Outsourcing E-Commerce
Miller Brewing Company is one of the world's leading brewers. Its wholesaler network is comprised of nearly 500 independent distributors that sell not only Miller products, but in many cases, several other brands of alcoholic and non-alcoholic beverages.
In this traditional three-tier model (used by all alcoholic beverage suppliers), business-to-business (B2B) transactions are complex because the distributors vary in size and technological capabilities. In many cases, the smaller to medium size familyowned distributorships do not have the resources to spend on technology and therefore are unable to comply with current and future electronic document requests coming from large retail customers such as advanced ship notices, invoices, purchase orders, etc.
Yet, the responsibility to fine-tune the distribution network to match retail customer needs ultimately lies in Miller's hands, but doing so across a large and diverse distribution network is no easy task.
"Technology initiatives are difficult to complete in this type of environment," admits Carissa Rollins, director, e-commerce for Miller Brewing Company.
For example, there are currently 26 Route Accounting System (RAS) vendors servicing the Miller distribution network. According to Rollins, "The complexity of an IT project coordinating the efforts of more than 26 vendors is enormous both in time and dollars."
FINDING A FIX
In August 2006, Miller announced that it would partner with GXS to create a B2B integration hub that simplifies the order-to-cash process between distributors and retailers, while shielding distributors from the increasing complexities of B2B ecommerce. To be clear, Miller did not outsource the B2B e-Commerce function of its business, rather its distributors are outsourcing e-commerce functionality to GXS.
In August 2006, Miller announced that it would partner with GXS to create a B2B integration hub that simplifies the order-to-cash process between distributors and retailers, while shielding distributors from the increasing complexities of B2B ecommerce. To be clear, Miller did not outsource the B2B e-Commerce function of its business, rather its distributors are outsourcing e-commerce functionality to GXS.
"Prior to our engagement of GXS for our distributor to retailer transactions, we chose a software, provided a VAN and wrote some retailer maps for the distributors, but usage of the solution was low," says Rollins. "In addition, the combination of disjointed compliance and no compliance led us to the conclusion that we needed to do something to help the network and also reduce the complexity of the Miller portfolio."
After running through the standard RFP process, GXS emerged as the clear winner. GXS touts more than 75 percent of the Fortune 500 businesses in the United States transacting business on its Trading Grid.
"It has experience in our industry and actually has many of the retailers we do business with as customers already," says Rollins. "It also runs data pools across the world and this will be very important as we embark on the next phase of our project -- item/price synchronization."
THE SWITCH
Miller is now in the midst of the successful execution of integrating its three-tiered distribution network using GXS Managed Services. A proprietary solution will be replaced with a GXS solution for Miller to distributor transactions. Meanwhile, Miller is analyzing the replacement solution from GXS for those suppliers that already transact electronically using a standard VAN and mapping in-house.
Miller is now in the midst of the successful execution of integrating its three-tiered distribution network using GXS Managed Services. A proprietary solution will be replaced with a GXS solution for Miller to distributor transactions. Meanwhile, Miller is analyzing the replacement solution from GXS for those suppliers that already transact electronically using a standard VAN and mapping in-house.
As expected, the implementation has had its share of challenges -- most resulting from the wide range of technical capabilities in Miller's distributor network. The wholesalers that are comfortable with their current software vendors are understandably wary of switching to a large vendor with which they have no experience. GXS is helping to ease their reservations with around-theclock support. Distributors need only call the same 1-800 number that they call for all Miller technology issues and hit an option that takes them to the GXS Help Desk.
"The nice thing about the GXS Trading Grid and mapping services is that they can basically take data in any format and translate it for the trading partner into any format. If a trading partner does not have the ability to produce a file out of their software, we can also create an intelligent Web form for them to use," explains Rollins.
Miller will also appease cost concerns from distributors with a new strategy for implementation in 2007 wherein Miller will be paying a portion of the cost of enabling its distributors to support EDI. In all, Miller is investing more than $5 million in the solution for the network.
THE ADVANTAGES
Since the start of 2007, Rollins reports that Miller's success rate for implementation has increased significantly. At the time of this interview, 56 distributors were using the solution from GXS. The benefits range from significant time-savings for drivers at the back door to growing from least favored to most favored supplier at a key convenience store chain.
Since the start of 2007, Rollins reports that Miller's success rate for implementation has increased significantly. At the time of this interview, 56 distributors were using the solution from GXS. The benefits range from significant time-savings for drivers at the back door to growing from least favored to most favored supplier at a key convenience store chain.
"In addition, many of our distributors are using GXS with their smaller chains with no involvement from Miller," says Rollins.
For Miller, the newfound ability to quickly respond to retailer requirements is expected to have the largest impact on its business.
"We proactively monitor the requests of our top 150 retail partners and this solution very easily meets all of their current needs," says Rollins.
Next on the list, Miller will leverage GXS to electronically comply with Wal-Mart's item synchronization program.Overall, the successful integration of a three-tier trading partner network will offer Miller and its distributors a competitive advantage as they stay ahead of the curve in e-commerce technology enablement and have a solid baseline for additional supply chain efficiencies.