June 3, 2010
by Deborah Aarts
Like many small- and medium-sized businesses, Waterloo, Ontario-based measurement technology provider Northern Digital Inc (NDI) had a pretty undefined process for managing its purchase orders (POs).
Every day, its four-member purchasing team would collect and exchange piles of documents to and from vendors using a combination of phone calls, emails and a seemingly unending volume of faxes. They’d negotiate back and forth using the different media and, once the details of the deal were finally established, they’d upload the data into the ERP and issue a PO.
“There was a lot of back-and-forth, and it wasn’t very well organized,” recalls Robin Smith, NDI’s senior IT manager. “A lot came down to Person X remembering that he had to call Person Y. If Person X was sick that day, it just didn’t happen.”
A supplier responds to a purchaser’s changed order in real time in this screenshot of B2B Connex’s web-based portal.
This process tended to work, but it was cumbersome. “When you’re playing phone tag, you’re not really adding any cost savings to the company,” Smith continues. “You’re not speeding up the process or adding any efficiencies. You’re very busy, and no one can deny that. But what you’re doing adds zero value.”
“Make things better”
Motivated by a broad mandate to “make things better,” Smith and a cross-functional team—representing purchasing, IT and operations—began investigating ways to eliminate the manual processing of PO releases.
“We were trying to achieve two main goals. The first was to automate the entry of information into the ERP. If you send me a fax with a new date, I don’t want to have to duplicate the information by re-entering it into the ERP,” explains Smith. “The second goal was to track and manage all the back-and-forth with vendors.”
They wanted a program that was web-based so that the company wouldn’t have to install any hardware. But software-as-a-service was out of the question; for security reasons, NDI wanted to host the service on its own internal servers.
Smith and his team first approached NDI’s ERP vendor, which did offer a supply chain management tool that looked capable of doing the job. But it was expensive and the capabilities weren’t quite right for what it was looking for.