eBAP in Retail

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The retail industry is engaged in bringing products to their customers via sales vehicles such as web, phone, mail orders, and of course, using the traditional channel of retail stores. While each of these sales channels have their own characteristics, the core business processes of procuring products, maintaining inventory, managing vendors, sales promotions, selling products, sales returns, and accounting remain very similar.

eBAP is a rich set of reusable, configurable, extendable, and scalable business components which can be profitably implemented to automate the retail business processes, whether a retail company uses web, phone, mail, stores, or a combination of these vehicles to sell products. How eBAP addresses the retail functionality is outlined in this paper.

Vendor Management

A retail organization usually deals with a large number of vendors depending on the variety and types of products it sells. Retail organizations need to identify, shortlist, and select vendor products for making them available to their customers. The vendor management activities that a retail company would typically follow are:

• Gathering vendor information

• Registering vendors

• Gathering product details

• Rating the vendors on quality, price, lead times, both in overall ratings and product specific ratings

• Managing vendor samples

• Finalizing merchandize and negotiating prices

The vendor management and vendor product management components of eBAP provide retail organizations with the ability to maintain vendor demographics, vendor warehouse locations, vendor contacts, vendor products, and relevant information on vendor products such as brand, price, vendor locations where the products can be supplied from, lead times for supply, and minimum order quantities. Basic product pricing information can be maintained using these components. Comprehensive pricing details and logic can be

Vendor Portals

eBAP provides vendor portals, using which vendors can register themselves, provide their information, and provide data on their products. This enables retail organizations to save time by eliminating data entry efforts and puts the onus of information accuracy on the vendors.

Of course, some of the critical information that the vendor enters can be confirmed and approved by the buying offices before the data is accepted for

managed by integrating these components with the advanced pricing component of eBAP.

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Vendor Qualification, Stability, and Rating

It is important for the buying offices to understand vendors’ qualifications in terms of meeting the quality parameters of the products, their financial stability, and profitability. Without a good understanding of these parameters, the buyer’s dependence on vendors for supply of goods might result in a situation which would result in non-fulfillment of service level agreements with respect to quality, timelines, customer goodwill, and cost overruns resulting in loss of business. To get an objective rating, vendors need to be measured and ranked on both quantitative and qualitative parameters. eBAP vendor management provides data points to gather such measures. Some of these data points are automated based on the history of purchase orders, goods receipts, quality inspection results, and sales returns.

Vendor Sample Management

Vendors typically provide samples of their products for selection and approval. The buying offices perform a series of activities on the samples based on the product types or categories and also based on the selling vehicles. For instance, catalog sales, mail order sales, and web sales need to show photos of products with product descriptions. The level and kinds of detail would vary based on product category. For example, a clothing product listing would include a brief description, the color, size, and material used to stitch the product, whereas a mobile phone or a computer will have a totally different set of details in its listing.

As the number of sample products increase, and the number of activities and the time to process samples through those activities increases, it becomes necessary for a buying office to computerize the inventory and track the

further processing. Also, a vendor may require to review and approve product information such as product photos and descriptions before the information can be published via the retailer’s catalogs, web, or any other vehicle. Vendors can also view their purchase orders, the results of quality inspections, and the status of their payments. These functions are provided by eBAP’s customizable workflow component, and role based authorizations and data level access restrictions of the security component.

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Sample Management Workflows

The eBAP workflow component, in conjunction with vendor management and product management, can be configured and customized to provide sample management functionality to buying offices.

Process maps can be set up in the workflow component which would consist of a sequence of activities / steps the samples of a product type or product category must pass through. As soon as a sample is received from the vendor, the sample can be taken through the series of steps as defined in the process map. The workflow component provides the status of the samples and metrics such as productivity at the process step level and operator level, and detailed activity reports carried out in a shift, day, or a given period of time. As the workflow guides the operators through the sequence of steps and alerts the next stage operators on the completion of prior activities, the coordination hours spent for these kind of activities can be minimized, if not completely eliminated.

Product Management

Product management is a major part of retail functionality. It can be as simple as maintaining a list of products with code, description, and price, to as complex as providing features for categorizing products, defining bill of material type structures, providing ability to build and publish multiple catalogs, workflow integration, purchase related data for products, sales related data for products, ability to substitute products, product inventory, reserve products for sales, ability to handle customer consignments and vendor consignments, and so on.

eBAP provides a comprehensive product management functionality which can be configured and tailored to suit the requirements of an organization whether simple or complex. Products belonging to different categories can have different

movement of sample inventory through the series of activities defined for the product.

