MODERN INFORMATION TECHNOLOGIES IN COOP MORAVA, S.R.O.

A modern business needs to have the ability to react promptly to customers’ and

suppliers’ demands. For that purpose we have created a solution based on modern technologies and reflecting the common demands of a business of the third millennium. We have provided such a system also to COOP Morava which will help them to maintain firm grasp of their business affairs and trade

About the customer

Over the last 150 years Czech and Moravian consumer cooperatives have established

themselves as one of the strongest business communities on the internal Czech market.

Their basic business philosophy is to provide good services to their customers over the entire area of the Czech Republic (in selling foodstuffs, and other goods of daily use). Those services are always to be reciprocally advantageous for them and their business partners.

They also aim to establish favourable enterprise conditions in a dynamically developing market economy for competitive members of those consumer cooperatives

COOP MORAVA, s.r.o. company was founded in 1993 by Moravian consumer cooperatives „BUDOUCNOST–JEDNOTA–KONZUM“ to facilitate integrated purchase of foodstuffs and other non-food goods for wholesale warehouses and individual stores of the cooperative.

The turnover for 2003 was approximately 4 billion CZK. At the moment the purchasing central ensures supplies into 16 consumer cooperatives with almost 1200 individual stores of varied size.

The cooperative now orders goods directly from the supplier, centrally under agreed conditions from the COOP MORAVA, s.r.o. purchasing centre. The goods are then delivered to a place demanded by the cooperative, supplier will issue an invoice to the purchasing central, which will check is validity and send it forward to the concerned cooperative.

Original situation

In the year 2000 the state of requisitions reached a point where no business partner was any

longer cable or willing to continue processing them manually. Management of the company had decided that the problem needs to be solved in a fashion that the scale of orders will be managed with regards to the value of the requisition or whether it has already been due to be paid. Customers were reminded about their own requisitions by fax, sporadically by email.

The fact that customers kept ordering goods that were no longer on offer or that the supplier hadn’t delivered, also proved to be a problem. So did the lack of knowledge about pricing from all parties involved. They needed to be dealt with quickly. At that time the company had no means of managing those order processes efficiently.

We have discovered that COOP MORAVA is experiencing great difficulties with efficient (i.e. quick and precise) price control on suppliers’ invoices. Invoice clearance was done manually by an accountant using pencil and paper checking those invoices against a printed out price list.

Therefore the company started thinking about a system upgrade as the old one ceased to be suitable for all users with regard to all those new business challenges. The company also lacked a web presentation of any sort which could be used as a means of public and customer/supplier relations.

It was at the time of an EDI (Electronic Data Interchange) Boom in the Czech Republic for which COOP MORAVA was utterly unready system and hardware wise.

The aims of the solution

These were the basic aims of the solution:

• Customers’ invoice management and their • Creation of a universal ordering from the suppliers system and management of the goods that are

available for order • Universal pricing in the entire retail chain • Simplification and optimization of price audit on the suppliers invoices by introducing so-called

“per item invoices” • Creating new shared updated items’ code-list • Establishment of new EDI communication with both the supplier and the cooperative • Development of a new online portal for public and employees of COOP MORAVA, s.r.o. and its

partners • Implementation of a new ERP system that will stimulate further expansion

Applied technologies

The ordering system and the web portal were both developed by applications in a three-layer architecture using the technology of Oracle, specifically Oracle 9i Standard Edition database, application server Oracle iAS a Oracle Portal version 3.0.

The whole of Oracle’s technology is run on a hosted platform hotpilot by aplis.cz, which offers latest technologies under more than acceptable conditions. The platform includes a farm of UNIX servers Sun with operation Solaris a Linux, and non/stop monitoring and hotline.

ERP system MBS Navision (today Microsoft Dynamics NAV) works on an operation system Microsoft Windows Server 2003.

For all external connections EDI ORION® solution is used.

Description of the solution

There are 4 interconnected applications in the solution:

1. Ordering system iCOOP

2. Web portal

3. ERP system Microsoft Business Solution Navision (today Microsoft Dynamics NAV)

4. EDI communication ORION®

1. Ordering system iCOOP

Application iCOOP is web based consisting of several modules, accessible to individual users depending on their access privileges allocated by the application administrator.

