Tallard Technologies

International Distributor Sees ROI, Customer Satisfaction Soar with SOA-Based Solution

Tallard Technologies distributes high-tech products to Latin American resellers. But the sales and inventory transactions it conducted with its largest customer weren’t very high-tech. When the customer asked Tallard to adopt an Electronic Data Interchange solution, the company optimized its existing SAP application platform by implementing a service-oriented architecture with Microsoft® BizTalk® Server 2006 R2 at its core. The result handles sales and inventory information and transactions faster than before, while requiring just one-third of the previous staff. Tallard’s return on investment continues to climb as it makes new use not only of its SAP system, but also of the EDI code to expand the solution to additional countries and services, such as warranty returns. Best of all, the solution boosts customer satisfaction—and drives a closer relationship between Tallard and its customer.

 

Situation

If you’re in Latin America and you want to buy some of the world’s biggest brand names in computer technology, Tallard Technologies will likely have a behind-the-scenes role in the distribution of those products to you. Tallard is part of Latin America’s largest value-added distributor, serving all of Central America and the Caribbean from its headquarters in Miami, Florida. The company also has offices in Chile, Mexico, Venezuela, Argentina, Brazil, and Ecuador.

A company that distributes technology products—including products for the convergence of data, voice, and video—should be expected to use the latest technology in serving its customers. Tallard does that, customizing its approach to meet the preferences of its customers.

Until a year ago, Tallard’s process for distributing merchandise for one of its largest consumer electronics manufacturing customers involved the Internet—and a lot of manual data entry. The distribution system had been created by the manufacturer. It called for Tallard to extract shipping and inventory information from Tallard’s SAP enterprise resource planning (ERP) system, assemble the data manually in spreadsheets, edit and format the data manually according to the manufacturer’s preferences, check the spreadsheets to catch and correct errors, save the spreadsheets as flat files, and upload the files to the manufacturer’s extranet using File Transfer Protocol technology.

“With so many points of human contact in the system, there were many reasons why information might not get to its destination correctly—or on time,” says Chris Meiser, Executive Vice President of Operations, Tallard Technologies. “We and the manufacturer both had SAP systems, and our feeling was that we weren’t taking maximum advantage of those systems in our distribution solution.”

Tallard also handled warranty returns for the manufacturer. To do so, several Tallard employees would visit the manufacturer’s extranet several times each day to identify and download service request orders (SROs) filed by retailers and approved by the manufacturer for returned products or parts that needed replacement. Tallard would manually create a sales order for each product or part and upload the information to its SAP ERP system. The sales order would be uploaded manually to the manufacturer, which would ship the requested product or part to Tallard. The company would then package the part and ship it by express mail to the retailer that had requested it. About 4,000 returns were handled this way each month.

Tallard did U.S.$40–50 million of business with this manufacturer each year and held $2–3 million of the manufacturer’s inventory at any one time. Those substantial sums were sufficient motivation for the manufacturer to streamline the distribution process. A faster, more automated process would deliver several benefits to the manufacturer, including lower inventory costs, increased accuracy of distribution data, and faster distribution. Because the manufacturer’s customers would be happier as a result, the manufacturer in turn would be happier with Tallard for participating in making those benefits possible.

Seeking that streamlined distribution process, the manufacturer asked Tallard to participate in a system based on Electronic Data Interchange (EDI), in which information on sales orders, fulfillment, invoices, and other transaction records are exchanged between companies in a format that is both standardized and automated, so that each company’s systems can understand and process the information faster and more accurately than is possible with manual processes.

Solution

Tallard and the manufacturer worked together on an EDI system that would address the challenges of the existing, manual processes. To do so, they collaborated with Activ Technologies, a Microsoft® Gold Certified Partner.

Figure 1. BizTalk Server is at the center of a SOA approach, which serves to speed and automate interactions betweenTallard and its manufacturer customer.

An early version of the EDI solution called for Tallard and its manufacturer to each send its inventory, sales, and other data to a third-party provider, which would translate the information coming from one company into a digital format that could be understood by the other. But this solution added both time and cost to the solution—and unnecessarily so, according to Activ.
Instead, the Microsoft solution provider helped Tallard and its manufacturer to make fuller use of the SAP and Microsoft technologies that they already had in place. “The solution was to optimize the application platform that already existed at the companies,” says Mike Roberts, Chief Executive Officer, Activ Technologies.

Optimizing that platform meant using a service-oriented architecture (SOA) with technologies familiar to Tallard’s IT department, especially Microsoft BizTalk® Server 2006 R2. The solution (see Figure 1) uses BizTalk Server in three ways:

• As an orchestration solution to translate information passing between the two companies
• As a workflow engine to manage the transmission of information and processes between BizTalk Server and the SAP ERP system
• As an enabler of sending the AS2 messages over a virtual private network (VPN), which provides secure, direct communication between Tallard and the manufacturer

The inventory and sales solution works in the following way:

• Every Monday morning, BizTalk Server sends two EDI documents to the manufacturer from Tallard’s SAP system.
• Both documents are generated from BizTalk Server by calling SAP with two custom BAPIs (business application processing interfaces). One is an inventory update (EDI document X12 846) and the other is a sales report (EDI document X12 867).
• Both EDI documents are sent to the manufacturer using the AS2 connection from BizTalk Server.

