Supply chain collaboration yields efficiency

By Mark Leon, InfoWorld |  Software

Ken Deveaux, director of b-to-b e-commerce at FleetBoston Financial in Boston, says he is just starting to make use of collaborative tools that are tailored to this environment. "Historically, in automated b-to-b financial systems, the information about the money has been separate from the money itself," Deveaux says. "This is very inefficient."

Since February, Deveaux has used software called Paymode from Clareon in Portland, Maine, to address this issue. "As a bank, we support over half a million companies," Deveaux says. "We provide cash management, payment, and collection services."

Deveaux uses the following example to illustrate how Paymode works: "When a business pays a supplier, the amount paid rarely matches the amount on the invoice," he explains. "So someone in the supplier's accounts receivable office will need to reconcile the difference with someone else in accounts payable on the customer end. Today this is usually done with fax, phone, and e-mail."

This reconciliation process involves what Deveaux calls "rich remittance" information. "Some of the product may be returned; there may be reasons why the customer will pay full shipping only for part of the order," Deveaux says. "All this kind of data is critical to reconciling accounts."

FleetBoston uses Paymode to put an electronic payment into the same package as the payment data. "The rich remittance information is encapsulated in an XML document," Deveaux says.

FleetBoston still uses an older format, ACH (Automated Clearing House), for actual payments. And Paymode supports popular electronic-payment methods such as ACH and FEDI (Financial Electronic Data Interchange). What is new here is the ability to package these transactional formats with the remittance information required to streamline the reconciliation process.

"This is financial, b-to-b collaboration," Deveaux says. "We have accounts payable mangers and accounts receivable managers working together, and all they need to use the system is a Web browser."

At present the collaboration never involves more than two parties, but Deveaux says that could change. "In the future this rich information could flow farther down or up the supply chain. I can envision this happening with complex transactions, perhaps cross-border transactions involving multiple countries."


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