On a Roll

Most large retailers have hundreds or thousands of suppliers with which they need to communicate on a regular basis. Efficiently managing and tracking that back-and-forth can get unwieldy.

That was one challenge facing Tesco, the U.K.’s leading grocer and world’s third-largest retailer. Between the suppliers that provide food and other merchandise for sale and vendors that offer products and services to support the company’s operations, its supplier base numbers well into the thousands, says Stuart Blackery, head of business support for Tesco corporate purchasing. “We have a large supplier base to communicate with, and didn’t have an effective method of mass communication.”

This took on more urgency in 2007 when Tesco was upgrading its internal financial system and implementing a procure-to-pay process as a way of boosting efficiency. In order for the new system to work, Tesco’s vendors would have to provide information that would allow the retailer to pay them electronically. “The concern was that we had a large number of trading partners we needed to reach” and a limited amount of time in which to do it, Blackery says.

Tesco management also wanted to streamline the process of registering new suppliers. At that time, bringing a supplier on board — capturing information such as its contact details and credit information — could take 30 to 60 days. What’s more, because much of the information was gathered via fax, phone calls and e-mail, errors and gaps in the data weren’t uncommon.

Tesco began working with RollStream, a provider of enterprise community management solutions based in McLean, Va. Enterprise community management is “collaborative software for supplier management,” says Nick Parnaby, RollStream’s founder and COO. Using it, a retailer can create a streamlined private network of its trading partners.

Retailers, in particular, can benefit from more effectively working and communicating with their suppliers, as “some 80 percent of their operating expenses can be locked up with them,” Parnaby says. Finding more efficient ways to work with suppliers can boost retailers’ revenue and lower their costs. It even can reduce risk, as tracking suppliers’ compliance with government regulation is streamlined. RollStream’s solution is targeted to retailers that have top lines at or above $1 billion and 800 or more suppliers, Parnaby says.

With RollStream, Tesco can sort its supplier database and communicate just with a specific subset of vendors, and the system automatically tracks their responses. Because it is a hosted solution, getting RollStream up and running was relatively straightforward and completed within a matter of weeks. “You don’t really implement it,” Blackery says. “It’s more of a new tool.”

Tesco’s team began by uploading its existing database of information for the suppliers with whom the company had been working. A team from RollStream then contacted the suppliers whose information was incomplete. Getting this master data file clean and complete typically takes two to eight weeks, depending on the volume of information that’s involved, Parnaby says. RollStream also spent some time instructing Tesco’s employees in the use of the system.

Once the database was up to date, Tesco used the RollStream system to let its suppliers know that the company was moving to a new procure-to-pay system. The communication from Tesco included a request for the additional information it would need to pay them through the new system.

For vendors and suppliers, getting looped into the RollStream network is relatively painless: they don’t incur costs, other than the time it takes to respond to the information requested by the retailer, Parnaby says. Moreover, once a supplier is on the network, communicating with its retail customer is more efficient. It can, for instance, more easily share information needed to resolve shipping discrepancies.

Currently, Tesco is exploring ways to automate transmission to its financial system of the information obtained from suppliers when they register with RollStream. That information is either entered manually or transmitted via a batch load, Blackery says.

Attractive retailer benefits
What additional benefits does a system like RollStream’s offer that would make it more attractive to retailers than other applications or spreadsheets? As a starting point, retailers can analyze their supplier databases in ways that would be impractical through the use of less-sophisticated tools, particularly once the number of suppliers tops several hundred.

For instance, a retailer can calculate the percentage of its total spending on products that come from a single supplier. If the retailer determines that one vendor is serving a larger portion of business than is prudent, management may decide to look for additional sources to ensure a steady flow of products.

Or, a retailer that wants to check the diversity of its supplier base can sort the database and highlight those that are minority-owned or small businesses. Similarly, the merchant can check which suppliers offer products that would be affected by new legislation.

Traditionally, all this information – if and when it can be found – is scattered across a number of areas within a company, including merchandising, purchasing and finance. RollStream “provides a holistic view of suppliers that retailers typically don’t have,” Parnaby says.

Moreover, all retailer/supplier communication through the RollStream system is tracked: A dashboard relays information like the number of suppliers that have and haven’t responded to a specific message; an activities screen shows all communication with a specific company and the dates on which all messages were sent or received. “It’s like CRM, which companies have been doing with customers for years,” Parnaby says. “Now they can do it for suppliers.”