Webinar Transcript ft. SourceDay’s In-House Epicor Expert Jim Frye

4 Ways to Bridge the Gap Between Your Epicor ERP and Suppliers

Patty: Okay. I think it’s time for us to get going today. I’m really excited to be here. A couple of housekeeping items today. Actually, I should probably tell you who I am, because some of you weren’t on when I first made my initial introduction. I’m Patty Loessberg. And I’m Director of Strategic Alliances here at SourceDay. It looks like we’ve got a pretty good turnout. Let’s start with just a couple of housekeeping items. If you look at the bottom of your screen and the Q&A, where it’s circled there, that’s where we’re going to have you put your questions in, because we want this to be a really interactive webinar. We don’t want it to be just Patty and Clint and Jim on the Zoom, the way we did in 2020. So, it’s going to be more of a fireside chat. We’re going to have Jim come on for a little bit initially, and then we’re going to go into a conversation and then answer your questions. So that Q&A area is pretty important. Please feel free to add any questions, and we will get to them throughout the presentation. Thank you.

I want to tell you a little bit about myself. I am here at SourceDay as Director of Strategic Alliances and Partnerships. I work with the Epicor ecosystem, with Epicor customers, Epicor partners, and Epicor itself. Prior to that, I’ve been in the Epicor space, I feel like, for a very long time, and I enjoy it. I’ve been here about 10 years working with Epicor customers. I worked at Avalara. Maybe you might recognize them. They’re the orange people. I’m now wearing green today. So green for SourceDay. But while I was at Avalara, I had the opportunity to work with many Epicor customers, and I really enjoyed helping them automate their business processes with sales tax automation. Sales tax is complicated, and another portion of what we can do for business processes moving forward to help modernize and to make your guys’ life a lot easier really is to look at automating your supply chain management solutions. I helped customers over there save a lot of time and money and streamlined their business processes, and I hope to help you guys, all of you out here today as well.

Without further ado, let’s go to our agenda here today. We’ll have some introductions, which I’ve already kind of taken care of. And we all know that I’m going to be Oprah Winfrey. However, I couldn’t get Clint McRee to approve to give away a car today, so don’t look underneath your seats because there’s not going to be an envelope or anything. But we promise to make it fun and engaging, and maybe next time we can give away that car. We’ll have to talk to Clint about that. We’re going to talk about the Chatsworth Products case study. That’s one of our customers that runs Epicor ERP. Jim Frye is going to walk us through that. And then we’re going to have, like I said, our fireside conversation where we’re going to get into the nitty-gritty, the nuts and bolts of supply chain management and how it can be maximized within your current investment with Epicor. And then we’re going to do a Q&A, and that’s why that Q&A area was really important. So please feel free at any time to put in your questions. And we promise if we don’t get to them, we will definitely follow up with that.

Without further ado, I’d like to introduce our expert, Jim Frye. And Jim is a gem, we like to say around here. Jim has a wealth of knowledge and experience that he comes to SourceDay with after being at Epicor for about 15 years, wouldn’t you say, Jim? And he was a senior solutions engineer. And I know there are some Epicor folks on the call today or on the webinar, and we all know they fought to have Jim on their accounts, because they knew when Jim was on an account, he was a trusted advisor, and his customers would really know they were getting the real truth from Jim. And Jim was able to help a lot of them out, and he…hundreds, Jim. I’m thinking almost thousands of customers you’ve…


Jim: Over a thousand, for sure.


Patty: So, we are really proud and happy to have Jim here to be able to help us out. I am going to back out now and let Jim take over. And enjoy, Jim, because we really do here at SourceDay.


Jim: Excellent. Thank you, Patty. Pleasure to be here. All right, folks. Let’s jump right into the story here with respect to the Chatsworth Products story. It’ll provide some context for our discussion today as we talk about how we might be able to extend your existing investment in Epicor ERP to leverage some supply chain tools, and specifically relative to Chatsworth, what’s important to note about Chatsworth Products is that they’re a global manufacturer of power management solutions. They’re also an Epicor ERP customer. And I’m emphasizing that because Chatsworth is a representative example of how a manufacturing company can extend their investment to leverage SourceDay, as I mentioned earlier, to achieve higher performance. And if you’re interested, you can see a full webinar showing the achievements of Chatsworth Products and the benefits that they attribute to SourceDay on our website. But I’ll highlight a few salient points here for context in support of our discussion today.

And so, as you look at this slide, some of the key challenges that Chatsworth has experienced in the past, and you can see them noted on the right. Late and incomplete deliveries largely due to inaccurate lead times and incorrect quantities. They experienced late shipments to their customers, which was eroding customer trust and impacting their production schedules. There was a recognition that there were manual and inefficient processes in place, which provided almost no visibility to either buyers or suppliers as a result of the disconnected spreadsheets and email communications that they used within their organization. And then, lastly, they experienced too much WIP inventory. They were carrying too much, which eroded their profit margins and tied up their working capital.

