Rustan’s goes into online supply chain management

After spearheading innovations in store and retail management for over 50 years, Rustan Commercial Corp. embarks on another bold venture, this time in the electronic commerce front.

With more and more companies embracing the concept of online transactions with foreign suppliers, vendors, clients and trading partners, the country’s premier retail giant is likewise making the big leap into the hi-tech world of online supply chain management.

"In the retail business, managing the supply chain is critical to success," says LA Topacio, Rustan’s assistant director for corporate communications. "Inefficiencies and inaccuracies in orders and deliveries can bog you down. By harnessing the efficiencies of electronic commerce, we hope to greatly improve this aspect of our business."

Thus, in partnership with Infrontier Phils., a leading provider of supply chain and wireless solutions in Asia, Rustan’s is set to be the first Philippine retail operator to adopt Electronic Commerce Network (ECN) in the Philippines.

ECN, an electronic business-to-business message brokering service which allows organizations to interchange data between disparate applications, will be Rustan’s launching technology vehicle for going full gear into managing its supply chain using the Internet infrastructure.

Brian Butler, Infrontier’s regional director for collaborative commerce, reveals that ECN has been widely used in New Zealand and Australia since 1996. In fact, it is estimated that approximately 90 percent of businesses in New Zealand today with electronic trading functions use ECN.

"ECN," explains Butler, "is a hosted service which allows businesses to electronically communicate with their trading partners without requiring companies to have similar computer system formats or the need to install hardware or software to match disparate computer systems."

This, he says, is vastly more efficient than the traditional approach of faxing purchase orders or re-keying data, which usually introduces delays and errors.

The advantages of an online supply chain management on an ECN platform, explains Butler, are manifold. "For one, ECN is a step beyond older technology approaches such as Electronic Data Interchange (EDI)." EDI which was designed before the advent of the Internet, he says, was built upon a technology that involved a number of technical challenges in extracting data from a computer system, translating them into internationally agreed EDI standard formats and transmitting the message to the recipient using value-added network providers. The receiver of the EDI message then had to translate also the message into the format required by their IT systems.

With ECN, companies do not need to invest in any hardware or software or rely on international bodies agreeing on industry message formats. ECN allows all levels of business from the largest multinationals to very small businesses to electronically communicate with each other. Moreover, users can be redirected from one website to another website to track the status of the orders or packages.

Butler adds that since clients pay only a "per message" fee, communications cost, both domestically and internationally, is no longer a barrier to entry.

ECN has also been extremely successful in a wide range of "vertical" industries such as transport and logistics, automotive, construction and health care. Over 4,300 customers worldwide benefit from this system, including companies such as Nestlé, Sony, Toyota, Colgate, IBM, 3M and Zuellig, to name only a few, as well as government departments.

ECN advantage for Rustan’s

In the Philippines, Rustan’s is synonymous with retailing. With over 70,000 square meters of aggregate selling space, primarily upscale department stores, it has truly helped defined the science of retailing in the country and in Southeast Asia as well where it has built a presence through its extensive network of companies.

Known as the home of many of the world’s most famous brand names and signatures – Cartier, Mikimoto, Tiffany, Ermenegildo Zegna, Nina Ricci, Alfred Dunhill, Sonia Rykiel, Estee Lauder, among others – Rustan’s has links with over a network of over 40 international freight intermediaries with connections to 26 countries and counts over 2,000 foreign suppliers as business partners.

This is more than enough reason for the company to step boldly into the electronic trading arena. With no less than Bienvenido Tantoco Jr., Rustan’s president and CEO, giving the go-signal for the ECN deal, Rustan’s is set to conquer

As Topacio aptly puts it: "An improvement in the supply chain side means a lot of things to consumers. They can have fresh merchandise in the store all the time, a wider assortment of goods to choose from and merchandise that is in step with global trends."

For this significant venture, Rustan’s sought to partner with a supply chain specialist, which provides secure, hosted business solutions and services developed for the Asian marketplace.

Rustan’s partner in this endeavor – Infrontier Phils. – is a member of the First Pacific Group of Companies, a Hong Kong-based conglomerate that owns and operates businesses in the food, consumer goods, telecommunications, property and banking industries. It has offices in Hong Kong, Singapore, Indonesia, Thailand, Greater China and the Philippines.

While Rustan’s is the first retail operator to adopt ECN in the Philippines, Infrontier is also implementing ECN services for a major Philippine logistics company and a number of companies in other industry sectors.

"Technology alone cannot place an organization at the forefront of electronic commerce," says Butler. "The key requirements for this to happen are for Rustan’s to understand and embrace the benefits of electronic commerce and they need the cooperation and collaboration of their partners." Rustan’s, he believes, has already placed itself at the forefront by having recognized these prerequisites and actively seeking technology that could deliver electronic trading capability to all businesses, cheaply, quickly and reliably.

Seeking a more efficient and timely online transactions with its foreign vendors and suppliers, Rustan’s hopes that on-time arrival of goods, lesser stock outs, accurate reporting and easy tracking of orders and deliveries will put the organization at par with the big world-class retailers abroad.

Among Rustan’s trading partners, the first to embrace the system is Estee Lauder, mother company of such popular brands as Clinique and Estee Lauder Cosmetics. It is expected that the rest of its suppliers will quickly embrace the system with the early success of this early adopter.