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Dec 31, 2015
Implementing E-commerce SolutionsPresented toUMSL e-Commerce SeminarMarch 13 - 15, 2000
Process FlowInitial projectScope changeManaging riskPlanning & designEmerging opportunities
Initial ProjectStart up Internet pharmacyA great vision No moneyNot just selling drugsSelling medical alliance with the consumerSource an accounting applicationOracle compatibleCan be installed in 3 weeks
Scope ChangesAccountingDistribution Fulfillment Warehouse designFlow racksInventory controlEDIProcess procedures
Interim controllerHardware salesNetwork installationProject managementInterfacesRequirements definitionBar coding
Managing RiskRequirements definition processUse expertsComplete project planClient expectationsCan the software do this?Keep the client informedFollow up
Design AccuracyReview requirementsGap AnalysisMap processesFlow validation Review with the expertsTeam consensus Present to the clientBuy off
Process Flow Diagram
Emerging TechnologiesInternetAnother store frontVirtual inventoryMarket opportunitiesSame old distributionNew concept same day delivery
Logistics is Changing
Commerce Site Logistics
Average order amount
More than $1,000
Less than $100
Highly seasonal, fragmented
Through the entire supply chain
Source: Forrester Research, Inc.
Emerging OpportunitiesDistribution network has not changedFedEx, UPS, RPS, USPS Revolutionary conceptToo expensive?Dynamic partnershipsHow do we do it?
ConclusionBKD is not just an accounting firm, but a business partner. We first sought BKDs expertise in selecting a robust financial package supporting our e-commerce enterprise. BKD provided much more and was instrumental in our success in meeting our targeted start up dates. BKD provided us with the financial application, distribution package, EDI with our vendors, bar code scanning of 25,000 SKUs, project management in the development of interfaces across multiple applications and daily business consultants. And when we decided to pilot test a revolutionary logistics distribution model, we did not hesitate to call BKD. Jef Fowler, Senior VP & CFO, RX.COM
Thank you Dr. Sauter for the introduction. I am Chris Keefe, partner at BKD in the consulting department. With me today is Ken Oberholz, managing consultant and project manager for the Rx.com solution we will discuss today.
When I first started at BKD 16 years ago, PCs were just becoming mainstream with our clients. I remember when we would have our Lotus 123 disk in one floppy and our data disk in the 2nd floppy.
Our world is changing again. As business owners and business advisors, we need to understand this new technology of e-commerce and evaluate how it can enhance our business in the same way that the PC and the fax machine have in the past.
Ken and I first got the call a year ago this week. What was a pretty routine call for us and the initial project quickly took on a new life of its own.
Our roadmap today is designed to take you through the changes from the initial project, how we managed the clients and our risk and where we are today with new opportunities.
One of our core principals is teamwork, and this presentation like all our projects are a team approach so with this in mind Ken and I are teamed up to present this concept for you.
As Chris mentioned our role went through many changes, our company, and the client went through many changes as well.
Here we had a client, great vision, still securing funding, operating day to day with cash flow risk.
This presented considerable risk for us as well. Chris and I often the first several weeks and months were nervous at the risk we placed our firm in.
But you have to believe, buy in, see the vision, and of course review the business plan and projections.
Our initial responsibility is stated in this last bullet.
We needed the applications in place by Apr 1st and selling on the net by May 1st. Piece of cake right?We met our objective with the accounting application and then took on many different tasks and roles as the project grew.
We sold our first product May 5th 1999. When we installed the accounting application there was no distribution system in place, physically or electronically. Can you say OOPS! There was need for some overall project management.
Some of those responsibilities are listed here. Complicating our role was a lack of permanent employees. Until June of 1999 consultants and vendors outnumbered the permanent employees 5:1. In Sept 1999 permanent employees outnumbered consultants 7:1
Warehousing, IS department, call center, accounting, web development, pharmacy technicians, pharmacists. Our role of consultants changed considerably from implementations, to teachers on several occasions.
With all these changes the risk grows considerably and you need to manage it not wish it away.Risk takes on many shapes and personalities.
Vendor deadlines, concept understanding, interfaces between applications and the list goes on.
Having a prescribed methodology which ties all decisions and changes back to your requirements is essential. As you know requirements take on many roes as well from functionality and performance of the applications to when we will make our first sale to governmental regulations. All must be identified throughout the process.
No one person knows it all you must surround yourself with experts in the industry, document, document, document.what you are doing.
The project plan is living let it grow with you as you move forward.
Keep the team and the client informed
Follow up on everythingThe design of your business will change as you progress through implementation. We continually performed gap analysis as we reviewed requirements and business methodologies.e.g. Third part adjudication of insurance benefits, credit card pre auth before the order is confirmed, validating customer data before authorizing the orders, inventory levels and so on.
Process maps helped us to train new employees and understand the operational flow. They also provided the visual what if and stump the dummy with various industry experts.
They were also great tools in codifying the clients ILL KNOW IT WHEN I SEE IT mentality at times.
Ultimately they are great buy in and risk reduction tools.
From 10.000 feet let look at a process flow.This diagram is one of many used in the identification of interfaces developed between the applications.
No comments on the use of design tools, KISS, keep it simple silly.
From this document we developed no less than 50 additional process flows to describe the system operation and even then we were still above the weeds. The real weeds came in the interface specifications designs.
As you can see here there are numerous systems that must communicate with each other just to get an order in the system.
Web (organic) Order entry (Flux) customer, financial, inventory (platinum).Fulfillment (SI Baker), shipping (SI Baker and Flux), transaction processing (platinum). The slowest component is the fulfillment and physical filling of an order, OTC is averaging 4 item per order and take 10 minutes to route and ship and RX, with DR validation etc takes 30 minutes. The system electronically did not break at 40,000 orders per day in stress testing which equates to over 320,000 calls across the applications to process these orders
As you know the Internet expands our opportunities for success and failure with the number of transactions we need to process on a daily basis, Redundancy insures operations but produces a new bottle neck in the operations. Distribution.
How can we achieve a same day delivery. Customer satisfaction, this is how we can gain a competitive advantage over the wallgreens and CVSs on every corner.
From your doctors office to your door, same day service.
Lets first understand how distribution is changing.e-commerce is driving some dramatic changes in our logistics systems.
This chart is a comparison of the logistics changes we need to deal with.
We need to re-think the basic business model to be successful in an e-commerce market and we cannot ignore how we get the product to the door or the changes e-commerce places on our logistics system.
This is the challenge, how do you get 40,000 orders out the door and to the customer on a daily basis?We still used FedEx, UPS, RPS USPS. For selected areas to expand nationwide this year we took on the same day challenge.
Once thought too expensive, we can do it for 50% of the cost of UPS and get the product to the customer the same day they ordered it.
Partnerships is the strength.This is the model again at a very high level using the Internet and wireless technology.
For selected zip codes the customer is given the opportunity to request same day delivery for prescriptions only. Smaller packages, the depends and ensure orders cannot go same day.
As volume increases the cost per order obviously comes down, plateaus and the reduces again at various levels.
No Im not at liberty to tell you the costs and price points.
Presently Rx.com is adding an additional 100,000 sq feet, 3-tier OTC fulfillment operation and replicating this total model in 2 countriesI know it was a quick pass, but thi