And so, the takeaway here is that most people will relate to the effects of late parts and their impact on cost and customer satisfaction, of course. But what appears to be a little bit more esoteric, of course, is the impact late parts could have on revenue. And so, there’s a direct correlation between those late parts and revenue risk. Failure to receive raw materials on time, of course, results in potentially impacting your production schedules and your ability to produce product, which ultimately leads to potentially late deliveries to your customer. That would, in turn, delay your invoices and then, ultimately, your revenue recognition. It’s important to note that those late deliveries could have an impact and, at the very least, put your revenue at risk.

And so, fast forward to the 10 quarters that preceded the webinar I referenced a little bit earlier and you see a positive trend line for supplier on-time delivery performance at Chatsworth. And now, they average more than 90% OTD, on-time delivery performance, since leveraging SourceDay for PO collaboration. That’s pretty important, but I think what’s more important and more impressive, to me anyway, is that there is a reduction in work in process of about 66%, and they attribute that to better just-in-time management of their raw materials from their suppliers. I think they went from about 9 days of WIP to roughly 3 days, which resulted in that 66% WIP reduction, and that also attributed to 90% reclamation of their warehouse space. And I chuckle every time I say that out loud, because watching the live presentation, I saw Spike McBride, who you can see a quote from there at the top of the screen. He actually quipped during that demo that nothing good ever happens in the warehouse, and I think that’s true of most organizations today. You want to see all the work being done on the shop floor. That’s where all the business takes place.

And so, what I’d like to do now is just kind of continue down the process, some of the things that Chatsworth experienced. I’m sure some of the companies on the phone can relate to this. And specifically, the email and phone communication streams that we’re talking about in most organizations today, the way in which most companies work with their customers is through email and through phone communication. So ultimately, let’s look at this from a big picture perspective: how can SourceDay help your company extend your investment and achieve comparable results to Chatsworth Products? The key takeaway is that when you consider the fact that more than 50% of purchase orders will have a change to price, quantity, or delivery over the course of a purchase order lifecycle and that most companies manage those with the traditional methods of email, phone communication, and spreadsheets, the answer becomes pretty clear, right?

Think about your purchase order value stream today. It probably starts with the purchase order from your ERP system, whether it’s Epicor ERP, or P21, or Eclipse, and recognizing there’s probably a few folks out there using other ERP platforms, this would apply to you as well. You’re generating your purchase orders from your ERP system, and then, based upon that, you’re probably attaching drawings or specifications, or in the case of distribution companies, in P21, maybe it’s packaging instructions, and you send that out to your suppliers via email. And if you’re lucky, you get an email response confirming that purchase order and acknowledging the fact that there has been demand placed on the supplier. That’s a very manual process, but when you add to that the fact that 50% of those purchase orders are going to change, as your order demand changes and your need to update those purchase orders becomes more prevalent, you’re going to need acknowledgments from those as well. And so that email and phone communication continues. If you’re lucky enough to get confirmation on the change, terrific. You have to go back into Epicor ERP, or P21, or Eclipse and make the appropriate change on the purchase order to acknowledge that PO.

More often than not, folks in the procurement would tend to get a little frustrated with all of the myriad of communication that takes place, and so they’ll oftentimes revert back to a spreadsheet to capture all of the open orders, submit those to their suppliers for some updates, and then get those responses back, and then update ERP as appropriate. The process continues for every PO that you place, and you probably still only get confirmation of about half of those purchase orders that are submitted. So, the demand changes back and forth, resulting in numerous phone calls and email communications. The process is fraught with errors, fraught with risk associated with late deliveries as well as inaccurate information. When you’re talking about managing the process between the buyer and the supplier, at some point, there is a risk to both the possible shipment delays and errors associated with those purchase orders. And then the updates to that are all manual. It’s a manual communication methodology.

So where I’m going with this, for most of our Epicor customers and customers on other ERP platforms, there is a better solution. In contrast to that minutia that I’ve just outlined for you, Epicor and SourceDay can connect in an ecosystem whereby communication of purchase order demand and changes are sent through the SourceDay platform, providing a single bidirectional environment where buyers and suppliers can communicate to increase the velocity of their communication, the accuracy, and then, ultimately, the transparency. And of course, that fosters better relationships with those suppliers and higher performance. And so, when we talk about the manual communication methodology, that’s really a traditional plan-and-react type of supply chain methodology, and we want to digitize that. We want to automate the process, eliminate the manual steps in that process flow, and ultimately, we want to arrive in a digital environment where we’re more effectively blending our people, our processes, and technology to support that high-performance initiative.

So those are a few key takeaways here. As we look at this graph, as I mentioned, more than 50% of those orders will change. What most organizations do today to manage that, you can see below the graph line. All of that is being handled manually through email communication, phone, and spreadsheets. That needs to stop. We need to improve the velocity of that information exchange and improve the accuracy so that the stakeholders that are outside of the four walls of your business can remain in communication with your team and maintain that accuracy between the two.

One of the questions I would raise before we bring Patty back on with respect to a poll is we’ve seen that Epicor customers, Epicor ERP customers, may have access to MRP, material requirements planning, and what we’re interested in understanding here is whether your company utilizes Epicor MRP to plan your purchasing demand. And so, as we let the poll process here, we’ll kind of give some additional insight as to what those results are going to be for you.


Patty: And, Jim, I’m back to join in our fireside chat. Do we have the results of the poll? Are we giving those results today, Jim?


