Electronic Exchanges

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Electronic Exchanges

By Linda Lisanti, Convenience Store News - 05/05/2008
More and more these days, manually entering invoices into the back office system at the store level is going the way of old-fashioned cash registers and QuickBooks. Aiming to save on labor hours, improve accuracy and provide a more efficient reconciliation process overall, convenience store operators are relying increasingly on electronic invoicing for dealings with both their wholesalers and direct-store-delivery (DSD) vendors.

All but one of the retailers at Convenience Store News' recent CIO Roundtable held in New York reported implementing some form of electronic invoicing. However, Kum & Go LC took the prize for the most widespread usage. Today, just about 96 percent of all products coming into the company's stores are processed with electronic invoices.

"Prior to implementing EB2B (electronic business to business), the majority of invoices were entered at the store level and then mailed into headquarters for auditing. The process was very long and time consuming for both store associates and headquarters," recalled Kym Howe, Kum & Go's vice president of information technology.

In 2000, the West Des Moines, Iowa-based chain began investigating the advantages of electronic invoicing with its wholesaler, implementing the technology in a select group of stores. Two years later, the tool was expanded to all stores, and a year after that, the company added DSD vendors and any other vendor that had the capability.

"Now, we ask that every new vendor brought in uses electronic invoices," Howe said.

The technology offers multiple benefits -- the most beneficial feature being that it enables Kum & Go to audit invoices very efficiently. It's also saved an enormous amount of time for both store associates and the company's Accounts Payable department.

Most recently, Howe said the retailer has seen another benefit with regard to its computer-generated reordering program. "Electronic invoicing has provided the accurate input of information needed to help make this project successful," she noted.

Like Kum & Go, The Pantry Inc. of Sanford, N.C., also has found several advantages to using electronic invoicing, particularly the reduction in time store managers have to spend on data entry. Before, invoices were entered manually at the store level. Overall, the technology has resulted in "a more accurate, easier and more efficient reconciliation" for the Accounts Payable team, according to Ed Collupy, vice president of information services.

The c-store chain has been using electronic invoices with its wholesaler since 1998 when it introduced a new back office system to its stores. Since then, the retailer has added a number of DSD vendors across multiple categories, including packaged beverages, dairy/milk, snacks and general merchandise. Currently, 42 percent of The Pantry's merchandise invoices are processed electronically, Collupy said, adding that there is an ongoing initiative to incorporate as many vendors as possible into the program.

>For some retailers, like Flash Foods Inc., it's been a challenge trying to expand the use of electronic invoicing. The Waycross, Ga.-based chain does electronic invoices with its wholesaler, Distribution South, a sister company of Flash Foods, as well as with DSD vendors Coca-Cola and Anheuser-Busch. But it has run into obstacles when attempting to bring other DSD vendors on board, Flash Foods CIO Jenny Bullard said.

The problem has been in the timing of when the electronic invoice is delivered from the vendor to the company's FTP site. In some cases, the invoice will not be delivered until late the next day and in other cases, it can take more than a day. Flash Foods is on an item-level perpetual inventory, so the invoice has to be entered and updated to inventory with paperwork on the date it was received, Bullard explained.

Because of this obstacle, less than 5 percent of Flash Foods' invoices are now processed with electronic invoicing. The retailer's goal is to considerably increase that number by the end of this year. Bullard noted that at the recent PCATS winter meetings, part of the EB2B working committee agenda revolved around developing a business best practice for vendors to deliver the electronic invoice to the retailer.

"Our goal for 2008 is to work with the DSD vendors to resolve any timing issues so that we can move ahead with more electronic invoicing," she said. "At Flash Foods, if we can receive the invoice from the vendor by 12 p.m. the next day after delivery, we can post that inventory to the previous day and keep our perpetual inventory correct."

Similarly, Kwik Trip Inc. in La Crosse, Wis., does electronic data exchange (EDI) only with its fuel vendors and wholesalers because it too, ran into timing issues with DSD vendors. "We did try, but the delay of getting the invoices outweighed the advantage," said Ed Strahs, director of information technology. "We need a quick turnaround on invoices."

Currently, about 5 percent of Kwik Trip's invoices are electronic.

Aside from timing, another challenge that retailers at the CIO Roundtable reported was the use of PCATS/NAXML standards. The Pantry's Collupy said his chain is committed to using the standard, but has found some vendors are not aware of the format. Kwik Trip and Kum & Go both said they do not mandate use of the standard.

"Our goal is to encourage as many of our vendors to participate in using electronic invoicing as possible," Howe said of why Kum & Go has chosen not to use the standard.

She pointed out that it's already tough trying to accommodate all the vendors. "Many times, we have to modify our format or, on occasion, even help a vendor format their files. We have a very efficient programming staff that handles these issues."

Kum & Go is also at work on a format whereby smaller vendors, who may not have the capability, will be able to fill out or import information.

"Our goal is to get as close to 100 percent as possible," she said.