Amphire: Platform for Productivity
Food service distributor MBM Corp. finds a base for building tighter relationships with vendors and offering value-added services to customers.
When you buy goods from 3,500 vendors, you welcome technology that helps you conduct transactions more efficiently. That's why food service distributor MBM Corp. decided to implement electronic data interchange (EDI). But after three years of hard work, the company hadn't seen much improvement. And no wonder: it was exchanging data electronically with just 10 suppliers.
Why so few? The process of forging links between MBM and its partners' systems "was very slow and very difficult," making it impossible to roll out the technology any faster, says Tim Harrison, vice president of procurement and markets at MBM in Rocky Mount, N.C.
Automating transactions with MBM's customers was easier. Restaurant operators used an interactive voice response (IVR) system, placing orders by entering codes on their telephone keypads. But operators couldn't use the keypad to request rush delivery, view inventory levels, or obtain other information. "We wanted a platform that would allow us to provide customers with more functions," Harrison explains.
Last year, MBM raised e-commerce to more productive levels at both ends of its supply chain. Using technology from Amphire, headquartered in Boise, Idaho, MBM now conducts electronic transactions with more than 50 of its largest suppliers and is adding three new ones per week. Restaurant operators place orders with MBM through a web-based catalog, which also provides information on their inventory and purchases.
Taken together, Harrison says, Amphire's buy-side Connect and sell-side Access solutions create a communications platform linking all three sets of players—suppliers, distributors, and restaurants. This allows MBM to conduct business with greater accuracy and speed. In the future, as Amphire enhances the system with new functions, the distributor will be able to offer its customers new, value-added services.
Distributors, Suppliers Connect
MBM is what the food service industry calls a systems distributor: it provides services exclusively to chain restaurants. MBM supplies approximately 25,000 corporate-owned and franchise restaurants in chains such as Arby's, Burger King, Chick-fil-A, Red Lobster, Olive Garden, and Golden Corral.
MBM began using Amphire's technology early in 2002, starting with Connect. Amphire developed Connect to help the food service industry "streamline the order management process and reduce errors and inefficiencies," says Mark Barnekow, president and CEO at the system developer. Dealings between distributors and suppliers have traditionally been labor-intensive; relying heavily on manual procedures, including communications by phone and fax, he says.
Connect allows trading partners to transmit purchase orders, PO confirmations, advance ship notices (ASNs), and other data sets, often through links to their back-office systems. Participants can transmit their data in any of a variety of formats, such as EDI, XML, or flat file via File Transfer Protocol (FTP). Amphire does the conversions to let systems that transmit data in different formats "talk" to one another.
It also translates among terms that different businesses use to refer to the same products or units of measure. For example, Barnekow explains, a distributor might transmit a PO for a certain number of "cases" of a commodity. But the supplier's system might use the field label "cs" for cases, or it might measure that product in pounds rather than case units.
"Amphire will take that 'cases' and convert it to 'cs' or 'lbs.' or whatever the supplier's back-office system can read," he says. It also translates among systems that use numeric strings of different lengths to store UPC codes.
Once Amphire "maps" a supplier's system, that supplier is ready to do business with all distributors that join the network. The reverse is also true: once Amphire maps its data to Connect, a distributor is ready to do business with all suppliers that join the community. Approximately 125 food service suppliers currently participate in Connect.
This "one-to-many" integration was great news for MBM. In the past, each time it wanted to establish an EDI link with another supplier, it had to do work on its own and the partner's systems to allow them to communicate. In effect, MBM had to start from scratch each time.
"We did not have a common denominator, so everyone had to map each other's systems," Harrison says. With Amphire, "we could map our entire system to theirs one time. If they already had a manufacturer's system mapped, then we could execute."
For suppliers that can't accommodate the communications Connect requires, Amphire offers a product called Web-based Order Management. This allows suppliers to receive orders and transmit confirmations, ASNs, and invoices through a web interface.
Amphire's sell-side product, Access, automates the order-taking function so distributors can concentrate on offering value-added services to their customers, Barnekow says. Logging into a distributor's storefront, the operator of a restaurant or other food service views an order and uses that browser interface to place orders. Users view only the products that are relevant to their operations.
Right now, MBM's customers simply replace one electronic ordering system with another, with no real change in the way they do business. But Harrison has big ambitions for the future.
"With Amphire's system, we can expand the functionality dramatically and give customers greater supply chain visibility: on-hand inventory at a particular distribution center on their proprietary items; purchasing patterns for their individual stores; visibility of cases purchased and shipped in real-time format, rather than 30 days after the fact," he says.
Operators might someday use Access to hyperlink to cleaning chemicals suppliers, and download their Material Safety Data Sheets (MSDS), rather than calling MBM for those documents, Harrison says.
Although he admits the idea is "a little blue sky" right now, Harrison also envisions using Access as an interface to a satellite-based fleet tracking system. This would allow operators to get updates on their orders while they're enroute.
MBM is already working with Amphire on a contract management function, to make sure each operator's storefront reflects the prices that chain has negotiated with MBM's suppliers. Eliminating pricing discrepancies up front will save MBM labor and expense. "We won't have to go back and rework or redo prices," Harrison says.
Amphire already offers a "campaign management" feature, allowing suppliers to promote items through special pricing, Barnekow says. Amphire can collect data on who views these promotions and who buys the products on Access, then provide cumulative data to suppliers. Those vendors might view the information by market, ZIP code, or other demographic category.
It's the new functions that will make Amphire's system really pay off for MBM, Harrison says. While it continues linking more suppliers and customers to Amphire, the system isn't yet saving the distributor money. "It's cost-neutral to us now," he says. "The real benefit is the added functionality, which we're just starting to engage."
Actual savings will come in the long run, "but they'll come in the form of soft cost savings," Harrison says. "How do you measure the customer who used to call you for an MSDS sheet and now doesn't have to? How do you measure the additional customer satisfaction because they didn't have to make three phone calls trying to get in touch with you?"
ROI in Different Ways
Amphire's distributors and suppliers are realizing a return on their investments, "but they all see it in different ways" because they place different price tags on the processes they're replacing, says Barnekow. "Some distributors tell us it costs them $25 to take an order. Others say it costs $125."
Suppliers and distributors pay a subscription fee for Amphire's services. In addition, suppliers pay fees based on the number of orders they receive from distributors through Connect; distributors pay based on the volume of orders they receive through Access. Amphire builds volume discounts into both payment models. End-customers—restaurant and food service operators—don't pay for regular transactions on Access, although they do incur fees for extras such as campaign management.
Persuading suppliers to join the Amphire community was hard at the outset, and not just because of the costs, Harrison says. "Even if it was free, we would have had a hard time selling it in the beginning, just because it represents a change in how things are being done. It represents a leap of faith" for MBM as well as its suppliers, he says.
But Harrison expects that leap to land MBM and its partners on higher ground. "Our hope is, that as we establish this new platform, the real benefits will come from additional functionality," he says, "because you'll change the fundamental way you do business with specific trading partners."