Feature

posted 2 May 2006 in Volume 2 Issue 10

A fine brew

Scottish and Newcastle is taking the headache out of handling a multitude of delivery notes and invoices by using an outsourced electronic document management system.

By Amanda O’Shaughnessy and Vicki Mackintosh

Leading brewer and cider maker Scottish and Newcastle UK Limited produces many of the United Kingdom’s biggest-selling beers and ciders, among them John Smiths, Foster’s, Courage Best and Directors, Kronenbourg 1664 and Strongbow. Its parent company ranks number seven among the world’s top brewers and enjoys market-leading positions in 15 countries across Europe and Asia.

Like most businesses, Scottish & Newcastle UK’s continued success and growth depends on its ability to fulfil customer orders and collect payment for those orders as quickly and efficiently as possible. A slow collection of payment will hit both cashflow and profitability.

Because our distribution structure is complex and covers such a wide geographic area, managing the information and documentation pertaining to those orders and deliveries can be a challenge.

In part, that is because of the distributed nature of Scottish and Newcastle’s operations. We have centralised our order-taking process, in that all beer orders are taken via a national call centre in Edinburgh, Scotland. But those orders are fulfilled by a network of 24 sites; twelve of these are regional distribution centres, the balance comprising our regional companies: John Smith’s, Scottish Brewers, Newcastle & Federation Breweries and Courage Best and Directors. In this way, we are able to offer close local support to the market place.

Customer accounts, meanwhile, are serviced at two levels: regional accounts are serviced at the call centre, while national accounts are handled by a special division based in Staines, Surrey. The processing of customer payments is further complicated by the variance from one outlet to another in their settlement lifecycle; some are on two-week settlement terms while others use monthly terms.

Information flows

This process creates a complex flow of information and documentation. Orders taken at Scottish and Newcastle’s Edinburgh call centre are keyed into the SAP enterprise resource planning (ERP) system by our customer service staff there. These orders are automatically routed to the most appropriate distribution centre, where a delivery note is generated and printed off. This is given to one of our delivery crews, who gets the customer to sign it when they make their delivery.

Once the delivery note has been signed off by the customer and returned to the regional centre, confirmation is entered into the SAP ERP system and an invoice is generated, which can be mailed, faxed or delivered electronically to the customer.

Eventually, that invoice appears on the customer’s statement of accounts.

We have thousands of customers, from nationwide pub chains to individual, privately owned bars. Most of them take at least one delivery a week from us, generating about 50,000 delivery notes every week. And for every proof of delivery (POD), meanwhile, there is a corresponding invoice and, later, a statement.

Scottish & Newcastle needs to match each delivery note with an invoice in order to service customer accounts efficiently and ensure prompt payment. Likewise, our customers sometimes need access to copies of delivery notes and invoices in order to verify their own accounts.

That could potentially create a paper mountain. But knowing that electronic information makes it easier to search for and retrieve, and less difficult to store than paper information, we preferred to take an electronic approach. What was needed, we decided, was a system that would enable us to upload and track all of this data to eradicate problems such as lost or delayed delivery notes and clerical errors during processing.

We also wanted a system that could take the load off the customer care team, by providing customers with strictly controlled access to their own accounts, for instance. This system needed to bring together paper and computer generated documents into a single, viewable facility that could be accessed from anywhere in our network of sites.

However, we knew that building and running that kind of system in-house was not a core competence for Scottish & Newcastle. Not only that, but we knew that doing so would involve a significant outlay in terms of capital expenditure.

For these reasons, we decided to take an outsourced approach through our existing document management (DM) services supplier StorText FM. This company was already providing us with DM services, taking our delivery notes and invoices in paper format, scanning them and then burning them onto a CD-Rom, which they sent back to us.

But that frequently required our employees to manually search a library of CD-Roms and, when they found what they were looking for, they had to print off the documents. We felt that web-based technology would provide a more satisfactory alternative.

In 2004, StorText FM launched its Eclipse OnLine service, and we decided to deploy this service in early 2005. Eclipse OnLine is an outsourced, web-based electronic document management system.

Now that we use this service, Stortext FM collects the paper-based delivery notes from our 24 sites. It scans them into the Eclipse Online system and the Eclipse Online web user interface enables our employees at any of our sites to view them. Invoices, meanwhile, are extracted from the SAP system in the form of flat files and sent to StorText FM, where they are also loaded onto the Eclipse Online system. In this way, the central accounts team can use the web interface to correlate delivery notes and invoices.

Certain national account customers also have access to their own documentation, while one major national group, which re-charges the delivery onto their own pubs, is able to access the delivery details either via links or as PDFs sent to them electronically. That reduces call and query handling in both our credit control and our customer services areas.

The system also enables the generation of valuable management information which is used in measuring customer service and performance levels at the depot. The system enables swift verification of delivery notes and a weekly report is produced identifying consistent offenders who fail to sign delivery notes. This is historically one of the biggest problems or sources of customer credit disputes. The system enables this to be addressed quickly, while improving revenue receipts and reducing the burden of write-offs.

Terms and conditions

With an outsourced contract like this, it is important to negotiate terms and conditions that are acceptable to both parties at an early stage, so that expectations are communicated, matched and managed. We have worked with StorText FM a long time, providing us with document imaging and management services since the late 1980s, so we were confident that they could meet our needs in terms of document turn-around time.

This needs to be prompt: we want to be able to see electronic images of our delivery notes and invoices as soon after they are confirmed and issued as possible.