Ordering

Ordering module will create orders for individual suppliers and allow the user to see the progress in processing those orders.

The customer can order goods in iCOOP application in two different ways:

• They order via the internet form of iCOOP application • They send an order from their ERP system as an EDI message. Such message will be

automatically uploaded into the iCOOP

Customers can also see their agreed margins (agreed credit) and the application will not allow them to excess their given limit.

Abnormal orders (not within the agreed conditions) are sent directly to a worker in COOP MORAVA for control. They can either accept such orders or reject them.

If a customer is late with their due payments their sales and discounts are diminished. The reduction is proportional to the time overdue.

Based on the credentials of the order and order is sent to a supplier through:

• Fax • E-mail or • EDI message

The customer can still cancel the order.

The application user has the possibility of tracking the progress of this order on the supplier’s side: whether it has been accepted, dispatched or what form will the payment be in.

Liabilities and payments from the customer

Each customer has access to their liabilities and due payments to COOP MORAVA. This data are loaded into the application iCOOP from ERP system CM.

Customer can also print out individual invoices which compose overdue liabilities. Overdue liabilities will also influence the final price of all goods in the iCOOP application for that customer.

That is to say, that when a customer has overdue liabilities his/her discounts and sales are diminished. Even overdue liabilities have deadlines: beyond which a given customer is not allowed to order any further goods.

Pricelists and contract conditions

All suppliers’ pricelists are implemented into the iCOOP application.

User can set a "special price" on selected goods for a limited period of time, such price will only be applicable for certain customers.

Both customers and suppliers can find their contract conditions with COOP MOPRAVA within the system. Those conditions then determine all processes of goods’ ordering.

If the customer can deliver their pricelists in an EDI form, then they are incorporated automatically into the application using EDI ORION® solution.

Invoicing

Customer can access and print out all invoices for his orders. Invoices for their liabilities to COOP MORAVA are also at hand.

Via iCOOP application the customer can also return and reclaim certain invoices.

Data and goods inspection

Item code-lists from all suppliers must at all times be complete and flawless for the uncompromised running of the system and ordering processes.

Item code-list is kept separate from the iCOOP application. The application then imports new code-lists from an external application every 60 minutes.

In the iCOOP application automatic scheduled checks of data and item quality are carried out. Those controls will disclose any missing or wrong information, such as:

• missing important information about an item • item pricing hasn’t yet been established • certain information about an item is wrong (EAN, flawed unit conversion etc.) • certain information on an item is duplicated (EAN, code, other identifier etc.)

If the check-up discovers any problems with the goods, it will issue notifications automatically to

responsible personnel with the instructions about how to resolve this problem.

Moreover users can directly require supplementation of missing items through the system. Automatic notifications are sent once again. The addressee of this notification will be the person responsible for integrity of the code-list.

Miscellaneous

Briefly about other modules: • quarterly orders’ agenda: customers can create an aggregated order quarterly, which will

ameliorate the negotiating position of the central. Individual dispatches are then registered as a percentage of the aggregated order.

• listings and statistics: allows the user to view tens of tables and diagrams • notifications: application has a well structured notification system, which ensures notifying

responsible personnel via SMS or e-mail about flaws or other specific events requiring assistance within the system

Access to application management: administrator set access privileges to the application.

2. ERP system MBS Navision

For an ERP system we have chosen the MBS Navision Attain solution version 3.60 from Microsoft Corporation for the following reasons:

• world known platform with strong user support in the Czech Republic • background of a strong SW solution supplier with the guaranteed expansion before 2013 • extensive and reliable system capable of handling such amount of data • covering contemporary and future demands of the company

Standard company agendas

Since MBS Navision was going to fully replace the original N-pro system from the very beginning, its functionality had to replace certain basic company’s agendas, such as:

