To get the most out of B2B you need to consider an integrated package. The operational efficiencies of an integrated system will run circles around everything else. With some of the systems you can go from a computer aided take-off through a proposal to a sales ticket all to way to an invoice without having to enter the same information twice. That's efficiency!

Click to view this presentationIn 2003 Potomac Floor Covering, a commercial flooring contractor serving the Washington D.C. metropolitan area, executed its first B2B purchase order using Flooring Industry specific software. Potomac allowed the software to tie every element of the business together, from inventory management to sales orders, thereby streamlining the entire process and improving margins.

BOWE Company in conjunction with Potomac documented how the introduction of B2B software positively affected the operation in this short video.


Jim Creamer, President and CEO of Potomac, talks about the experience below.

Why B2B Worked for Me

My company typically had to send or fax a standard purchase order form to a supplier. Someone at the mill would pick up the form from the fax machine, take it to the order department and then fax back a standardized confirmation.

B2B follows the same process, but since it is transmitted and stored electronically, the process is faster and more efficient.

Your computer sends a purchase order document to an electronic mailbox. The vendor's system receives and processes the contents. Next, the vendor system returns to you an electronic purchase order confirmation. It's really pretty simple.

The documents exchanged at this time are:

  • Product/Price Catalog
  • Purchase Order
  • Purchase Order Confirmation
  • Advanced Shipping Notice
  • Invoice
  • Functional Acknowledgement

Product/Price Catalog

So you say you're a commercial dealer and all of the prices you use are special prices and so a price catalog means nothing to you. Think again. Here are some reasons you are wrong.

  1. Typos
  2. Incomplete or incorrect style/pattern numbers
  3. Discontinued or due to be discontinued products
  4. VCT, Base, Reducers, Adhesive, Blades, etc ...

While I do not know how a software vendor will use the catalog information, I do know if you select a product from a list instead of entering the information the chance for error is significantly reduced. I know I am not alone in discovering that architects, specifiers, designers and even your own salespeople improperly write style/color information from time to time. Whether the number does not match the name or digits are reversed or missing, you have a chance to catch the error prior to ordering, and that saves you time and money!!!!

If you look at the number of transactions you have with each vendor you will probably find that you have more dealings with the supplies vendors and distributors than any carpet manufacturer. Most of those purchases are not job priced though they may be specially priced. B2B is designed to facilitate those transactions and keep your accounting personnel from wasting hours investigating pricing errors.

While maintaining a price book may not be a burning issue for many of us, just ask your staff. I have. Basically, everyone at my office hates dealing with it. Too many vendors with confusing price lists, it is impossible to keep organized, no one ever knows if the price list in the book is up to date and many salespeople keep their own copies of their favorite vendors which means that often they have the old prices. Trust me, B2B is a better way.

Purchase Orders and Purchase Order Acknowledgements

Time equals money. Potomac Floor Covering placed 3300 purchase orders in the last 12 months. Our average purchase order phone call lasts 4 minutes. That means 13,200 minutes or 220 hours. At $20/hr for wages and benefits, we're talking $4,400 in cost of ordering. Using B2B technology, our average order time is 6 seconds. That calculates to 5.5 hours or $110 in costs. While that represents a potential savings, more importantly, what could your staff do with the extra time? We're talking about doing in 5.5 hours what takes 5 1/2 business weeks to accomplish.

An amazing thought is that in 6 seconds, the vendor has received your purchase order, calculated a total cost of the purchase, checked and, hopefully, approved credit, checked stock, assigned inventory and responded to you. Wow!.

Advanced Shipping Notice

Many dealers record the manufacturer, style & style number, color & color number, size, mill roll number, dye lot information, sequence number, purchase order number and side mark on every roll of carpet we receive. That is a lot of information, especially if you're receiving a truck load of carpet. Imagine all this information being automatically received by your system prior to the delivery truck backing up to your warehouse door. And, suppose all your warehouse had to do would be to confirm the delivery of the rolls. More time would be saved and a lot of errors could be avoided. Now your salespeople and project managers would have additional time to map out the cuts to the rolls because the information will be sent within hours of the material leaving the vendor warehouse.

Invoices

Receiving a bill faster may not seem to be a great idea on the face of it. Looking at it a different way can change your view. There are vendors who have terms which allow only a few days in order to take advantage of a prompt payment discount. By the time the snail mail arrives and the invoice works its way into accounts payable, there may not be much time to turn around a payment, let alone investigate a discrepancy.

While the standard does not tell software vendors what to do with information, it seems likely that a good system will recognize the invoices, perform some method of matching, highlight discrepancies and allow the rapid posting of invoices which match the purchase order and receiving information. I would expect that invoices with differences would remain un-posted until they were corrected. One of the consequences of B2B purchasing is that every significant fact is agreed upon at the time of ordering; therefore fewer errors show up in invoices and the process is expedited.

Understanding B2B is fine but what is the ROI?

One software vendor estimated that B2B would add 1 - 11/2% to the bottom line. For the average StarNet dealer that does $10 million that equates to $100,000 - $150,000. Obviously, those numbers are estimates based on time savings throughout your organization and the reduction of errors. Time savings you can probably calculate - time saved by your salespeople, sales support staff, purchasing clerk, receiving clerk, accounts payable clerk multiplied by their hourly rate. But, errors are a little more difficult. What do errors truly cost your bottom line? If you have to replace an installation because the wrong carpet was ordered and installed, what does that error really cost? It costs more than just the cost of the material and labor. It means a lot more work: another ticket to be written, another purchase order to be written, more material to be received, stored, picked and cut, another installation to be scheduled, more labor to be paid, an additional trip to inspect the job, etc. Not to mention, the damage to your reputation in the eye of the customer.

In the big picture, what each software vendor charges for the B2B component is insignificant in comparison with the contribution to your bottom line. B2B, by saving time and reducing errors, will help you make more money.

Now that you understand B2B, what should you do next?

Well, if you have Flooring Industry specific software, you should contact their office and tell them you want to upgrade to the B2B version. There may be some extra costs involved but it's worth it. If you don't have one of these packages talk to your current software vendor and tell them you want it. And, if you don't use any integrated package consider either buying a product like VencomB2B or Rollmaster UDXg. These products are designed to stand alone or be used in conjunction with accounting packages like Peachtree or QuickBooks.

To get the most out of B2B you need to consider an integrated package. The operational efficiencies of an integrated system will run circles around everything else. With some of the systems you can go from a computer aided take-off through a proposal to a sales ticket all to way to an invoice without having to enter the same information twice. That's efficiency!

Contact your vendors and talk to them about B2B. They are no different from you and me. They respond to customer demand. And, quite frankly, both buyers and sellers gain from using B2B. Everyone benefits when errors are reduced and productivity increases.

Jim Creamer,
President and CEO of Potomac Floor Covering