CUTTING TRANSACTION COSTS

Byline: Andree Conrad

ANAHEIM, Calif. — Pacific Sunwear here is implementing Web-based supply-chain management software that will enable the specialty retailer to manage transactions via the Internet rather than through electronic data interchange (EDI).
“We have had EDI in our tentative project plan for the last couple of years, but found it to be excessively expensive,” said Ron Ehlers, vice president of information systems at PacSun.
Further inhibiting the effectiveness of EDI, “fewer than 20 percent of our vendors are EDI capable. Only those who are dealing with department stores have made the investment,” Ehlers said.
The company expects the new solution will generate substantial cost savings, particularly since PacSun has more than 500 vendor partners. They include the surf-and-skate apparel, shoe and accessories manufacturers of southern California. Many of these companies started in garages or in small shops, and grew into multimillion-dollar companies in the past few years, just as PacSun itself did.
The solution, from application service provider SPS Commerce of St. Paul, Minn., will go live on Aug. 1 and enable PacSun to transmit purchase orders electronically to SPS Commerce, which will sort them and forward them to the corresponding vendors by whatever method the vendor chooses, including mail or fax.
Vendors who opt to use Web functions will receive e-mail notifications of new purchase orders. They can then post advance ship notices when the merchandise is ready for shipment, providing exact detail on how many units of what product are going into each carton.
PacSun will require one invoice per advance ship notice (ASN). Previously, vendors who manufactured different types of products would lump them all together on one invoice, leaving it to PacSun’s billing department to decipher them and log them into the system individually by type of product.
“This will mean a huge labor savings in our accounts payable process and will end sorting what portion goes to Vendor 1a, 1b, 1c, etc.,” Ehlers said. “ASNs and invoices will be posted electronically and matched electronically, and only exceptions will be noted.”