Jim: We’re seeing those come on to the screen now. It looks like about 78% of the participants are currently using MRP to plan their purchasing demand, which is outstanding. Why is that important to us? Well, certainly, if you think about the ERP platform that you’re using today, if you’re running MRP, then those action messages are being provided through the planning engine, and as a result of those action messages, we can push those demand signals into SourceDay to make them more actionable by your buyers and then ultimately through the supplier base. So more to follow on that topic.


Patty: Very good. Thank you, Jim. I really appreciate you going through that brief overview. And we’re going to get into some more of the nuts and bolts of the supply chain management offering from SourceDay and how it can integrate with your ERP, any platform really within the Epicor ecosystem right now. But without further ado, to kind of make this more of a fireside chat than just a conversation between Jim and I, we’re going to bring on Clint McRee. He is our COO and co-founder of SourceDay. I met Clint, I think, about five or six years ago. We were doing the Epicor circuit when it comes to user groups and conferences. And I always really enjoyed meeting with him, and I thought, “This is a really solid offering that they’ve created.” It was really born, Clint, I think from you being in the manufacturing space yourself and managing teams of technology and manufacturing together. And the best product is not one that you create the demand for but that you meet that demand from what’s already being created in the marketplace. And I think that’s what Clint has done here at SourceDay.

We’re really happy and proud to have you on this webinar with us. SourceDay has, since 2015, about 10,000 manufacturers, distributors, and suppliers of processed goods and services through our platform, and about $666 billion in total spend. That’s what they tell me, and I’m going to believe it. So, thank you for joining, Clint.


Jim: And, Clint, before I stop sharing here and give you the microphone, I just want to point out the fact that both Patty and I have a little headshot, and you’re looking very stately here in the Oval Office with your full body shot.


Clint: Yes, I’ve been strategically placed.


Patty: We’re in three different locations, everyone. I’m in California, and Clint and Jim are in Texas. So, we’re trying to cover it off. I guess the word for 2020 was Zoom, right? Zoom became the platform of choice.


Clint: The beauty of technology, right? Well, appreciate the introduction, Patty. Yeah. So this is Clint McRee, one of the co-founders of SourceDay. Before starting SourceDay, I ran a manufacturing company, and really what sort of led to the creation of SourceDay was just stopping all the madness with all of our suppliers constantly letting us down. It just became such a frustrating thing to chase after and manage that, just like, “There’s have to be a better way to stay on top of suppliers than manually keeping track of it.” And so, therefore, SourceDay was birthed, and here we are.


Patty: Very good. Very good. And I think it has much more applicability in many ways within the sales tax compliance software, because at manufacturing and distribution, this is where they eat, live, breathe, and die for their businesses. I think it’s a really cool and slick solution. But before we go on, I’m going to have Jim come back on. And I did a little superhero intro to Jim, but he is going to give me a little bit more about himself other than the bad dad jokes, okay. Jim.


Jim: Terrific. Yeah, Patty. I started my career in manufacturing back in 1988, actually, as an estimator and a project manager for a metal fabrication company in New Jersey. And during my 12-year tenure there, I helped lead an implementation of an ERP solution. And I had so much fun working with the product and seeing the performance improvement in our operation, I decided to make that a career. So, I spent the next 22 years as an ERP product expert, the last 15 of which with Epicor software. For those folks on the phone that have attended any of the annual Epicor Insights events, you may have seen me. I’ve presented at 12 of the last 15 events. And one of the things I wanted to kind of dispense right out of the gate here is the term expert, right, you presented me as an Epicor expert. That’s debatable, of course, but I do have 34 years of experience working with over 1,000 manufacturing companies and distribution companies, large and small, global and domestic. So quite a bit of experience. Thank you.


Patty: Very good. Don’t forget, everyone, we have the Q&A chat box. I see a few questions kind of rolling through but keep them coming because we really want to be able to get to them all on this webinar. So, Jim, why did you leave Epicor after, you know, almost 15 years there and come on over to SourceDay onto the partner side?


Jim: There’s a couple of reasons. Obviously, one, growth and development. I was there for quite some time. I had quite a bit of success in my career at Epicor. But one of the things, one of the prevailing challenges that I continue to see in the manufacturing and distribution environments in which I visited was a gap in some of the supply chain communication. Epicor ERP is a very robust solution that does a great job of end-to-end management of most organizations. But if there are some blind spots, those blind spots might be in the area of supply chain collaboration and really taking advantage of the fact that suppliers play such a key role in the success of manufacturing and distribution companies. I saw an opportunity there to have more impact on the bottom line for the customers that we serve.


Patty: Thank you. I mean, you do know a lot. I love to listen to you on the phone. I learn more and more every day. Clint, do you have any input in the conversation, any questions for Jim, our expert, as we move on on our fireside chat?


Clint: Absolutely. Well, of course, we’re very lucky to have both Jim and Patty at SourceDay. I should have mentioned that earlier, when we were talking…


Patty: Yes, you should have.


