MANAGING E-COMMERCE EXPANSION

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1 MANAGING E-COMMERCE EXPANSION Scott Bolduc Director of Supply Chain Strategy 4/29/2014

2 Introductions AGENDA SPS Commerce Overview B2C process B2C electronic trading Implementing partnerships 1

3 INTRODUCTIONS Over 25 years of experience with supply chain systems (WMS, ERP, Forecasting, Procurement, Accounting) and EDI Our Own Hardware (hardware Industry Cooperative/Wholesale/Distributor) 300 suppliers to trade PO, Invoices, Freight Bills Nash Finch (Grocery Distributor) 200 suppliers to trade Grocery PO and Invoice Fingerhut /Bluestem Brands(Catalog/Online Retailer) 700 suppliers to trade Warehouse and Direct to Consumer PO, POC, Ship Notices, Invoice, Carrier Shipment Statuses, International Consolidator Currently the Director of Supply Chain Strategy at SPS Commerce. I have been in this role for over 12 year where I have worked with hundreds of retailers, suppliers, distributors, carriers and Third Party Logistics (3PL) companies to gain new efficiencies in their supply chain 2

4 SPS COMMERCE (NASDAQ: SPSC) Founded in Minneapolis 1998 Global Footprint 54 Consecutive Quarters of Growth 52% of the Market - Market Leader employees 100% Software as a Service (SaaS) Model 2,700+ Pre-built Integrations NASDAQ SPSC 3

5 2014 = ARE YOU A RETAILER, A SUPPLIER, OR BOTH? we saw a continuation of the multichannel transformation as more suppliers are becoming retailers and retailers are becoming suppliers. What once was very defined is now becoming ONE continuum Organizations that are nimble and have equally nimble supply chains are capable of creating whole new categories.

6 RETAIL INDUSTRY TRANSFORMATION E-Commerce Impact Cloud Computing Adoption New Distribution Challenges M-Commerce Empowerment Ship-to-Consumer Ship-to-DC Ship-to-Store Cross-Dock Import VMI 5

7 KEYS TO E-COMMERCE FULFILLMENT SUCCESS Determining e-commerce requirements Managing items and reporting inventory position Managing e-commerce orders and order changes Streamlining drop shipping and transportation Simplifying, managing or automating returns, order tracking and vendor scorecarding 6

8 E-COMMERCE DRIVERS AND TRENDS E-Commerce can improve inventory management E-Commerce can grow sales without capital expense E-Commerce can increase customer loyalty The threat... 7

9 TOP E-COMMERCE CHALLENGES/REQUIREMENTS Item setup Inventory visibility Order visibility and managing orders Managing logistics spend Branding Finding e-commerce capable vendors 8

10 ROADMAP TO WORLD-CLASS DROP SHIPPING Item management Inventory management Order processing Order confirmation and correction Change/cancellation Order tracking Billing and payment management Return management 9

11 ITEM MANAGEMENT Importance of item information Attributes Adds/changes/updates/discontinues Item master cleansing Images/digital assets 10

12 INVENTORY MANAGEMENT Electronic Data Feed EDI/XML Clearinghouse Attributes Supplier information Product information Inventory information 11

13 E-COMMERCE DC/STORE Orders Consumer DC/Warehouse Vendors Retail Store 12

14 E-COMMERCE SHIP TO CONSUMER Consumer DC/Warehouse Orders Vendors Flow 13

15 PURCHASE ORDERS Many smaller orders Multiple Ship To addresses Customization Personalization Shipping and handling fees 14

16 ORDER CONFIRMATION AND CORRECTION Receipt of orders Validation of inventory available Corrections/error notification Customer notification 15

17 PO CHANGE/CANCELLATION Purchase Order correction Purchase Order cancellation Cancellation confirmation Customer notification 16

18 PURCHASE ORDER TRACKING Shipment Confirmation Many small packages Branding Customer notification Transportation Shipment status Customer notification 17

19 THE BRANDED EXPERIENCE Marketing Private Labels, Packing Slips, Holiday Messages, Gift Cards, Related Products Literature (enforces branded customer experience) 18

20 BILLING AND PAYMENT Invoice Many small invoices Remittance Many small invoices/documents reported on the voucher Debit/Credit Adjustments Rebates 19

21 COMMUNICATION OF RETURN METHODS Return instructions Return verbiage Return address 20

22 RETURN PROCESS Physical Returns Customer Returns o Supplier o Retailer o 3 rd Party Return Center Returns from Retailer/3 rd Party Return Center to Supplier Electronic Data Exchange Request for a return Return Authorization Credit for returns 21

23 SUPPLIER COLLABORATION Order performance Designed to measure KPIs over time (on-time delivery, order changes, fill-rates, EDI data quality, etc.) Across dimensions (product, vendor) Across levels (SKU, product, category) Supplier scorecarding Timely shipments On-time shipments Fill rate performance Supplier scorecard 22

24 TYPES OF EDI TRANSACTIONS 832 Item/Catalog 846 Inventory Availability 850 Purchase Order 855 Purchase Order Acknowledgment 860 Purchase Order Change 865 Purchase Order Change Acknowledgement 856 ASN Shipment Confirmation 214 Shipment Status Message 810 Invoice 812 Debit/Credit 180 Return Request and Authorization 820 Remittance 23

25 TRANSACTION FLOW Item Catalog (832) Retailer Inventory (846) Vendors PO (850) / PO Change (860) PO Acknowledgement (855) PO Change Acknowledgement (865) Shipment Confirmation (856) Invoice (810) Return (180) Debit/Credit (812) Remittance/Advice (820) Shipment Status (214) Shipment Status (214) Carriers 24 24

26 IMPLEMENTING PARTNERSHIPS B2C capable partners Implementing electronic trading Alternatives to limited electronic trading capabilities On-going management of electronic trading success 25

27 B2C CAPABLE PARTNERS Who s capable of fulfilling orders? Are they electronically capable? What are their capabilities? How do you get these answers? One-on-one meetings between partners Conferences Business social networks 26

28 IMPLEMENTING ELECTRONIC TRADING 100 s of Vendors Big XML Carriers The real integration challenge. DSD Vendors SME 10,000 s Items EDI EDI EDI EDI Spread Sheet Distributors Mail EDI 50 Items 1000 Items Ship to DC Int l Domestic Ship to Local The legwork of implementing technology with hundreds of individual companies on an initiative that will cost them time and money 27

29 IMPLEMENTING ELECTRONIC TRADING PARTNERS Implementing Electronic Trading Partners Implementing your partners Steps o Setup o Testing One one Service providers 28

30 LIMITED TECHNOLOGY What happens if they can t do it (or all of it) Eliminate the partnership Create a portal Exemptions SaaS providers 29

31 ON-GOING DATA MANAGEMENT How to manage and monitor data success Management by fire ORDERS NOT SHIP In-house systems SaaS providers o Visibility reporting ON-TIME SHIPMENTS o Order performance reporting 30

32 QUESTIONS 31 31

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