As businesses take their first steps away from paper procure and payment, many are asking whether those first steps are enough. Australia’s leading paint and coatings company, DuluxGroup, is making new gains by taking a step beyond Electronic Data Interchange (EDI).
Time to leave paper behind
Ian Griffith, the head of procurement at DuluxGroup is absolutely clear: The company hit a point about three years ago when it was time to leave paper behind. He describes a labor-intensive process, a time-consuming process: “So paper, we’re getting invoices and typing them into the system. And when receiving goods at the factory they were having to type that data into the system.” And with all that manual data entry comes a higher chance of human error, with the possible extra cost of doing the job a second time.
So Dulux took the first step beyond paper, implementing an Electronic Data Interchange system. As EDIBasics.com describes: “Electronic Data Interchange (EDI) is the computer-to-computer exchange of business documents in a standard electronic format between business partners. EDI Basics says the benefits include “reduced cost, increased processing speed, reduced errors, and improved relationships with business partners.” Griffith explains Dulux started with an EDI system because that’s what was available. “And that achieved efficiencies,” he says. “Once it’s up and running it’s very simple and cheap to run.”
Big investment, limited return
But that isn’t the whole story. Griffith explains, “The trouble you have is that it’s a lot of investment up-front to get it to work. And you need IT resources from your own side and the supply side in order to make it happen. So it’s really only practical for significant relationships. We had 14 suppliers who were willing and able to go down an EDI journey with us, so you’re looking at about a third of our total spend. Everybody else, it just wasn’t practical.” The need was there for a system that offered the benefits of EDI and then some, without the high up-front commitment in IT resources.
Looking to the cloud
Their quest led Dulux to the cloud, because companies can get the power of a cloud solution without a big investment in their own infrastructure and software – that all belongs to the solution provider. In this case, Dulux chose a collaborative supply chain module, which is focused on automating purchasing for raw materials, packaging and third-party manufacture. Griffith says, “We have an opportunity to get all of those suppliers onto a paperless processing system without the headache of going through an EDI implementation.”
The boss is happy
Was taking another step beyond paper the right thing to do? Griffith says that with EDI it took Dulux two and a half years to get 14 suppliers connected, and, with the module, they connected 60 suppliers in less than six months. He puts it this way: “So my boss is a pretty high-level guy. He would know about it if there were problems. But the fact is that there aren’t, he’s not hearing problems from people on the supply side or at the factories. He’s happy.”
Interested in why DuluxGroup wanted paperless procurement and what it’s doing for the company? Click here for more.