Clint: I missed that opportunity. Very excited to have both these experts and people with experience. People love experience. Jim and I have been talking, in fact, he comes over from a big background in the ERP space, and everybody knows, when you’re dealing with ERP, you’re dealing with just about every aspect of the business. But one area that gets kind of missed has historically been supply chain. But that narrative seems to be changing. We’re starting to hear more and more, I’m starting to hear, and people would love for Jim give his feedback on, you know, the fact that supply chain, supply chain resiliency, supply chain issues are now being discussed, not only at the executive level of organizations, but it’s being discussed even in the boardroom. And you know, all you had to do is just open up the headlines and see Peloton running out of parts, and Chick-fil-A running out of chickens, and the semiconductor industry can’t get parts to feed the auto industry. So that’s elevating that conversation. What’s been your experience, what are you seeing, Jim?


Jim: Yeah, I would agree with that. I’m seeing a much more acute focus on supply chain, and those reasons are mostly obvious given the COVID pandemic and macroeconomic trends that we’re seeing today. You mentioned a lot of the press that we’re seeing, the Suez Canal incident, Peloton you referenced a little bit earlier. Those are a couple of specific examples, and for that reason, most companies are developing mitigation plans for risk to prepare their organizations for the inevitable challenges that lie ahead. And so, when you talk about the boardroom discussions, what’s important to note for our audience today is that if you’re not in those discussions today, which I assure you are taking place at the executive level, we would encourage you to be proactive in that because there needs to be some mitigation of risk associated with your organization going forward.


Clint: Yeah. It’s like, we all know right now the supply chain discussions are being had, and if you’re not in that discussion, that should be a red flag for you. So definitely need to insert yourself into those conversations because they’re real. You know, one of the things that you and I also talked about, Jim, I’m curious for you to share your response with the audience here, is, you know, one of the things that SourceDay has proclaimed since day one is that suppliers are key stakeholders for our customers, and a lot of times, they’re not looked at as stakeholders like the person on the manufacturing floor or the AP person or the AR person. They’re kind of like the red-headed stepchild, if you will. I’m curious, you know, why do you think that has historically been the case for companies?


Jim: That’s a good question. I think most organizations today recognize that better supplier relationships typically result in lower cost of products and higher levels of responsiveness, for sure, but what many of them don’t realize is the impact of those late deliveries from the suppliers and what a strong correlation that is to their business success in terms of revenue protection, cash flow optimization, and preservation of working capital. So, the best organizations, in my opinion, recognize that in order to fulfill their demand, they need to have tighter relationships with their suppliers. And if the suppliers are not connected to their ecosystem, then success is somewhat limited. And so, as we look forward, some of those world-class organizations are striving to improve that supplier ecosystem. Another benefit of including those suppliers as stakeholders in the organization is what we call the branch effect in AP collaboration. If we’re able to improve the velocity and the accuracy of the purchase orders, the AP invoices that follow will already start with a higher accuracy rate in terms of AP matches. And so, the general communication velocity, the results of those improvements in purchase orders, takeaway being that the downstream benefits can be observed and significantly improve the match rate on the AP. So, the downstream benefits of AP matching and automation of those capabilities using the SourceDay platform are a benefit.


Clint: Yeah, that’s interesting. So many…


Patty: Jim, I’m sensing a secret sauce. I’m sensing a secret sauce coming from Jim.


Clint: Yeah. It’s interesting, Jim, that even though so many organizations think you can link the PO to the invoice, but a lot of times, those two functions are handled in completely different departments that are not joined together. And so, you’ve got different people chasing after different issues to link those two together and be more efficient, more real-time communication can help streamline both areas.


Jim: Okay. So, poll number two, do you recognize supply chain as a strategic pillar of your overall business plan? Recognizing that stakeholders do play a key role in the organization, this is an important question for us to understand.


Patty: Yeah, this probably didn’t become much more relevant until this whole last year, right? All of a sudden, it’s risen to the top of people’s minds, what they were doing.


Clint: Yeah. I mean, more and more organizations, we talked about it, are starting to…I mean, the poll right here suggests that folks are starting to recognize suppliers as being key stakeholders. I mean, IBM came out with a report that said 60% of businesses expect to be disrupted by a competitor with better supply chain management within 3 years. That’s very significant, and it’s really getting organizations to rethink about the supply chain.


Jim: There’s two elements to that. One is the inherent supply chain disruption caused by inaccurate purchase orders and changes, and the inability to manage the volume of that change. And the second one is that there are other competing companies out there that do have a risk mitigation program in place. And so those folks are supplanting some of the organizations that do not have a risk mitigation plan in place.


Clint: Absolutely. You know, one thing that’s interesting, Jim, that, you know, we talked about is, and this is really for the audience, and this is kind of a question to the audience and a question to you as well just kind of to think about, is what we see over and over, you’ve been doing ERP implementations for a very long time, and you see organizations invest heavily in the sales optimization and to making selling faster or building products faster. What very few organizations tend to invest at all for driving any sort of efficiencies are automations in the supply chain. That’s been the case forever. Why do you think that is? What do you think has been the hold back there?


