Supplier Management: Increased collaboration to accelerate global shipments

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Leggett & Platt:

Developing a well-oiled international supply chain Fortune 500 manufacturer takes its antiquated supply chain technology into the 21st century by implementing an on-demand global trade solution that streamlines compliance and procurement.

By Bridget McCrea, Contributing Editor

hen John Wainwright thinks back 10 years

ago to the way Leggett & Platt (L&P) Global

Services handled purchasing and compliance

across its 160 international and domestic

branches, this vice president says the system

was “wonderful, by 1975’s standards.” In other words, the For-

tune 500 manufacturer of engineered components and products

relied on outdated, disparate technology systems to manage its

supply chain.

According to Wainwright, L&P’s many branches around the

world operated autonomously, with disparate systems and a

decentralized IT infrastructure. Data sharing, for example, was

minimal among the company’s numerous purchasing centers.

Account processing and inventory management were equally

as disparate at the firm, which was straining under the pressure

of having too many manual and error-prone processes. And on

the compliance front, Wainwright says the import management

and process review was handled almost entirely by customs bro-

kers and carriers.

That changed in 2005, when Wainwright and his team con-

ducted an internal analysis and realized that the Chicago-based

firm—whose products can be found in consumer items such as

box springs, innersprings, recliner motion mechanisms, and retail

store shelving—was due for a complete overhaul of its interna-

tional procurement processes.

One of the primary challenges the company was facing, accord-

ing to Wainwright, was the lack of control over internal compliance

processes on imported goods, an oversight that could have wound

up costing the company dearly in fines and/or shipment delays.

After a thorough assessment, Wainwright says L&P realized

that its existing systems wouldn’t sufficiently support the growing

company’s needs. “We wanted to start with a clean slate,” says

Wainwright, “and introduce an entirely new purchasing process

and the software to support it.”

As part of a larger implementation that included both a trans-

portation management system (TMS) and warehouse manage-

ment system (WMS), L&P rolled out Amber Road’s global trade

management software (GTM) Supplier Portal (see sidebar) to

streamline its global logistics and compliance processes. Wain-

wright says that the company looked at several different systems

available on the market before “coming to the conclusion that

Amber Road would be the best fit.”

Back to the future As a global entity, Leggett & Platt Global Services acts as a cen-

tralized compliance entity for all of L&P’s U.S. imports. Its Sup-

plier Portal is one of several tools that enables paperless transac-

tions and functions to and from suppliers and within the firm’s

supply chain. The 125-year-old firm is comprised of 19 business

units and 19,000 employee partners who work in 160 manufac-

turing facilities in 19 countries.

Since 2005, L&P has relied on its on-demand Supplier Por-

tal to effectively manage the purchasing and compliance process

across its myriad international and domestic locations. According

to Wainwright, about 80 percent of L&P’s compliance needs are

executed at the time a purchase order (PO) is issued on behalf of

one of its branches.

“The PO stops with my group,” Wainwright explains, whose

department then performs the necessary compliance testing,

applies for the harmonized tariff number, inputs the country of

origin and country of export, and handles the requirements set

forth by the FDA, FCC, EPA, DOT, and other government agen-

cies (OGAs). “All of this is done before the PO is accepted for

dispatch to the actual overseas suppliers that will be filling the

order out of the country.”

When L&P’s suppliers receive the PO in a paperless format via

the portal, the wheels begin to move as the order is put into the

production phase. When that order is ready to ship, the vendor

uses the online system to create a packing list and invoice based

on the already-issued electronic PO—thus eradicating the need

for multiple, manual entries.

“Not having to re-enter the information by hand has paid a

huge benefit in terms of compliance,” says Wainwright, “because

the information is based off of what is already in the system and

it’s not being entered into the system twice.”

Wainwright says that the paperless nature of the system allows

L&P to use its stored data to manage other links in the supply

chain. The Global Services group, for example, uses informa-

tion from the portal to create advanced shipping notices (ASNs),

which in turn are used to pay supplier invoices.

That streamlined setup replaced a largely manual system that

resulted in a large number of replications and errors. “At this

point we’re just relying on the core data that’s already sitting in

the system,” says Wainwright, “with no hands touching it and no

fear of replication.”

The same data is shared with customs brokers, used for import

compliance, and then delivered straight through to the receipt of

the goods at L&P’s operational branches. “Received amounts are

compared to what was dispatched by the supplier and matched

up to invoice payments and original POs,” says Wainwright. “It all

comes together to make up an integrated, paperless environment

that’s largely supported by our Supplier Portal.”

