TBXONE simplifies and accelerates LotteMart collaboration with suppliers
LotteMart, a global retail operation, number one in Asia and based in South Korea, opened its first outlet, the Gangbyeon store, in Guui-dong, Gwangjin-gu, Seoul, in April 1998. LotteMart is part of the Lotte conglomerate. In Indonesia, in October 2008 it acquired PT Makro Indonesia from a Dutch-based retail group that controlled 19 stores throughout Indonesia; it plans more than 75 stores in 2018. Currently, Lotte use three retail formats–supermarket, hypermarket, and wholesale: respectively 2, 10, and 27 stores. Currently LotteMart is the number one wholesale-format retailer in Indonesia.
Client: LotteMart Hypermarket and LotteMart Wholesale
Industry sector: Retail in Supermarkets, Hypermarkets, and Wholesale
Challenges: Due to rapid growth, streamlining the Order-to-Pay process with suppliers
Solution: LotteMart Indonesia chose to implement TBXSRC (Terbit-Business-eXchange Supplier-Retail Collaboration) platform, connecting thousands of suppliers and collaborating on purchase orders, receiving notes, invoices, and other e-documents with LotteMart back-office systems; merchandise, warehouse management, and finance (SAP).
Result: With TBX SRC, LotteMart suppliers receive all supporting supply chain documents online. Improved supplier relationships resulted from decreasing the days’ disputes online and payments to suppliers on-time.
LotteMart’s three retail formats–supermarkets, hypermarkets, and wholesale—buy from more than 5,000 suppliers in Indonesia–micro to small, medium, large, and Global Fortune 500 companies like Unilever, Nestle, Proctor and Gamble, Danone, Friesland Campina, and many others. Suppliers deliver fresh, dry grocery, beverage, furniture, cosmetics, electronics, and all the other products you see in supermarkets and hypermarkets.
Before implementing TBXSRC, suppliers receive their purchase orders online, receive their delivery notes at their warehouses, and invoice LotteMart for payment. In cases of errors in the invoices, suppliers make appointments with their category buyers to resolve them. LotteMart sends more than 180,000 purchase orders per month, receives more than 140,000 invoices, and hundreds of thousands of supporting documents–due to LotteMart’s rapid growth in Indonesia.
This flood of documents brings pressure to bear on all departments, and particularly to merchandise, receiving, and accounts payable (A/P) in disputes. Pressure and backlog result in slowdowns of payments and supplier non-deliveries, reduced on-shelf-availability (OSA), and thus lost revenue.
In November 2015 LotteMart top management, led by the CFO and CEO, assigned PT Terbit inFormation Technology (TFT) to implement ALL manual supply chain collaboration processes online. The following processes were moved to online implementation :
- Order-to-Pay (OTP)
- Dispute settlement on invoices
- Returns and credit notes
- Providing remittance advices and KPI reports
- Collaborative Key Performance Indicators (KPI’s)
To make it a success, TFT was assigned to train the thousands of suppliers on the new system. TFT used its best practice and proven change management methodology, the Terbit Rapid Adoption Program or TRAP.
Another challenge was to implement the new LotteMart B2B platform within one month!
Processes provided to the suppliers were:
- Purchase Orders (PO)
- Receiving Advices (RA)
- Pro-forma invoices
- Invoices (Barcoded)
- Dispute settlement on quantity and pricing
- Remittance Advices and Invoice Information (remittance notes)
- Return information (RRL and RCS)
- Credit notes (CN)
Figure 1. LotteMart Back-office Process Integration to TBXONE
- Cost control and merchandise run on SAP MIDAS
- Invoice control runs on SAP FICO
- Warehousing runs on SAP SD
Figure 2. Suppliers Collaborate Online with LotteMart through TBXONE
- Suppliers settle the quantity with the respective receiving departments through their receiving advices (RA) documents. In disputes, both parties can track and trace the disputed information through all document versions.
- Suppliers settle the prices with procurement departments through a pro-forma invoice (PFI). In disputes, both parties can track and trace disputed information through all document versions
- Whether disputes are settled or otherwise, settlement documents are generated for the suppliers. This document can be used as an invoice and must be sent to LotteMart for further processing.
- In Indonesia, suppliers must present and scan a copy of the barcoded invoice and a copy of the e-tax (QR coded) invoice to LotteMart for a final document audit.
- After invoice control receives the two mandatory documents, the transaction is posted for payment.
- Process management within departments is implemented to act within 24 hours. KPI reports are sent daily to the respected LotteMart users and their supervisors.
All invoices are used with 3-D barcode scanners to speed up document handling.
What did LotteMart Indonesia achieve in implementing TBXONE SRC solutions?
- Efficiency throughout the departments processing order-to-payment
- Speed up dispute settlements, from 10 to 20 days to a maximum 2 days!
- Enable after 6 months more than 70%–currently 99%–of suppliers use the system
- Increase service levels, which equates to increased revenues
- Become the preferred and most agile retailer in Indonesia
- Provide visibility throughout collaborative processes
- Overall improvement in working capital
- Platform: TBXSRC
- Business model: SaaS, software-as-a-service with full support levels 1, 2, 3
- Integration: SFTP with global merchandise and SAP FICO
- GO-LIVE: in one month, with 2 months of stabilization
- Users: more than 9,000 users to-date and growing
- E-documents: more than 700 thousand monthly.
The benefits are still accruing! LotteMart Indonesia keeps supporting its suppliers in improving their working capital so that they can grow with their customer. See the case study: How Early Payments to suppliers accelerated growth for LotteMart Indonesia. What benefits do suppliers gain using TBXONE: see the case study: Suppliers benefit using TBXONE SRC.