to use Web services to integrate the negotiation and purchase order directly into their own enterprise software systems, said TradeStone CEO Sue Welch. It also automatically spits out export documentation, which can save up to $500 per order, Welch said.
"Plus, [integrating the order] is not as error-prone [as manually entering the information], so the supplier is more likely to get paid in a timely way," Welch said.
TradeStone, which officially launched this winter, was founded by Welch and Chief Technology Officer Jack Zakarian, who together founded RockPort Trade Systems Inc., an international sourcing software company that was acquired by QRS Corp. in 2000.
Welch said TradeStone this summer will launch a hosted offering called Collaborative Trade Center, which will act as an electronic trading hub supporting the kinds of supplier identification and settlement that the packaged software does. But it will also be able to host virtual trade missions, Welch said.
One obstacle OSJ faces in getting some suppliers on board is that the TradeStone user interface initially was written only in English. OSJ is trying to minimize the impact of that by keeping the interface it presents to suppliers very simple and including some Chinese where it can.
Automating international business relationships is not an overnight process. OSJ is trying to tackle the technical hurdles first and expects to smooth out issues of getting suppliers fully involved as they arise.
"The biggest hurdle I see is not from our [side of the transaction]; it is the unknown on the other side," Aharon said. "It is how the suppliers and vendors are going to see this application: Will it be easy enough to get the information we need from them?"