• internal finance and reporting • estimated budgets and their fulfilment • banking operations with national banks • cashing operations • long-term property record • wages and resource management • ordering and invoicing of both suppliers and customers • keeping track of requisitions and liabilities from suppliers and customers • correction of requisitions, overdue notices and penalties • bookkeeping and stocktaking

Customers’ agendas

Following unique agendas were developed to deal with specific requirements of the company:

• bill of exchange tracking agenda • contract and individual partner’s conditions tracking • tracking of suppliers bonuses in relation to already purchased merchandise connected to

invoicing • tracking of suppliers participation in promotion such as leaflet distribution, connected to invoicing • tracking of suppliers fulfilment of purchasing compulsory stocks (item catalogues) connected to

invoicing

• module for EDI ORION system and iCOOP system connection • connection with the ordering system iCOOP

Module for connection with EDI Orion and iCOOP

Module establishes a fully operational interface on both systems with following functions:

• orders that are generated for the supplier in the iCOOP system are tracked in case future reference is needed

• creating items “ID cards” tracked within the iCOOP system • check-up processing of received EDI invoices against sent orders • check-up processing of received invoices without the orders (direct deliveries to the stores) • re-invoicing and EDI outputs for the consumer cooperatives • information delivery about processed invoices to the iCOOP system

Résumé

Thanks to its modularity and potential fro expansion the MBS Navision system has become an integral part of automatization of all internal processes and fulfilled the criteria through its functionality and ability to process large amounts of data. Therefore the system is continuously developed to suit higher levels of such automatization. It is also important to mention more transparent financial transactions. MBS Navision has created foundations for modern financial management of the company.

3. EDI ORION solution

EDI ORION® solution is a complex system for electronic data interchange. It is based on the latest internet technologies, which it combines with traditional means of EDI communication. Thus connecting the traditional environment based on UN/EDIFACT, EANCOM standards and x.400/x.435 communications with modern internet based and XML communication.

Although it was possible to implement the solution directly to COOP MORAVA main and branch offices, we have used more economical outsourcing – using the whole package of EDI services from the supplier – CCV s.r.o.

Thereby the supplier not only operates supports and supervises the entire system but also

ensures the so-called roll-out – i.e. connection of suppliers and customers. Using our complex ORION® services the company COOP MORAVA was prevented from further spending on the hardware but also from long-term expenses on system maintenance (no experts for system maintenance, and technical contact with the customers was needed).

EDI ORION® solution provides more than standard EDO services for COOP MORAVA, i.e. documentation conversion and their distribution amongst the partners, but also other supplementary services:

• Conversion between the ERP format of the customer and the format used by the partner

(usually EDIFACT in various versions and national specifications). • Message exchange with business partners (communication with VAN networks in the Czech

Republic but also abroad)

• Alternative message delivery via email fax, which can be used at the time of EDI black-out at the supplier’s.

• Adding new suppliers – EDI ORION® team also ensures adding new suppliers to the system.

• Due to the flexibility of the ORION® solution it is possible to commence communication

promptly with suppliers that have already got an EDI solution on their system.

• Because of the favourable pricing of ORION® services new suppliers, which hadn’t yet implemented EDI (for price or technology reasons), were also connected quickly.

• Test operation – at the time of connection of a new supplier we ensure parallel delivery of

orders via fax or email, which significantly facilitates the testing operation, which could otherwise be very complex in terms of organization when more customers (whole cooperatives) were connected.

• Planned-out and efficient way of giving feedback – all parties involved are promptly informed

about a message delivery with the possibility of direct transfer of the information into the cooperatives’ systems.

• When feedback and alternative ways of delivery in the case of unconfirmed orderd the risk of

not accomplishing an order is minimized. Meanwhile the entire life cycle is supervised and checked by the ORION® solution and problems are resolved in the frame of standard services provided by its supervision centre.

• EDI ORION® solution is also used for communication between customers (consumer

cooperatives) and the company COOP MORAVA. Consumer cooperatives then can use EDI ORION® solution also for their direct communication with suppliers.

The concept of EDI ORION® solution and its implementation via outsourcing brought to the

company COOP MORAVA not only remarkable limitation of operating and one-time costs, but also supervision and more direct contact with suppliers and higher quality and faster operation of essential processes. In its price category our EDI ORION® solution works like no other on the market.

