Like many suppliers to tier-1 retailers, such as Amazon.com, global lifestyle and gift brand manufacturer Pearhead Inc. relied on its EDI platform to receive and process orders. But as its electronic sales began to explode, Pearhead realized its EDI platform’s lack of compatibility with its enterprise resource planning, or ERP, system made it difficult to know how many orders were open at any given time and whether there was enough inventory on hand to fill those orders.
To get that information, Pearhead had to manually check each purchase order against available inventory.
“It got to the point we were managing inventory and order management data from our third-party warehouse logistics providers instead of our ERP system,” says Lennie Diyco, director of warehousing and logistics for Pearhead. “That made it challenging to map orders from our EDI network to the warehouse and receive fulfillment information from the warehouse in our ERP.”
Improve order speed and visibility
The lack of compatibility between its EDI and ERP systems also began to negatively affect Pearhead’s performance score with its customers. Large retailers such as Amazon, Walmart Inc. and Bed Bath & Beyond Inc. measure supplier performance based on turnaround time for an order and on the supplier’s ability to provide detailed information about a pending delivery so the retailer can be prepared to accept delivery.
“There was so much manual data entry after receiving an order before it could be transferred to the warehouse, that orders we got on Monday weren’t processed for 24 hours and didn’t start shipping until Thursday or Friday,” Diyco says.
It also slowed the generation of invoices and advance ship notices (ASNs), which provide detailed information for customers about a pending delivery.
To solve the visibility problem into its warehouse and order management systems, Pearhead, which uses Oracle NetSuite’s ERP system, replaced its legacy EDI platform with TrueCommerce Inc.’s integrated EDI solution for NetSuite ERP. Since making the change, Pearhead has near real-time visibility in NetSuite on open orders, inventory and payables, which speeds order processing, improves accuracy and reduces chargebacks from customers.
Connecting with Amazon
The first customer connected to Pearhead’s new EDI platform was Amazon.com. Amazon buys directly from Pearhead, which does not have an Amazon storefront. Pearhead also sells to both to consumers and to retailers on different sections of its Pearhead.com ecommerce site.
The connectivity between its EDI and ERP systems allows Pearhead to see orders from Amazon in its ERP system within 30 minutes of receipt through its EDI platform, Pearhead says.
Prior to using its new system, Pearhead had to take the information in a customer’s purchase order, enter it into an Excel spreadsheet, then verify the order and check it against available inventory line by line. Once the data in the spreadsheet was received by the warehouse, Pearhead’s staff manually transferred the information to Pearhead’s ERP system.
Automating those processes has substantially shortened the amount of time it takes Pearhead to fulfill an order.
“Now if we get an order at 6 am on Monday, our 3PL has visibility on it by 6:30 a.m.,” through the ERP, Diyco says, referring to a third-party logistics provider.
Amazon Prime shipping windows
Faster fulfillment has enabled Pearhead to consistently fulfill Amazon orders within Amazon Prime shipping windows. “Amazon orders received early Monday are being shipped to Amazon distribution centers by Tuesday or Wednesday,” says Diyco. “This enables us to be an Amazon Prime supplier.”
Since connecting Amazon to its TrueCommerce EDI network, Pearhead has also onboarded its other customers.
The payoff from faster fulfillment and better visibility in its warehouse improved Pearhead’s vendor scorecard with customers and reduced chargeback costs. Better visibility into the warehouse, for example, allows Pearhead to notify its customers sooner if it is unable to completely fill an order or if an item is on back-order. This reduces the potential for chargebacks as Pearhead, for example, will notify a customer that it could only fill 15 of the 20 widgets ordered. The system can also notify customers when Pearhead expects back-ordered inventory to become available.
Faster invoices—and payments
“We got dinged a lot for late advanced ship notices,” Diyco says. “Previously we had about a 46% on-time score with Amazon ASNs, and many of those late ASNs resulted in chargebacks. Now our Amazon ASN score is 91% because we can see what’s in inventory and on back-order through NetSuite.”
The faster generation of ASNs has also shortened invoice generation cycles. “As soon as an order ships and we generate the ASN, the invoice is approved in NetSuite and sent to the customer within minutes,” Diyco says. “This is a big benefit because the faster our customers get their invoices, the faster they pay them.”
While its new EDI platform has not increased sales volume, it has enabled Pearhead to achieve operating efficiencies by freeing up service representatives to take on office management duties instead of handling order management and ASN issues.
“We can manage staff more effectively now, as well as warehouse labor, and be more proactive from an inventory standpoint because everything is operating as it should,” says Diyco.
Peter Lucas is a Highland Park, Illinois-based freelance journalist covering business and technology.
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