Compliance and quality assurance: Pieces of a complex supply chain puzzle
From the outside, supply chain management might seem a straightforward process involving shipping products, loading and unloading trucks, and tracking the associated payments. But peel back a few layers, and it becomes evident that the process has many elements, including quality assurance and compliance. This part of the supply chain is often content-centric but also has a workflow component in which content needs to be provided to a variety of stakeholders.
Stage Stores is a retailer operating more than 750 stores in 42 states under the Stage, Bealls, Peebles, Goody’s, Palais Royal, and Gordmans brands. Products are delivered to the stores from three distribution centers located in Ohio, Texas, and Nebraska. Suppliers need to ticket and pack the items in a way that complies with Stage Stores’ requirements, and shipping information needs to match the purchase order. If anything is out of compliance, the suppliers are charged a fee referred to as a “non-compliance chargeback,” and the error must be corrected at the distribution center. This delays delivery to the sales floor.
The need for compliance
“Our goal is to help our suppliers avoid non-compliance chargebacks so we can keep the sales process flowing,” said Ken Lettre, VP of compliance/distribution manager at Stage Stores. When Lettre first arrived at Stage Stores, suppliers often were unaware of the company’s requirements, and if they attempted to contact the company to ask why they had been charged a fee, they would not receive a response for months. In the meantime, they were likely to incur additional fees.
To improve compliance (and vendor relations), Lettre sought to implement a system that would manage compliance issues. He investigated several solutions, and selected OpenText Active Intelligence from OpenText. Ease of use for suppliers was a factor in the decision, along with the web-based mobile interface for entering/initiating the identified compliance issue.
The majority of non-compliance incidents at Stage Stores are identified by inspectors in the distribution center. If the inspector spots a problem, such as the price ticket not being in the right location on the product, then the inspector uses an iPad to enter the purchase order number, select a violation code, take a photo, and then send an email notice to the supplier. “The email has a link that takes the supplier to a description of the violation,” explains Lettre, “and to the photo, which is very helpful in documenting the violation.”
Some compliance violations are detected electronically, because OpenText Active Intelligence can process electronic data interchange information to pick up errors such as a mismatch between the Universal Product Code (UPC) on the purchase order and the UPC on the product. Suppliers also receive automated notifications of this type of violation via an email. In addition, the system manages transportation-related violations, such as a case of a delay in loading a truck, which in turn causes Stage Stores to incur extra shipping expenses. Whatever the source of the violation, deduction management (keeping track of chargeback fees) is automated in OpenText Active Intelligence and tracked.
The reporting capabilities of OpenText Active Intelligence provide useful feedback about each vendor’s performance and overall compliance. “Every month, we run the top 10 compliance violations for each supplier,” said Lettre “and we also can run the top 10 overall issues.” A consistent pattern can indicate a communication problem either between Stage and the vendor or within the vendor’s organization, which can then be addressed.
Automation and the human element
Despite the benefits of automation and streamlined workflow on supply chain management, Lettre emphasizes that the human element is also very important. “We are available and responsive when a supplier has a question or problem,” said Lettre. “Just having them know that our priority is to help them, not fine them, is very important. Our goal is to reduce the chargebacks to zero by having everyone stay in compliance. This approach benefits the supplier, improves productivity at the distribution center, and helps the retailer maintain the inventory it needs to serve its customers.”
OpenText Active Intelligence is a cloud-based solution that supports B2B transactions. It can be configured to incorporate rules related to both documents and business processes. A surprising number of companies are still paper-based, and much information, even if digital, is siloed. “Having the right digital foundation is essential,” said Jeff Eckel, product marketing director for supply chain at OpenText. “Once that is present, many other options become available, including order visibility, compliance, and analytics.”
OpenText has multiple products that support the supply chain, including OpenText Trading Grid and OpenText B2B Managed Services. Analytics are based on information that flows through Trading Grid, which includes orders, shipping notices, invoices, and payments. Analytics can be displayed on interactive dashboards that provide visibility into operations and help improve management and performance of business partners. OpenText B2B Managed Services provides a B2B integration environment for companies that prefer to outsource this function.
Looking to the future, Eckel foresees an integration of AI, IoT, and blockchain into the supply chain. “When we get to that stage,” he noted, “we will be able to anticipate the need for items such as a replacement part, trigger its shipping and delivery, securely manage the associated financial transaction, and schedule the installation of the device.” That scenario is not yet in place but is on the way.