Picture no1: EDI ORION scheme of use

System implementation

The entire disposition of the solution was thoroughly analyzed together with the project investors to establish priorities of individual functionalities (modules) realization. According to those priorities implementation of individual applications and their phases were scheduled. The key requirement was to fully implement the first phase by the end of 2001. This strategy proved to be successful because no longer than 4 months after the initial negotiations some modules were already fully functional. Those running modules have brought the investor COOP MORAVA expected results and confirmed that they have made the right choice.

In the first phase we implemented modules of the iCOOP application that can do (quarterly) ordering, price-listing, suppliers’ and item code lists management, supervision of liabilities and customers’ payments, alerting system. At the same time we have implemented EDI ORION® solution, which was connected to the ordering system and with the ability to receive deliveries from approximately a 100 suppliers.

In the second and third phase was the application iCOOP extended so it is now able to import suppliers’ pricelists and communicate with the customers ERP systems (code-lists, pricelists, orders etc.). Now it can also share invoices, statistics and data, it also automatically checks items’ code-lists, the possibility of adding new items into the system has remained open etc.

Fourth phase was mostly implementation of the ERP system, fifth phase included innovation of the web site which now directly connected with the iCOOP system.

In the last phase new modules which enable EDI invoicing in both directions were implemented in to the system.

During the time of all phases the circle of suppliers who can receive EDI orders, send EDI price-lists and invoices had been gradually extending.

Time period Description

September 2001

Initial negotiation, strategy planning

December 2001

iCOOP implementation – 1st phase (application iCOOP, EDI ORION®)

June 2002 iCOOP implementation – 2nd phase (extension of the iCOOP application) December

2002 iCOOP implementation – 3rd phase (extension of the iCOOP application)

January 2003 ERP MBS Navision implementation – 4th phase March 2003 Web site innovation – 5th phase

January 2004 EDI invoicing in the ERP – 6th phase

Thanks to high quality of project management and teamwork with the investor as well as regular risk assessment we have been able to implement individual phases on time and in required quality.

Having started full operation, we have also commenced system support, which includes daily checks of all applications operation and their response to given events, which may signal a potential risk of access limitations.

Solution’s benefits

The solution is operating in real time and has following benefits:

• Claims are reduced by 30% compared to the status quo before the implementation • Reduction of expenses on sending and bookkeeping of orders to the supplier • Acceleration of re-invoicing thanks to EDI invoicing from the supplier and better quality product and

price information • Communication within the chain is cheaper (no faxes, phone calls, letters etc.) • Implementation of the code-lists’ automatic checks have reduced expenses on its management

reduced the number of mistakes and thus accelerated both ordering and invoicing • Automatic pricelist imports from the suppliers have reduced the expenses on their maintenance and

management • Sharing of internal information (documentation, calendars etc.) sped up their maintenance online • Implementation of a modern ERP system enables better and faster reaction to others’ demands

Final status quo- résumé

Having finished all phases of implementation the company COOP MORAVA, s.r.o. now has an

information support of all integral processes and most of those are automatized:

• Items code-lists input in to the information system of COOP MORAVA, s.r.o. as well as into the IS of cooperatives

• Pricing management of the offered products within the entire business chain • Liabilities status management • Receiving orders from customers • Sending orders to suppliers • Receiving suppliers’ invoices and their check against agreed price-lists • Issuing and sending customers’ invoices • Online promotion of the corporation • Sharing of information within the chain

Contact

Supplier Customer

CCV, s.r.o. Libušina třída 23 623 00 Brno tel. +420 541 212 199 fax +420 541 217 969 email: ccvbrno@ccv.cz http://www.ccv.cz/en/ RNDr. Jan Škerle Project manager jan.skerle@ccv.cz

COOP MORAVA, s r.o. Sukova 659 40 Brno tel. +420 542 216 122-4 fax +420 542 215 252 http://www.coopmorava.cz Josef Čep Director cep@coopmorava.cz