Jim: I think the answer to that lies in the perception that supplier on-time delivery is just a cost of doing business, and typically, it’s not measured in business terms. Most companies have some level of supplier performance scorecarding, but in my experience, it generally is not a formalized process, and it doesn’t weight the various elements to supplier performance. And so, things like supplier responsiveness, for example, companies have different levels of importance associated with that. As a result, companies don’t realize the potential impact to the three value drivers we talked about a little bit earlier, right, revenue, cash flow, and working capital. The takeaway, for me, and for Epicor customers, is that supply chain performance absolutely has a correlation to customer order fulfillment, and when those organizations invest heavily in the order fulfillment area of their business, they’re not recognizing the downstream impact of that supplier relationship. And so, I think there needs to be some recognition that there is a linear path from late deliveries to revenue protection and the ability to fulfill customer orders on time and in full.


Clint: Right. In getting customers to start thinking about more of a balanced investment approach to, you know, if you just make sales go really fast but you don’t have the parts to build the widgets, they kind of fall down, right? It’s good investment, both areas.


Patty: Is it time for another poll, maybe our last poll?


Jim: All right. Most companies track on-time delivery in terms of order fulfillment to customers. Many track OTD from suppliers. Some recognize the correlation between the two. Does your company calculate the cost to your business of late deliveries from suppliers? In this question, I believe this is critically important, because as we talk to different organizations, and the cost of a late PO varies dramatically from company to company, industry to industry. But I think we can all agree that there is a cost impact to the organization for those late purchase orders. So, in addition to not being able to deliver on time and in full, there is typically a cost when we take into account the fact that many companies have to disrupt their production cycles. When they don’t get raw materials, they’ll shift priorities for different production orders. There’ll also, in some cases, be customer penalties, etc. It’s interesting to me that the results of this poll from our current audience is that 65% of you do not calculate the cost to your business of late deliveries from suppliers. So that’s an important element of consideration and a metric that I might suggest you consider going forward.


Patty: Yeah, that is very interesting, because what do companies do today, is it just guesswork? I mean, do we have tools that can assist in their evaluation of this, in a business case, perhaps, that we…?


Clint: Perhaps, to be obvious, it’s just SourceDay. Isn’t that the answer?


Patty: Oh, wait, wait. [inaudible 00:30:20].


Clint: I’m kidding. I’m kidding.


Patty: Did I just lead the horse to water?


Clint: That’s right. That’s right.


Jim: And again, the key takeaway there is most organizations consider that a necessary cost of doing business but being able to measure that gives us the facility to improve going forward. And SourceDay does provide those tools.


Patty: It becomes almost a scorecard, so to speak, for…


Jim: In and of itself.


Patty: …in and of itself, yes. Okay.


Jim: As a final comment on that topic, and you mentioned the business case, so I’ll grab that carrot and run with it for a moment. One of the things that we engage in at SourceDay, and I’m always excited to engage Epicor customers in this exercise, the business case for us is really an opportunity for us to monetize the business value that you should expect to receive through leveraging the SourceDay platform. We’ll use some of the existing data that you folks are using as data points, and we’ll compare that with the results that other SourceDay customers have achieved, folks like Chatsworth, for example. And so, based upon that, you can look at the relative level of investment versus the benefit that you should expect. The fact that a lot of companies are not measuring that today is a little alarming, because there’s so much downstream benefit, both in terms of hard and soft cost savings.


Patty: It sounds like it could be something good for somebody to use to go in and ask for a raise, to say, “See how much we have improved our performance.” To have the numbers, right? Because at the end of the day, it’s all about numbers, right?


Clint: Well, you know, an interesting little side note here too is that, with the polls, what we just saw, which is not surprising, but it is showing that there’s an area of opportunity. You know, so many companies are looking for that next thing to be competitive in a competitive world. And certainly, making the supply chain go quicker and be more efficient, be more real-time, is a way to do that, to be more competitive. To me, it looks like it’s an opportunity for our company.


Patty: Totally agree. All right. I’m going to now transition this over to some of the questions we’ve received. We received quite a few of them from our audience, and this sounds like I’ll either go to Jim or to Clint, but this is going to be a good one for Jim.

If you were to pick one feature of SourceDay that you believe is the most beneficial to Epicor customers and really any manufacturing and distribution customers out there, because we do have quite a few on other ERPs, but can you tell us, share with us what is that secret sauce that I referred to earlier? I have to hear it, Jim.


Jim: I think in response to that question, it’s hard to choose just one. Of course, we have many features that help organizations extend that ERP investment. On a functional note, I would say that there are two primary benefits/features that Epicor customers appreciate, one of which is the purchase order exceptions management that we provide. Essentially, what we do there is we leverage the MRP action messages from Epicor ERP, and then we bucket those into move-in, move-out, and cancellation areas. The business benefit of that is that we can take all of the MRP messages that many organizations feel creates too much noise in the background, and we can translate that into actionable insight, right? And so, ultimately, when we talk about those three value drivers I mentioned earlier, revenue protection, cash flow, and working capital preservation, each of those three buckets of move-ins, move-outs, and cancellations provides a strategic lens through which you can see those big picture items.