In the absence of automation for these processes, the buying offices will need to spend many labor hours to track and find the status of sample products and coordinate the movement of sample products from one activity to another. This would lead to delays in making the products available for customers to buy.

Product Hierarchies

A hierarchy of product types, categories, and brands can be created with no restriction on the number of levels of hierarchy. For example, a hierarchy of ‘Apparel’ -> Women’s Apparel -> as well as ‘Apparel’ -> Men’s Apparel -> can be created.

Product SKUs

Using eBAP, different packaging units of a product can be defined. The packaging units are defined using Unit of Measure codes and conversion factors between unit of measures are provided for. Product SKUs are the actual products that are transacted in purchase orders and sales orders. Pricing is defined at the SKU level. eBAP provides a mechanism to convert the orders to most economical SKUs based on the order quantities using the conversion factors.

Product Catalogs

Retail organizations involved in direct sales create and publish catalogs and sell via the catalogs. They create catalogs based on seasons and for special promotions such as Christmas, Easter, Thanksgiving, Father’s Day, Mother’s Day, and so on.

eBAP provides the features of creating named catalogs, adding products to the catalogs, viewing them, and defining prices. eBAP allows for products to be associated with more than one catalog.

Sales Related Product Attributes

Using eBAP, a retailer can decide on which products to sell to online. This definition can be made at product type, category, product, and SKU level.

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sets of attributes and follow different workflows.

eBAP provides the following major product management functionalities:

eBAP has features to block the returns on a product or product SKU. eBAP allows for blocking of the requests for information, quotations, or orders at product SKU level. These features can be used to manage products that are to be discontinued by blocking further inquiries, quotations, and orders on these products, or allowing only orders and delivery until the stocks are depleted.

Product Associations

Products can be associated to each other using user defined association types, such as an association type of ‘Package’ or ‘Up Sell’. These associations can be used for promotions, special pricing, or for determining products that can be suggested to the customers based on their earlier purchases or product selections.

Vendor Consignment Products

A retail organization may want to procure products from vendors and pay for them after they are sold. The inventory of such products, though physically in the

Bill of Materials and Configurable Products

Bill of material type products such as an automobile, music system, PC, or a chemical compound can be defined with its constituents. eBAP provides the ability to explode and implode bill of material structures to accomplish materials requirements planning, generate purchase requisitions for the constituent products, and to cost or price the products based on the cost or price of the constituents.

Bill of material type products can be classified as configurable to provide for variations and allow the customers to vary the configurations, find the price, and place an order. An example is a PC where customers can vary the standard monitor with a TFT, or add a WIFI option. Another example is a music system where the configuration of speakers and other accessories can be varied. An important aspect of configurations is the ability to define the rules that would validate the configurations. As an example, a music system configured with MP3 music CDs should be invalidated when MP3 is not supported by the music system.

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Industry Standard Product Identification

eBAP allows for the definition and generation of product identification numbers such as UPC, EAN, and GTIN, as well as ISBN and ISSN numbers for books and magazines. eBAP provides for the validation of those numbers, check digit, or any other logic. Custom generation and validation logic can be built, if necessary, and attached to an identification number type so that those numbers can be generated and validated.

User Defined Product Attributes

At times it is necessary for the product information management group to maintain additional attributes for products, over and above the attributes provided by eBAP.

eBAP provides the ability to identify such additional attributes and their data type such as number, date, string, range of values, and list of values to choose from. eBAP also allows for custom logic to be built and attached to those attributes for generation and validation of the values.

These attributes can be defined at a product type level or category level. eBAP provides a mechanism to enter data for these attributes when maintaining products of a particular type or category.

Purchase Order Management

Typically, a retail organization will have multiple purchase organizations. Usually these offices specialize in buying certain types of products, buying products for sale in a certain geographical territory, or buying from certain locations including other countries which would involve the knowledge of local business practices, local vendors, and import procedures and policies.

premises of the retail organization, would be treated as the vendor’s inventory and would be accounted as such until the product is sold.

eBAP provides this functionality through configuring and customizing product management, vendor management, purchase order management, and the accounting interfaces.

