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Clothing manufacturer tames payables

by David Longworth
April 29th, 2003

At clothing manufacturer Nygard Partnerships, it used to take several hours to process a supplier invoice. Now it takes just a few minutes.

 
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Nygard automated longstanding manual processes when it used web services to link its manufacturing and finance systems:
  • Purchase orders from the manufacturing system were key to its competitive advantage
  • But there was no automated link into the finance system
  • .NET provided a way to connect the two
  • Dealing with supplier invoices now takes minutes instead of hours
  • There's more time to investigate supplier discrepancies


Glossary terms: web services, .NET, client-server, lookup tool

The improvement came from deploying web services to reconcile purchase order records from its manufacturing software, running on an IBM AS/400, with its accounts payable ledger.

The Canadian company, based in Toronto, recently won an award for its ePO web service system from the vendor of the accounts software it had linked to. Epicor ran a competition from its website for the best web service built by a customer integrating to its software. By the time Nygard saw and entered the competition, it had already completed the ePO system. It has since moved on to further iterations of the service and is looking at deploying services elsewhere based on the components developed for ePO.

The core IT systems which give Nygard its competitive edge include inventory control systems, product development management (which costs a garment before manufacture) and 24-hour replenishment. Key to its success are the manufacturing systems that generate the purchase orders. The company had long been casting around for a purchase order processing product which could handle manufacturing's complex, two-way requirements while reconciling that to its Epicor back-end finance systems. But it had found nothing.

When the first versions of the .NET environment were coming to the fore a year ago, it saw an opportunity. After some internal campaigning, David Brough, senior database administrator and a handful of designers and developers set to work building a bridge between the systems that generated the purchase orders and the back-end. It was their first exposure to .NET.

"It was a learning curve to start with," says Brough, whose developers had previously worked mainly with client-server environments, where a lot of the software functions execute in the front-end client software. "But it was more of a mindset change than anything else. You have to get into the mindset of building multi-tier, component-based services and seeing web services as components that everybody can use, then the web-based front-ends are much less important."

Manual approvals
The company has seen massive efficiencies from the project, which has reduced the time required to prepare and approve an invoice in Epicor from 5-10 man hours to 5-10 minutes.

Previously, accounts-payable clerks would have to print out and reconcile all the documents relating to the invoice — the purchase order, the advance shipping notice (on receipt of which it would pay), receipts, the invoice itself and any quality charges (ie, adjustments to the amounts payable due to variations from the original specification). The clerks would manually assign general-ledger codes to all the documents, and then pass them through various manual approvals before finally rekeying the information into Epicor.

Now this whole procedure is handled electronically by the ePO system. For the moment, clerks are still doing invoice matching "to make sure nothing has slipped through," but soon, only exceptions will have to be looked at manually.

The cautious approach has paid dividends for Nygard. Based on the success of the initial service, it is moving on to build closer integration with its manufacturing systems, with the aim of creating more of an end-to-end procurement process. None of this would have been possible without first carefully establishing proof-of-concept that the core payment processes would still run smoothly.

The most important payback for Nygard has been a change in the way it does business with suppliers. Previously, suppliers were paid according to what they delivered, even if they had delivered late, or supplied either more or less than requested. Implementing ePO has given its procurement staff swifter and more timely access to information, empowering them to take a firmer line with suppliers. Now, they will only be paid for what Nygard has ordered. "We assume that what we ordered is what they'll deliver," says Brough. "As long as it is, they will be paid more quickly and there will be no charges."


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Background

Nygard International
Company website

Epicor
Vendor website


 
 


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