Below, common use cases are outlined where we have implemented B2B automated data exchange and business processes to help an End-Client transform their collaborative relationships with Customers, Suppliers, and Service Partners such as Banks, Third-Party Logistics (3PL), Warehousing.
B2B - Sales Cycle: Order to Cash with 3PL Distribution
In this use scenario the business cycle is of a short time duration – a FMCG Brand Owner receives orders from a Customer (or Channel Reseller/ Sales Portal) and the finished good must be in the Customer ship-to location (e.g. distribution centre, store, end-consumer's home) within 48 hours (once seen as a radical amount of time in the pre-Amazon era, now a minimum expectation).
- The Customer sends an electronic purchase order to the FMCG Brand Owner. The FMCG Brand Owner automatically integrates the purchase order to become a sales order on their system.
- The FMCG Brand Owner holds finished product from the factories in a third-party logistic 3PL warehouse. The FMCG Brand Owner sends a delivery instruction to the 3PL to ship finished goods to the Customer. The 3PL picks the required finished goods in the warehouse and prepares a delivery. Upon the delivery leaving the warehouse the 3PL sends a dispatch advice to the FMCG Brand Owner advising finished goods are on the way. The FMCG Brand Owner sends a Ship Notice to their Customer so they can prepare appropriately for the physical goods receipt.
- The physical reception takes place the Customer’s nominated ship-to (e.g. a warehouse, a store). The 3PL sends the FMCG Brand Owner a proof of delivery of the physical receipt and acceptance by the Customer.
- The FMCG Brand Owner issues an invoice to the Customer. There may be certain legal invoice requirement depending on locality.
- The Customer pays by bank transfer on the payment date and issues a Remittance Advice to the FMCG Brand Owner.
- The FMCG Brand Owner Account Receivable closes the cycle with the order marked as paid and complete.
B2B - Procurement to Pay Inventory Models
In this scenario a FMCG Brand Owner needs raw materials to be delivered to a factory so that the manufacturing line can be run to produce finished goods. The FMCG Brand Owner is the Customer with many raw material / component / packaging Suppliers. Ideally the Customer wants a Just-In-Time delivery at their factory for the manufacturing, so they keep a minimum inventory holding that balances the cost of holding inventory versus the risk of delayed supply shutting the manufacturing line. There are several different ways to achieve this:
- Supplier is managed by discrete purchase orders: this process is essentially a mirror of the Order-To-Cash cycle described above.
- Supplier is managed by schedule agreements: A schedule agreement has a start and end date with the Customer agreeing to consume a total quantity of a material at a certain price over the lifetime of the schedule agreement. On an agreed cadence (e.g. daily, weekly) the Customer forecasts quantities as being required for the manufacturing process for an agreed time horizon (i.e. quantity of a material on each working day for the next six months). This forecast is divided into firm, trade, and forecast periods. Quantities / dates in the firm period cannot be changed after first publication, trade is advisory on what will likely be required, and forecast is best estimate.
- Supplier managed inventory: The Customer and Supplier agree a min / max inventory holding at the Customer factory. On an agreed cadence (e.g. daily, weekly) the customer published a forecast of likely materials needed for manufacturing, the current inventory count and recently consumed materials. The Supplier then works out the re-supply plan to keep the inventory within the agreed min / max inventory.
- Consignment inventory with self-bill: This can be used with any of the above models but typically in conjunction with the Supplier managed inventory. Here the inventory only transfers to the ownership of the customer when it is moved to the manufacturing line. The Customer and Supplier agree how often manufacturing consumption will be reported. The Customer pays the Supplier for that amount. i.e. the Customer is essentially preparing their own invoice, a self-bill. There may be certain legal invoice restrictions depending on locality.
B2B - 3PL Warehouse Replenishment and Transportation
In this scenario a FMCG Brand Owner manufactures finished goods that come off a plant production line and need to be placed in a 3PL warehouse for Customer orders.
- Transport needs to be booked to move finished goods from factory to the 3PL warehouse. The business is put to typically put to tender to get current rates and availability from Carriers. The FMCG Brand Owner makes a positive selection and declines others.
- The Carrier collects the goods and issues a ship notice to the 3PL receiving warehouse. Inventory is “in-transit” on the FMCG Brand Owners ERP.
- The Carrier reports status of journey progress to the 3PL receiving warehouse. Inventory transitions to a “Quality Inspection”.
- The 3PL warehouse informs the Customer of goods that pass the “quality inspection” to make it “available” for sales.
- The 3PL warehouse issues daily inventory reports to the FMCG Brand Owner to ensure both have the same view of inventory status. The FMCG Brand Owner investigates discrepancy and authorises adjustment due to incidents such as sampling, unintentional accidents, inventory miscount and in unfortunate circumstances pilferage.