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Purchase Organizations

A purchase organization, also referred to as a buying office, is a physical or virtual location staffed with a group of people playing roles such as vendor relationship managers, vendor administrators, buyers, and so on. Though purchase organizations typically work with vendors exclusively, some of the retail organizations may allow multiple buying offices to purchase from the same vendors.

eBAP has an organization structure component that can be used to set up purchasing organizations, their hierarchies if any, assign personnel to purchasing organizations, and assign roles.

Buying offices would use the vendor management component of eBAP to manage the vendors and other attributes such as contacts. They would use the product management component with its integration to vendor management to identify the vendor products, prices, and various attributes of vendor products. They would handle vendor samples using the workflow management, product management, and vendor management components.

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Purchase Order Management

Purchase organizations would typically receive the purchase requisitions from the distribution warehouses depending on the order forecasts and inventory levels. The approved purchase requisitions would become purchase orders against a selected or approved vendor for an agreed upon price with a discount structure, any additional charges, and with a delivery schedule. Purchase organizations typically pre-select and approve vendors by products with pricing details and delivery lead times. eBAP provides the facility to float RFQs, receive quotations, rank quotations, and select vendors. Quotations can be copied and converted to purchase orders. Alternatively, purchase orders can be directly created.

Some retail organizations do not stock certain products. They sell these products typically via catalogs or web. Upon the receipt of the sales order, a purchase would be placed requiring the goods to be shipped to the customer’s ship to address. eBAP provides this functionality via a third party order.

The standard functions of holding, modifying, releasing, and canceling purchase orders are provided in eBAP.

Using eBAP, notifications can be sent to vendors via email, EDI, or XML.

Goods Receipt

When goods from vendors arrive, the storage or distribution warehouses receive them, verify them against the purchase orders, inspect them for quality, and reject if necessary. eBAP implements this standard functionality.

Purchase Invoices and Accounts Payables

eBAP implements the standard functionality of receiving vendor invoices, allowing them to be verified against purchase orders and goods receipt notes, and flagging them for inquiry and reconciliation for differences beyond acceptable variations.

Using eBAP accounts payable, transactions can be posted into a third party accounting software, or into eBAP’s Accounts Payable module.

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Customer Management

A retail organization selling through stores typically would not have the names and demographic information of all the customers. Through loyalty card programs, many retail organizations are capturing their customer information. To sell products directly via catalogs or web, retail organizations need to collect customer information such as name, address, and credit card numbers for processing orders.

Customer information is important for a retail organization to tailor their promotions and to upsell to the customers based on the sales history in order to increase their market share.

eBAP provides features to store the customer demographics, register them for loyalty cards, and store the order information for analysis.

Sales Orders

Retail organizations need sales order management systems with a point of sale functionality for in-store sales, a shopping cart functionality for web orders, and an order entry functionality for phone or mail orders handled by their customer service representatives. Using eBAP sales organizations can be created in a similar fashion to purchase organizations.

Point of Sale

Using the product management, product inventory and order management components of eBAP, a point of sale application can be set up which integrates with point of sale machines including credit or debit card interfaces. Also, the POS application can be configured to accept customer loyalty cards and store coupons. The POS application can also be configured to print coupons at the checkout counter for up-selling and cross-selling, as well as to print sales receipts (the equivalent of an invoice for POS). For example, coupons for comparable products from different brands or designers, or coupons for complimentary or supplementary products for the same brands and designers can be printed.

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Catalogue Orders

eBAP provides an order entry interface using which customer sales representatives can enter orders that they receive via phone, fax, or mail. Sales promotion codes, loyalty cards and other promotions that the customer sales representatives are able to offer are taken into consideration for the pricing and any up-selling or cross selling.

Order Fulfillment

eBAP’s order fulfillment provides for pick lists, pack lists, label printing, delivery, shipping, and notifications such as advance shipment notification. eBAP’s picking process can be interfaced to an automated picking machine such as SI’s Itematic or DISPEN-SI-MATIC. eBAP’s shipping process can be interfaced to shipping systems such as UPS or FedEx.