Tallard implemented the inventory and sales report system in response to the requirement of its customer. But once that system was implemented, Tallard saw the possibilities and benefits of extending the solution—a relatively easy step with a componentized service-oriented architecture—to include its warranty service as well. Company executives built the business case for the added investment, and the expanded solution was implemented within months.

The key steps in this fast, accurate, and cost-effective warranty service solution are:

• Tallard receives new service request orders from the manufacturer’s warranty Web site through Web service calls.
• New sales orders to fulfill those SROs are entered into Tallard’s SAP system.
• SAP confirms the creation of the new sales orders by passing the sales order numbers to BizTalk Server.
• BizTalk Server confirms receipt of the SROs from the manufacturer with a Web service call to the manufacturer’s warranty Web site.
• SAP creates purchase orders and sends them to BizTalk Server, which transforms them into EDI documents.
• BizTalk Server sends the EDI documents to the manufacturer using AS2 over a VPN.
• When the SRO is ready to be shipped, SAP creates a corresponding invoice.
• BizTalk Server receives the invoice and sends the address information to the express mail service for shipping.
• The express mail service returns a tracking number to SAP, again going through BizTalk Server.

Tallard has implemented this solution in three of its national markets and plans to expand the solution to cover its entire Latin American market within a year.

Benefits

The EDI solution at Tallard—based on application platform optimization and a service-oriented architecture centered on BizTalk Server—is delivering more information more quickly to Tallard’s customer, is increasing Tallard’s value to the customer, and is increasing the return on investment (ROI) that Tallard has in its existing technology.

Delivers Better Information, More Quickly

By optimizing its application platform for the inventory and sales information systems, Tallard has succeeded in delivering more, and more accurate, information to its manufacturer customer, and does so more quickly, than before. It is also responding to warranty replacement needs more quickly and accurately than before.

“Our customer gets better inventory, sales, and warranty information from us, and processes that information with no more than one-third of the personnel time it required before,” says Meiser. “That makes it possible for our customer to redirect its personnel to more productive, and more profitable, activities.”

Thanks to BizTalk Server and SOA, we are able to use SAP in ways we never could before—increasing our return on investment in that technology. Chris Meiser Executive Vice President of Operations, Tallard Technologies

Meiser also notes that fuller and more accurate information about the manufacturer’s various national markets in Latin America is a particular benefit to the manufacturer’s sales managers—each of whom may have sole responsibility for a national market. “Our customer’s sales managers don’t have the time to wait for information or to chase it down,” he says. “We’re making it possible for these sales managers to have a better understanding of what’s going on in their markets, with less effort on their part. They’re pleased with the result of our move to EDI—and they’ve let us know how valuable our EDI information is to them.”

Increases the Value of the Vendor-Customer Relationship

Tallard’s customer isn’t the only one that benefits from the increased speed and accuracy of the BizTalk Server–based EDI solution.

“We delivered the EDI solution quickly and effectively, putting it into production after just months,” says Meiser. “That shows our customer that we are a responsible and dependable vendor. It makes us more valuable to our customer, and it strengthens the customer’s ties to us.”

One result of that closer tie is that Tallard’s customer is now talking to Tallard about expanding the solution to more countries than originally planned. It’s also talking to Tallard about adding new services to the EDI solution, such as point-of-service information.

“The more we can do for our customer, the more business we can earn from our customer—and the more revenues we can see,” says Meiser. “Optimizing our application platform for EDI has made this possible.”

Increases ROI Exponentially

Tallard didn’t just install an EDI solution, it used BizTalk Server and a service-oriented architecture to do so. That has given Tallard tremendous flexibility as it moves to expand the EDI solution to include new markets and new processes—and it has increased the company’s ROI in its existing SAP software and related application platform.

“Thanks to BizTalk Server and SOA, we are able to use SAP in ways we never could before—increasing our return on investment in that technology,” says Meiser. “Also, the vast majority of our investment in this initial EDI solution can also be exploited to extend the solution pretty much any way we want.” For example, the extensions that Tallard and its customer are now discussing become very cost-effective because Tallard doesn’t have to write solutions from scratch. Instead, it can create new solutions by incrementally adding software components to the existing application infrastructure.

Another way in which the solution increases Tallard’s return on investment is through scalability. “We are currently supporting 250 warranty returns per day,” says Meiser. “But as we develop a closer relationship with our customer, we can take on more of the return business—1,000 or more returns per day—with the existing infrastructure. And if we need to scale out, it’s simply a matter of adding another low-cost server.”

 

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For more information about Activ Technologies products and services, visit the Web site at:
www.activ-tech.com

For more information about Tallard Technologies products and services, call (305) 925-8200 or visit the Web site at:
www.tallard.com