Logistics technology: SPS Commerce, Kamino partner up for outsourced EDI services

Jeff Berman, Group News Editor -- Logistics Management, 4/11/2008

MINNEAPOLIS—A partnership between SPS Commerce, a provider of software-as-a-service Electronic Data Interchange (EDI) technology and third party logistics (3PL) service provider Kamino International Logistics is providing shippers and suppliers with outsourced services comprised of SPS’ EDI capabilities and Kamino’s outsourced logistics services.

The companies said that by partnering and outsourcing Kamino’s EDI department to SPS, Kamino can provide various added services to its customers, including electric documents or purchase orders, advance ship notices (ASN), and UCC 128 barcode label data that can be sent to myriad supplier/retailer combinations “with ease and confidence of data integrity,” the companies said.

Kamino and SPS have worked together for several years, said David Novak, SPS EVP of business development, in an interview. He said SPS’ relationship with Kamino is similar to those it has with many other 3PLs: a 3PL starts off as a participant in a supply chain process SPS in trying to solve on behalf of a supplier, meaning the supplier wants to streamline communications with a logistics provider and be able to cleanly exchange information in a timely fashion.

“Kamino started that way with us, and we came to the conclusion that they have to do this for a lot of their customers, whether they are SPS customers or not,” said Novak. “And rather than try to manufacture themselves as an EDI specialist or provider and be able to exchange information among trading partners, they elected to take the outsourcing approach with us.”

This process is a common one for SPS, he said. SPS works with more than 10,000 suppliers that outsource supply chain functions. And he noted this is a pretty common path for SPS to take: starting as a participant, moving on to customer, and then partnering with a 3PL so they can offer EDI as a joint service for their customers.

Kamino is leveraging SPS’ outsourced EDI services for its relationships with several U.S.-based retailers like Wal-Mart and Target, among others. When asked how many retailers will utilize this joint SPS/Kamino service, Novak explained that is largely dependent on how many joint suppliers a retailer has. As the number of suppliers grows, the number of retailers increases from there, he said. At this point, he estimated the number of joint customers is anywhere from 10-to-less than 20 dozen.

“This service is fulfilling the EDI requirements of the suppliers that the retailers need to serve,” said Novak. “It is a buyer-seller relationship.” In terms of examples of services and benefits provided for Kamino’s customers, things like ASN and labeling for shipments are some of the common services.

Novak outlined a typical example of how a retailer may utilize this service: If 

a drugstore chain issues a purchase order to Body Glide, a provider of skin protection deodorant for athletes, Body Glide needs to produce that order and have it fulfilled, which is where it turns to Kamino. The purchase order will come to SPS Commerce, because Body Glide is an SPS customer. That purchase order is then forwarded to Body Glide’s order fulfiller, and it is also sent to Body Glide for its internal systems. When the purchase order is acknowledged by Body Glide, it turns to Kamino to have it fulfilled, that purchase order is entered into Kamino’s system through its collaboration with SPS.

Once the purchase order is fulfilled, Kamino writes up an ASN to be sent to 

a drugstore chain so it can receive the goods.

“Without the ASN,  the drugstore chain has very little ability to plan who needs to use the receiving dock, how long unloading the order is going to take, how many people are needed, what order the trucks are coming in, if the truck is dedicated to the the drugstore chain's goods or has items for other retailers, too,” said Novak. “The ASN allows us to plan to receive goods, and when it comes in to auto-receive them. Kamino generates all this information, sends it back to SPS, and SPS produces the specific ASN

the drugstore chain needs. So we make sure we are meeting its specifications on behalf of Body Glide and Kamino.”

At this point, SPS notifies Body Glide to let them know its product has been shipped, and Body Glide sends SPS an invoice and SPS turns it into the specific document requested by 

the drugstore chain from its suppliers.

“Consumer packaged goods manufacturers face a double-edged sword when dealing with big box stores,” said Lesley Hume, Vice President Sales and Marketing - USA at Kamino, in a statement. “Of course they want to grow their business and sell to the big-name retailers, yet owning and maintaining the necessary EDI software to interface with these large and complex organizations can break the bank. Kamino has freed itself, and its 3PL customers, from the restrictive software EDI model by opting to outsource our EDI to SPS Commerce and using their pre-built maps already in use by other vendors.”