For example, move-ins represents the demand coming from your ERP system for which, if we don’t take action and communicate in a timely fashion with our supplier, we’re putting revenue at risk, because we need to get those products on time so we can see that as a monetized value. The move-outs, conversely, suggest that perhaps demand has been relaxed, and as a result, if we don’t take action on that and we actually purchase and receive products in advance of the demand signal, then we’re going to tie up our cash. And so, the product may sit on the shop floor until we’re ready to produce product. And then, of course, cancellations, that one’s pretty self-explanatory. The cancellations represent a scenario in which demand has been canceled, and so, therefore, we don’t need the product anymore. If we don’t act quickly on those cancellations, we can’t purchase and receive product for which no demand exists, and in that case, we’re tying up our working capital. So, from a functional standpoint for MRP users, which was the majority of the poll results that we saw, that’s a key element for consideration.

I also see a lot of traction for advance shipping notification from suppliers. That’s a blind spot that most manufacturing and distribution companies experience today in as much as when the supplier ships product, there’s no visibility to when that product ships. That’s exacerbated even further when we talk about drop shipments to customers on the distribution side, particularly the P21 audience. And then the ability to not only notify the buyers that a product has been shipped but also to provide barcoded packing list and barcoded labels. Upon receipt, you have visibility to those products. Those are a couple of functional areas.

And just to expand on that one additional point here, you mentioned the secret sauce, and to me, the secret sauce that ensures the success of our customers is, in as much as the product components that I mentioned a moment ago as a couple of examples, one of the things that ensures our customer success is our managed services program. And the managed services program is really geared towards supplier adoption. And I’m sure everyone on the phone can appreciate the fact that when we talk about collaborative experience between buyers and suppliers, it’s imperative that we have buy-in from all parties, all stakeholders if you will. Failure to adopt the process is going to be a failure in the communication process. What we’ve done to combat that, given its level of importance, is we’ve developed a managed service program, which takes the onus off of our customers in terms of the onboarding, training, and support of their suppliers. SourceDay takes on that responsibility, and so, at no cost to the supplier, we take responsibility for that onboarding, training, and ongoing support.

The downstream benefits for the supplier include a reduction in the amount of time that it takes to process those customer order demands, because now they have potentially one or more SourceDay customers funneling demand into a centralized location from which they can execute and confirm purchase orders. If they’re not using SourceDay, then they’re stuck in that manual minutia of 15 inbound emails, with 5 line items per purchase order, and they’re responding to those one at a time. There are some benefits to the supplier, and I’ll reference SMC Corp, a supplier using the SourceDay platform. They were able to save five hours per week in working with one of the SourceDay customers with whom they do business. So, there’s a benefit there on the supplier side. And then, on the buyer side, one additional, since I mentioned that on the supplier side, typically, we provide 10 to 15 hours per week back into the buyer’s calendar in terms of reducing the manual effort required to confirm purchase orders, update those POs, update Epicor ERP with the results, all of that can be automated. There’s a significant efficiency gain to be had there in addition to those hard cost savings of revenue protection, cash flow optimization, and working capital preservation.

I apologize for the long-winded message there, Patty, but I get pretty passionate about some of the benefits that we’re able to deliver to our customers, and frankly, it’s one of the reasons I decided to join SourceDay.


Patty: How is it that SourceDay can guarantee…I guess, so to speak, how do you get these suppliers to use the system? Can you can expand on that?


Jim: With a shorter response. Absolutely. So, a two-part response to that. One, by providing the suppliers with a glimpse of the benefit that they should expect to receive is one component of that. Now, for our SourceDay customers, the number one question I field is, ‘I’m not sure if our suppliers are going to adopt the platform,’ and so, contractually, SourceDay will guarantee supplier adoption for the top 80% of your direct spend. If you were to look at the direct spend annually of your organization and put a list of those suppliers together, with the highest spend rates at the top, and work your way down through that list, if you’re like most of our customers, 80% of your direct spend is associated with 20% of your suppliers. And so that’s our trigger to go to work to start onboarding those suppliers from the top down. We prioritize that list and continue through tranches. We’ll onboard 15, 20 at a time, and then move through that until we have at least 80% of your direct spend. And I believe the last metric that I saw, we’re just north of 90% across our existing customer base.


Patty: Very, very good. Another question here, what if a company is primarily a job shop and carries very little inventory because they purchase raw material directly to jobs. What benefit can SourceDay provide to them? Is there still a benefit to be had?


Jim: One of the things we talked about earlier is the cost of a late purchase order and recognizing that we can debate what that cost is. There is a cost, and it varies, as I mentioned, from company to company, industry to industry. But when you consider the cost associated with jacking job orders around on the shop floor when products have not been received, you’ve got a production schedule that you need to maintain, and now, you’re taking your resources and redeploying those. There’s a cost associated with that shift. There’s also, potentially, penalties associated with customers when we fail to fulfill those orders. And then, of course, the customer satisfaction element, right, what does that cost your business in terms of having to delay order fulfillment because raw material shipments have not been placed? Regardless of whether you’re carrying a high inventory value or not, there are some cost implications associated with late purchase orders.


Patty: Speaking of purchase orders, this next question is, do buyers still cut POs in Epicor when they have SourceDay? How does that all work? Are the POs still initiated from Epicor?