Accounting and Inventory Interfaces

eBAP posts sales transactions to the appropriate receivables and general ledger accounts and updates the inventory at the point of sale or at order fulfillment for direct or web orders. eBAP also provides a cash accounting functionality to

Shopping Cart

eBAP’s shopping cart can be configured and customized to enable online customers to navigate through types, categories, and brands of products, select and configure the products they would like to purchase, display the price and any promotion offers or discount on the products, and add them to the shopping cart. Customers can review the shopping cart, modify the quantities, delete the products from the cart, or add more products to it. The shopping cart has the ability to show the latest products and discounted products. Based on the products purchased and using the product associations, the shopping cart application has the ability to show additional products that the customers might be interested in.

eBAP’s shopping cart can integrate with the payment gateway of a retail organization’s choice using SSL and HTTPS protocol.

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Sales Returns

Items that are bought via any of the channels can be returned based on the general return policies of the retailer and specific policies relating to the product categories. For example, products such as video cameras and computers can be returned within 15 days with a restocking charge of 10 or 15%. Returns can also be disallowed for products of certain product categories. The number of days within which to return the products can also vary from category to category.

eBAP’s order management can be configured and customized to provide for these variations and to generate credit notes for the returns. Separate price procedures, or rather return procedures, can be configured to provide for restocking charges as either a fixed charge or a percentage.

Advanced Price Management

Pricing is one of the complex functions of an ordering system and should be designed to price the products competitively and offer promotions such as discounts and product packages in order to increase market share.

eBAP’s Advanced Price Management component is scalable, configurable and customizable and has features to cater to the complex pricing requirements of an organization, with the ability to let the price administrator set up calculation schemes for arriving at product prices.

The component’s pricing methodology uses pricing procedures and price records to store prices, discounts, and surcharges and an engine to execute the pricing procedure and arrive at the appropriate product price.

Pricing Procedures

Pricing in eBAP is carried out using pricing procedures. A pricing procedure is selected by eBAP based on parameters such as organization unit, order type, and customer category. An organization unit represents a sales organization. A company can sell its products under different organizational units such as

account for and reconcile the cash collected at the POS machine and store levels and handle the bank deposits.

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Price Types and Pricing Procedure Steps

Pricing procedures contain a series of steps to be executed. Each step is for a specific price type, and there can be multiple steps for each price type. Price types can be user defined and typical price types are: base price, discount, surcharge, and restocking charge. A pricing procedure step is associated with a sequence of parameters using which eBAP obtains pricing.

The final pricing is an aggregate of the price obtained from all the steps in a pricing procedure. For example, if a pricing procedure contains a step for base price, a step for discount, and a step for shipping and handling, then the final price would be the selected base price minus the selected discount and plus the shipping and handling charges. The price types and pricing procedures would carry an attribute to indicate to the pricing engine whether the price needs to be added, subtracted, or multiplied to the price obtained from the previous step(s). A pricing procedure for sales return can have a step to calculate restocking charges where applicable.

Price from Quotes / Contracts

eBAP’s pricing procedures can be defined in such a way that the price is defined for specific products based on a quotation or contract for a given customer if the products are ordered within the validity period of the quotation or contract.

domestic or international sales and different territories within the domestic or international regions.

Order types are a categorization of sales transactions within eBAP. Examples are quotations, deliver and bill orders, mail orders, web orders, and point of sale.

Customers can be categorized as individuals, wholesale customers, governments, schools, defense customers, industrial customers, and so on.

eBAP can be configured with the appropriate sales organizations, order types, customer categories, and any other parameters that would influence pricing schemes for a retail organization.

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Custom Price Routines

eBAP allows for routines (API interfaces) to be coded and attached to the steps in the pricing procedure, to provide for any pricing needs that are not addressed by eBAP. Typically, a step in the pricing procedure would result in a price either from “Price Records” or from the custom price routine.

Product Packages and Pricing

eBAP allows for the creation of product packages or any form of product associations using the bill of materials feature of the product management component. Products in a product package can be purchased together and pricing can be defined at package level, or discounts can be provided based on the purchase of products within the product package.

Price Records and Scales

eBAP uses price records to store product price based on various parameters. There can be multiples prices for a product and one of the prices would be applicable based on the parameters. For example, the base price for a product can be different based on the whether the order is a phone order, mail order, web order, or whether the item is purchased at point of sale. The discounts can also vary.