In the case of invoices, these are sent to StorText FM each Monday by flat file from our SAP system. More than 50,000 invoices each week are indexed and archived, and are available via the Eclipse web interface by the Wednesday of that week, enabling personnel to easily retrieve and send them on, where necessary. They are also scanned using intelligent character recognition (ICR) technology to identify key data items, such as the invoice number, delivery number or account number and date.

Delivery notes, meanwhile, are sent to StorText FM via courier from each of our 24 regional centres every Friday. These are scanned and are online by the following Monday. During the scanning process, data on the delivery notes is compared with the corresponding invoice data to make sure it all matches.

The implementation itself went smoothly. We ensured there were no problems involving documents being unavailable during the transition from our old system to the new one, because we continued to run our existing CD-Rom based service from StorText FM during the initial testing phase for Eclipse Online, until we could be sure that it would work smoothly.

Two years’ worth of delivery notes and invoices were then loaded onto the new system and, once we were assured that that task was complete, we asked StorText FM to discontinue the CD-Rom system.

Key benefits

The new web-based system has made life far easier for the staff responsible for handling customer queries and chasing up unpaid accounts. Furthermore, it has enabled us to improve service to customers, too. If a customer calls and requests to see ten invoices from their account and the corresponding delivery notes that prove the orders in question were delivered, employees can do that from their desktop.

The list of documents can be accessed via the Eclipse OnLine web user interface, and by ticking a check box next to each document, the invoices and delivery notes can be brought up, transformed into PDF format and e-mailed or faxed to the customer.

The whole task is completed far more quickly than it would have been under the previous service, which meant that employees had to search our library of CD-Roms, one-by-one, for the appropriate documents – a thoroughly unsatisfactory state of affairs in the age of the internet.

Using the system, both electronic and paper documents are processed in the same manner, allowing them to be cross-referenced, enabling easier retrieval. And because they are stored electronically, they can be processed, archived and retrieved using multiple search criteria. Copies of electronic files, meanwhile, can be accessed by employees and sent to other departments, suppliers and outlets.

One of the main advantages of the new system has been the improvement it has made to our debt-recovery processes. Because credit controllers can now easily view statements, invoice and delivery notes via Eclipse OnLine, they can use this information to reduce debtor days and resolve disputes, improving corporate cashflow in the process.

A weekly report is produced that identifies ‘persistent offenders’ who fail to sign delivery notes – one of the main causes of customer credit disputes, since if we don’t have a signed delivery note, we can’t easily enforce payment.

From the user interface, it is possible to identify proof of delivery notes that do not have a matching invoice; invoices without a matching proof of delivery note; proof of delivery notes presented ‘late’ grouped by delivery depot; and proof of delivery notes with missing signatures. As a result of these benefits, the system has quickly become a valuable part of our integration process and has strengthened our ability to fulfill our supply contracts efficiently.

Amanda O’Shaughnessy is National Credit Manager at Scottish & Newcastle. Vicki Mackintosh is Regional Credit Manager. Both use the outsourced system on a daily basis.

Project Benefits

Conversion

Both electronic and paper documents are processed in the same manner, allowing them to be cross-referenced and enabling easier retrieval.

Electronic storage

Files can be processed, archived and retrieved almost instantly using multiple search criteria.

Document sharing

Copies of electronic files can be accessed and sent to other departments, suppliers and outlets.

Client self-service

Customers have access to information such as invoice, delivery notes and account status, freeing up staff resources at Scottish and Newcastle UK Ltd.

Debt recovery

Credit controllers can now view all statements, invoice and delivery notes held on the Eclipse OnLine system and have used this information to help reduce debtor days and resolve disputes – improving the company’s cash flow. A weekly report is produced that identifies the persistent offenders who fail to sign their delivery notes – one of the main causes of customer credit disputes.

How the service works

Each Monday, StorText FM takes a text file copy of Scottish & Newcastle’s invoice print file from the company’s SAP enterprise resource planning (ERP) system.

This file is processed to achieve two output formats:

1. Index file and format invoice data

a. Invoices are retrieved from archive directly on screen;

b. Invoices look like a printed invoice;

c. From here user can print, fax or email directly to customer.

2. Key data file for matching with scanned proof of deliveries (PODs)

a. Invoice number and date;

b. Delivery Number and date;

c. Account Number.

PODs are sent to StorText FM weekly after delivery confirmation. The are scanned and key data is captured from each. Data from scanned PODs matched against invoice data (step two, above). This data is also used to send the POD image to its regional invoice ‘owner’ (for example, John Smiths, National Sales etcetera);

Thus, irrespective of where the document was delivered from, it is returned to the correct user area;

The same data enables copy POD images to be sent (as PDF) direct to key clients as required.

PODs and invoices are uploaded to Eclipse OnLine (hosted by Stortext FM) and a back-up copy is loaded to DVD media. Statements are processed in the same way, directly from the SAP system and loaded to Eclipse OnLine for subsequent user access. Using the system, the following reports are available to authorised Scottish &

Newcastle staff:

1. PODs that do not have a matching invoice;

2. Invoices without a matching POD;

3. PODs presented "late" grouped by delivery depot;

4. PODs with missing signatures (categorised by driver and client, driver only, client only).

Using Eclipse OnLine, authorised users from Scottish & Newcastle UK’s customer base are able to access their records and:

Retrieve an invoice/credit via invoice number search;
Retrieve both the invoice and POD by entering Delivery Note number;
Group all transactions for an account (enter account number);
Group transactions by month or date for an account;
Group by date to see all transactions on that date;
View reports and related images.

A strict service level agreement (SLA) is also in place, with invoices arriving weekly every Monday morning and being online by the Wednesday; and PODs arrive every Friday and have to be online by the following Wednesday, along with all the reports for that week. The volumes that have to be dealt with are in excess of 150,000 documents per week.