Jim: Gotcha, gotcha. Thank you. Yes. The way that integration would work, your Epicor ERP would be the primary source of truth for all data related to your business. You will still respond to your MRP messages, or for the Epicor ERP folks, the purchase order suggestions, which of course is a subset of your MRP run, and you would respond to those and place purchase orders with whatever level of approval is appropriate. And so, if you have different thresholds for purchase order values, all of that would be maintained inside of Epicor. Once the purchase order is approved, then it will show up in the SourceDay platform, and we will communicate that to the supplier for fulfillment. Now, one of the benefits here is that we’re not sending out those emails to your suppliers, one at a time. We’re consolidating that messaging so they don’t get inundated, and all of those messages provide a link so that they can easily jump into the platform and see a consolidated list.


Patty: When they’re looking at a PO, it goes not just the whole PO, but it goes line item by line item, correct?


Jim: That’s exactly right. In fact, we go even deeper than that. Just as Epicor does, you’ll have purchase orders, lines, and releases, SourceDay does facilitate that multilevel review. And what’s nice about that is that, on the platform, a supplier will be able to see a list of purchase orders, lines, and releases. So, from a usability standpoint, the supplier does not have to drill into a purchase order to see the lower-level details. It’s all presented and filterable using advanced search capabilities.


Patty: I think that is really slick. And for a customer who wants someone on the phone, we can do a whole demo of that, correct?


Jim: Happy to do it.


Patty: You’d be happy to. I bet you would be, Jim. So maybe, Clint, you want to maybe respond to this one. Do you think that things will settle down in the coming months when it comes to supply chain, or what is the word on the street when it comes to what’s happening as far as supply chain management?


Clint: Yeah, that’s a good question, and I kind of, like, chuckle with that one, I want to hear that. The thing is that the graph that Jim showed earlier, the 52% change in POs, that’s here to stay, probably indefinitely. Your businesses are going to change. One of the benefits for us at SourceDay is, today, you know, we’ve got several hundred customers that use us. We’ve got 10,000-something users using our system, and therefore, we have millions of purchase orders that flow in and out of our system every year. And that allows us to collect that data. We’re seeing data that’s never really been collected before. There’s a 50% chance of likelihood that your POs are going to change from when you originate the PO to when it actually closes out. That’s not going to change. Now, all the disruptions that we seem to be having in the industry, I think are here probably for another 12 to 18 months as supply chains catch up. But all the change, all the issues in managing your suppliers, that’s here to stay. That’s not going to go away.


Jim: And one thing related to that question that I hear quite a bit is, from some manufacturing companies that struggle with supplier performance in specialized areas, things like…and I was working with a customer not too long ago that was impacted by the polyolefin production in Texas as a result of the big snowstorm that we had. The question that was posed to me was, how are we going to positively impact the supply of those goods? And the reality is, if there are challenges in the manufacturing process, those need to be corrected by the supply chain. However, as Clint just pointed out, if 50% of those purchase orders or more do change over their lifecycle, then the timely communication of those changes and the acknowledgments and all of the communication that transpires back and forth is where you would see a significant improvement in terms of performance.


Patty: Very good.


Clint: Yeah. For those of you who are running manufacturing businesses, it just takes one transaction in your ERP to change probably 10 POs. The supplier has to do one thing to change, you know, 10 PO lines. You’re making minor adjustments day in and day out for your business, but that’s generating a ripple effect in the back end of your supply chain. And those aren’t going to go away. You have to stay on top of those changes and input those changes into your system. It’s just making sure they get captured and making sure that they get delivered to the stakeholder that needs it the most, which is the supply chain and suppliers.


Patty: Another question that came in is, in order to use AP automation, do you have to also purchase the PO module with SourceDay, or can that be used with something native within Epicor ERP?


Jim: So, from an AP automation perspective, purchase order collaboration is not a requirement to benefit from AP automation from SourceDay, first and foremost. You can collaborate with your suppliers on the AP side. We would help to create those AP invoice templates, and we use OCR, as you would expect. However, having said that, the benefits of having both PO collaboration and AP automation are significant based on what we talked about a little bit earlier. We’re able to improve the accuracy and velocity of the purchase order changes. Once we get the AP invoice, most of those matches should be near 100% right out of the gate. That improves our AP match rate. Right now, we’re experiencing 94% to 96% touchless processing of AP invoices for customers that have both PO and AP automation in place.


Patty: And is there anything within Epicor right now natively that can do what SourceDay can do?


Jim: There is a solution. AP automation workflow is a workflow activity that happens within the Epicor content management solution, or ECM as it’s referred to. That ECM requirement is a pretty heavy lift. However, it does quite a bit more than just the AP automation. So, while there are some capabilities there, I would argue that if your focus is on AP automation, then we provide some tools that will streamline that process without the additional rent.


Patty: And does Epicor have anything that does supplier management, manages the supplier side of the business when it comes to communication?


Jim: There are… I’m sorry. Didn’t mean to interrupt you. Clint, did you have something to add there?