Price data such as discounts, surcharges, shipping and handling, restocking charges, and even base price if needed, can be defined at product type level, brand level, or for all products rather than defining for each product separately.

Every price record can have scales allowing for the price to vary based on the volume or quantity of sales. The scales can be simple scales or graduated scales. Simple scales are proportionate to the volume or quantity of sales and use the price based on the slab range within which the volume or quantity of falls. Graduated scales use each slab for calculating the price of the units that fall within that slab and aggregate them using all the applicable slabs.

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Price Procedures and Accrual Processes

eBAP pricing procedures allow for the definition of steps, which will be calculated when the products are priced, but not added to the product price. This feature can be used for calculating rebate accruals. The rebate itself can be processed at the end of the year, or end of the contract term for the rebate.

Price Lists / Catalog Prices

Using eBAP, named product lists or catalogs can be created with effective dates. These can have associated price records such as base price, discounts, surcharges, and shipping handling charges.

Product Promotions

Seasonal or targeted promotions can be set up using the pricing component and the effect of such promotions on sales can be studied.

Gift Products

The pricing component together with the product component can be used to associate gift products free of charge, or at a marked down price whenever customers order certain products.

Configurable Products and Pricing

Using the bill of materials features of product management, configurable products such as music systems, PCs, and automobiles can be created. Optional and alternative products can be defined and the pricing can be varied based on the product configurations. For example, a music system can consist of an amplifier, CD / DVD / MP3 player, radio, and speakers. Speakers can be optional and the price can vary based on the brand and model. The player may not be optional but can be substituted with other players. At the time of ordering, the customers will be able to choose the product by varying the configurations and obtain the price based on the final configured product.

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Reporting Functionality of eBAP

In addition to the standard reports provided by eBAP, users can define ad hoc reports using the reporting component. eBAP provides a set of report groups containing the entities and attributes of various business process areas, which users can use to create ad hoc reports. The reporting tool, with its drag and drop functionality, allows for the creation of

• list type reports such as list of customers and list of products of a category or type

• header detail, or master detail reports such as orders by customer and order header and order detail (products in the order).

The reporting component allows the users to select the columns, to define report parameters, column headers, column formats and lengths. The report definitions of ad hoc reports can be saved and the reports can be generated in PDF or MS Excel format.

Global Price Changes

This is a versatile price update mechanism of eBAP. Price changes of a given product list based on type, category, or brand, or other parameters can be varied by a certain percentage. eBAP allows exceptions to be specified while varying the price. The price changes can be made ahead of time with effective dates, using either the global change feature or the price maintenance screens. Without this feature retail organizations will have to wait until the last minute to update the prices and if there are many changes, need to resort to an offline price management and batch price upload / update mechanism. This often results in erroneous pricing or time consuming and expensive price management as additional checks would be needed, requiring additional man power, in addition to requiring an extra piece of software for offline price management and batch uploads.

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Business Intelligence

The Business Intelligence component of eBAP is a data warehouse with facts and dimensions related to the vendors, products, customers, purchase orders, sales orders, and other transactions of the eBAP framework. The data warehouse is designed to allow users to get summary views of data with drill down capability. For instance, using this component, a buyer can get the overall amount spent on the vendors, drill down to the regions, vendors within regions, products, and to individual purchase orders. Such functionality can be provided on vendor ratings data, sales data, product movement, and many other data points.

This component provides ETL to extract data from the operational database into the data warehouse. This extraction can be done in a batch mode, or as and when the users update the master data or transactions in the operational database.

eBAP provides the flexibility of using any of the industry standard OLAP tools such as Cognos, Business Objects, SAS, SQL Analysis (Microsoft), Oracle Discoverer, and Oracle Express for reporting, drill down, and data mining functionality.

Solution Development with eBAP

As detailed above, eBAP implements a set of business processes as components which aid in providing retail solutions. eBAP employs a service oriented architecture exposing the functionality of these components as web services complying to WSI and WSE.