Measuring the benefits Since implementing its Supplier Portal, L&P has documented

numerous benefits, not the least of which are fewer clerical errors

and faster, more streamlined international supply chain manage-

ment. “We’ve been able to remove the need for another set of

hands when it comes to generating documentation and/or repli-

cating existing data,” says Wainwright. “Extra hands equal extra

errors, the need for revisions, and issues upon entry.”

Using its Supplier Portal, the global compliance department

at L&P can rest easy, knowing that it is dealing with consistent

data that can’t be changed internally or by its suppliers. “They

can only change the actual shipped quantities,” Wainwright

describes. “The SKUs and descriptions are literally locked down

and cannot be altered.”

According to Wainwright, the portal has saved L&P both man

hours and the hassle that used to go into double-checking data

and information as orders made their way from initial PO to final

payment of invoices. The company has also been able to reduce

overall order cycle time and streamlined interactions with cus-

toms brokers.

The latter has resulted in both improved efficiencies and

reduced fees, according to Wainwright, who adds that the num-

ber of errors detected in L&P’s post-entry audit review has “gone

Supplier Management: Increased collaboration to accelerate global shipments

A

down remarkably.”

Thanks to L&P’s Supplier Portal, the

company has also been able to more accu-

rately measure how quickly it moves its

goods, the efficiency of its processes, and/

or any delays experienced at customs.

also helped the manufacturer control cen-

tralized payment of both suppliers and ser-

vice providers. “We’ve seen great improve-

ment from this standpoint as well.”

To shippers that are currently consid-

ering a more streamlined global supply

design your processes based on a specific

piece of software,” he advises. “Instead,

understand exactly what you want and

buy a solution based on that. Make sure

the process drives the effort, and that the

software doesn’t drive the process.”

“We’ve traced these points internally and chain approach, Wainwright says under-

have seen a return from the system,” says

Wainwright, who adds that the portal has

standing the organization’s internal pro-

cess is the best first step. “Don’t try to

Bridget McCrea is a Contributing

Editor to Logistics Management

Supplier Portal: One piece of a larger, on-demand platform MBER ROAD’S SUPPLIER

PORTAL IS ONE piece of

a larger, on-demand plat-

form that the company has

developed to automate and

streamline global trade. Ty

Bordner, vice president of

product management and

solutions consulting for

the East Rutherford, N.J.-

based sof tware vendor

says that the system was

designed to help users

better manage the trans-

actional and customs data

generated when importing

and exporting goods.

According to Bordner,

Supplier Portal typically

replaces the manual, time-

The Supplier Portal dashboard provides supplier transparency for Purchase Orders and all related

transactions by workflow stage with click-through access to the underlying detail.

consuming process of filing necessary import documentation—includ-

ing the invoice, packing list, and bill of lading—something that organi-

zations have dealt with manually. “It’s traditionally handled by printing

out documents and then using DHL, UPS, or another provider to send

those documents (at a cost of roughly $30 per package) to customs bro-

kers in the importing country,” Bordner explains.The customs brokers

receive the physical documents and then re-key the information into

their own systems—a process that often results in errors.

“Some of these shipments may be very large with hundreds of

line items,” says Bordner. “Not only do these shipments take hours

to key in, but the odds of injecting errors into the process are very

high.” Such errors can be extremely costly in the compliance world,

where even just the wrong classification of a specific good can

result in fines and/or shipment delays.

As shippers like L&P have already learned, the Supplier Portal

helps alleviate these issues by automating a previously manual

process by acquiring a PO from an importer’s ERP system, and by

then making that PO available to the respective supplier.When that

supplier logs into the portal, it sees the PO in the system and inputs

a ship quantity and date. “The supplier pushes a button and creates

a transaction that is now available for L&P to see,” says Bordner,

“without anyone having to rekey in any information.”

As part of Amber Road’s global trade management solution,

the Supplier Portal module allows companies to easily obtain the

supplier shipment data required to clear customs. However, there

are other supplier collaboration capabilities provided by the Amber

Road solution. For instance, a U.S. importer wanting to claim zero

duties under the rules of a Free Trade Agreement (NAFTA, U.S.-

Korea, etc.) must obtain proof that the imported goods qualify

under the rules of origin defined by the agreement. This informa-

tion must be provided by the supplier of the goods and comes in

the form of a signed certificate. Amber Road’s Supplier Portal

provides the online collaboration software to make this process

easy and efficient.

“If the proof is in the system then the company pays no duties,”

says Bordner. “That’s pure profit margin for the user.”The Supplier

Portal can also help shippers determine which of their suppli-

ers are C-TPAT (Customs Trade Partnership Against Terrorism)

certified, making them “less risky” to do business with. “When

all of that information is online and easily accessible and when

companies have vetted their suppliers for these and other risks,”

says Bordner, “shipments flow through customs faster and supply

chains flow more smoothly.”

—Bridget McCrea, Contributing Editor