Clint: No. Well. I was going to mention, on the AP side, you know, we’ve been talking a lot about supply chain for most of this webinar, but AP is actually a topic that has been on the minds of a lot of CFOs and financial leaders for a very long time. I don’t think there’s been a lot of options really in the ERP space, whether you’re an Epicor customer or another ERP. But now more than ever, solutions like SourceDay are here with an AP automation solution that understands direct spend to be able to read and consume an invoice from a supplier could be complicated, and so that’s why it’s been sort of left out because direct spend suppliers tend to send over more complicated invoices. But that technology is there now. We’re able to take an invoice from a supplier, read it, three-way match it, and then actually voucher it into the ERP without involving a person. That’s actually pretty exciting stuff. For those on the call, if you have financial leaders that have been looking for ways to streamline AP, we’d love to have an opportunity to have that conversation with you.


Jim: One of the key takeaways there being, of course, that we’re complementary to ERP as opposed to competing with ERP. We do things quite a bit differently. Patty, your last question with respect to supplier collaboration, certainly, Epicor and other ERP providers provide some level of supplier connection. I would encourage folks to review the SourceDay platform, because really what we’re looking to do here is automate all of those mundane steps that are not adding value to the process, and we want to make it as easy as possible for buyers and suppliers to interact. And so one of the primary benefits of that, and Clint made reference to this briefly a little bit earlier, is our ability to look at multiple records that require updating, provide acceptance, and then write those changes back into ERP, in this case, Epicor ERP, P21, Eclipse, etc. The benefit of that, of course, is that, now, we’re not just simply taking an email from a customer, responding to that email, and then manually updating our ERP. We’re executing those changes and eliminating a lot of those steps in the process that don’t add value.


Patty: Okay.


Clint: Patty, let me…I just want to jump on that as well. One of the things…and this happened to me, I actually worked at a manufacturing company that used a different ERP, but we also looked at what they offered as a supplier portal. A lot of ERP solutions, including Epicor, I believe, have a supplier portal. One of the big differences, though, is going back to that managed services component, because you know, we could talk about feature and functionality all day long, but if you can’t get suppliers to adopt it, then it’s not going to work. And that’s actually the number one reason why supplier portals fail is because the suppliers don’t adopt, and that is because the organization that’s buying the portal and deploying the portal has to take ownership of that. That’s usually someone in IT who’s setting up those accounts and managing those suppliers. And as Jim mentioned, we’ve offloaded that completely to us. We take on ownership of onboarding, managing, and training those suppliers to use SourceDay. That’s another big difference between not just anything that Epicor has but really all the ERP systems.


Patty: Looks like we have another question that sneaked in, or did you want to make a comment, Jim?


Jim: No, that’s exactly… I was looking at the Q&A, and I see a question from Tyler.


Patty: Yeah. What makes SourceDay’s change suggestions easier or better than Epicor’s built-in functionality?


Jim: The PO change suggestions that you get out of Epicor ERP are a result of either running the Generate PO Suggestions process or a full MRP generation. And so those suggestions are presented in a manner that enables you to create a purchase order or an RFQ. However, many companies struggle with just the volume of noise in the background. The messages are so frequent that they’re not sure whether they believe all of the messages or not. One of the things that we can do at SourceDay is translate those messages through our platform, and if there’s something there that you’ve researched and you decide, okay, based upon either a planning parameter or a variable, you want to disregard that message, you can turn that off inside of SourceDay, and it will remain out of view until or unless the demand signal that caused that message is changed. If there’s a change in date or quantity, then it will resurface and enable you to take action. In my opinion, the primary difference is just the simplicity with which we can respond to those change messages in SourceDay versus a traditional PO suggestion or an MRP message.


Patty: All right, guys. I’m looking at the time here, West Coast time, it’s 11:56. So I think we’re just about out of time. Did you have any closing remarks or comments to make before we hop off the call?

I’ve got one: we will be following up with you all after this webinar with a complementary business case analysis that Jim referred to earlier for participating in our conversation today. We’d like to really run that through with you and to be able to show you just how beneficial to your company can be for saving time, money, and resources, really. Anything after that, Clint, Jim?


Jim: Just to recap a couple of things that we started from an agenda standpoint. There were four points we wanted to make during this session, right? We wanted to help you understand how we can extend and expand the investment you’ve already made in Epicor ERP. We wanted to talk about guaranteed supplier adoption and its importance in ensuring your success. How we can provide those managed services, and quite frankly, you don’t have to manage them. SourceDay will manage those for you in terms of the onboarding, training, and support of your suppliers. And then, lastly, how we can increase the operational efficiency and automation in your enterprise. And we talked quite a bit about those manual steps that you’re taking today that we can automate. So those are the four primary objectives, and I hope you feel that we’ve addressed those today.


Patty: All right.


Clint: For me, it’s just, thank you, everyone, for showing up today. I know this is an investment in your day, taking time out of what you guys are doing. So hopefully, this was informative, you learned something. You know, we got to listen to Jim, which is always a plus. And appreciate everybody coming to the webinar today.


Jim: Can I leave us with a dad joke?


Patty: Go ahead.


Clint: Just leave a dad joke, absolutely.


Patty: A bad dad joke. Go ahead there, Jim.


Jim: So here’s my bad dad joke of the day. I recently purchased a chicken and an egg from Amazon. I’ll let you know.


Patty: That is a pretty bad one.


Jim: Thank you, folks.


Clint: All right. Thank you. Thanks, everybody.


Patty: Thank you, everyone. And like we say here at SourceDay, don’t just go make it a great day, make it a SourceDay.