Reusable Components

eBAP employs many reusable, generic, and multi purpose components which are utilized by the business process components. These reusable components along with the business process components of eBAP can be effectively utilized to serve the needs of a retail organization in the management of the supply chain. Some of these reusable components are the id generation component, address management component, organization structure component, features

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Extensibility of eBAP Components

Many of the eBAP components can be extended to provide additional functionality without touching the core of eBAP. As an example, consider the id generation component of eBAP. This component is used by the eBAP business process components to generate ids forcustomers, vendors, products, sales orders, sales returns, purchase orders and so on. These ids can have prefixes and or suffixes with a running serial number uniquely identifying the business entity, partner, or document. If organizations wish to use a different identification scheme for some of these, it can be done without touching the core of the eBAP. The logic to generate the ids can be programmed in a separate method or routine and attached to the id generation component of eBAP. The eBAP framework will execute the specified method to generate the number. The eBAP framework provides a standard interface to define and develop the methods that can be plugged into eBAP. Another example would be the ability provided by the advanced price management component. The logic of a price calculation step can be replaced to provide custom logic by developing a method based on standard eBAP interface guidelines for price calculation steps and attaching the method to the step.

Custom UI

The business process components and other reusable components of eBAP provide standard browser pages for maintaining code and master data such as vendor category code, customer category code, product types, product categories, customers, vendors, and products, configuration data such as definition of price procedures, properties of different kinds of orders, identification and generation sequences, and transactions such as orders, goods receipt, delivery, shipping, and invoicing. These browser pages utilize eBAP’s business logic layer and the data access layer. The business logic layer is accessed either directly or via web services. Thus eBAP provides a very clear delineation of the user interface. As a result, eBAP can be customized to provide the user interface

(additional fields) component, and notes and attachments component. They add flexibility in configuring and customizing eBAP to the various needs of retail organizations.

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Summary

In summary, whether a retail organization intends to automate or modernize their complete supply chain management, vendor management and purchasing, or customer management and sales order applications often referred to as order to cash, or any part of these functionalities, the eBAP solution offers the following technological and business advantages:

Technological advantages:

• Set of business process components with rich functionality.

• Extensibility of business processes without modifying the core of eBAP.

• State of the art technology with service oriented architecture.

• Custom GUI interfaces to the business process components

Business advantages:

• All business users of the organization share the same integrated data on all business entities, objects, and transactions such as products, vendors, customers, purchase orders, sales orders, status of the orders, and pricing.

• Availability of up-to-date information to the business users, enabling them to take timely and necessary actions.

• Ability to manage vendors efficiently and optimize the purchase process with respect to price, timeliness, and quality.

• Ability to procure optimum product quantities to ensure the availability of products for sale and avoid over stocking which would make products obsolete, or out of season or fashion.

• Sales forecasting and trend analysis based on sales history.

• Ability to identify the target customer groups and promote suitable products using customer profiling and sales history.

• Ability to offer appropriate sales promotions, set up pricing schemes, and product package combinations in order to increase market share.

preferred by the organization adhering to the GUI standards of the organization. This makes eBAP a best of both worlds’ solution, providing the benefits of the rich business process components of eBAP with a custom build flavor.

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About this Paper

HTC’s Retail Practice develops experience based case studies to highlight the deployment of our accumulated domain and technology knowledge in the Retail space.

This is part of our commitment to share the knowledge and experience gained from implementation of significant projects in the Retail Space. This information is proprietary to HTC Global Services Inc. For more information on this case and on our Retail practice, you may contact nailesh.shah@htcinc.com.

About HTC

Established in 1990, HTC is an Inc. 500 Hall of Fame company with headquarters in Troy, Michigan. HTC is a leading global Information Technology (IT) solution and Business Process Outsourcing (BPO) provider offering innovative solutions that utilize proprietary tools, methodologies, and processes, increasing the speed and reducing the cost of software development and business processes. HTC uses proven solution frameworks such as eBAP (enterprise Business APplication) to provide reliable and cost effective solutions to customers. HTC assists clients with complete streamlining of business processes and entire system development lifecycle including software development, systems integration, implementation and support, application migration, software training, and technical support. HTC has global delivery centers across multiple time zones in North America, India, Malaysia, and Australia. HTC is a methodology and process-oriented company with SEI-CMM Level 5 certification. The Global Delivery Center in Chennai, India is ISO 9001:2000 certified.

• Decision making capabilities via the business intelligence components of eBAP with the ability to view data on different dimensions such as sales by geography, by month, quarter or year, by promotion, and by product type with drill down features to the actual orders and line items.

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