Rite Aid lowers its costs by automating its global supply chain transactions

Jan. 18, 2005
Rite Aid, which operates 3,400 drugstores, is automating its trade transactions with approximately 200 international suppliers

Rite Aid, which operates 3,400 drugstores, is automating its trade transactions with approximately 200 international suppliers – from purchase order delivery through payment – thanks to its use of technology from TradeCard Inc., a provider of on-demand financial supply chain products. Benefits for the retailer include streamlined procurement processes, the elimination of costly letters of credit and improved supplier relations.

According to Jerry Cardinale, Rite Aid’s senior vice president, category management, the retailer opted for TradeCard’s web-based platform, primarily because of the visibility it provides. “With minimal capital investment, Rite Aid and its suppliers can see the status of their transactions in real time. We expect our savings to be significant,” Cardinale says.

Approximately 85 of Rite Aid’s international suppliers are now on board and able to transact. The remaining suppliers – most of which provide seasonal merchandise – will be connected over the coming weeks, when Rite Aid requires their goods.

Through its web-based platform, TradeCard automatically creates, routes, matches and stores trade documentation – such as electronic purchase orders, supplier invoices, freight receipts, and other information – to facilitate payment and financing. Each party has appropriate access to view and amend documents as a transaction progresses. Payment decisions are automated based on supplier compliance to purchase order terms and conditions. Discrepancies are systematically flagged and managed online.

Issued by banks, letters of credit guarantee payment to suppliers once pre-set conditions – such as a buyer’s receipt of goods – are met. Many suppliers rely on letters of credit not only for this guarantee, but also to obtain export financing from financing providers.

"We have to open up a letter of credit for our international suppliers, so that they can go into production," explains Cardinale. "This requires preparing documents, resolving discrepancies, and going back and forth with banks and suppliers. It’s a costly, labor-intensive process – both for our organization and our suppliers. All those inefficiencies trickle back into the cost of goods."

To remedy these issues, TradeCard and its financial partners provide integrated services over the platform, including settlement and automated early payment discount programs, as well as credit protection and pre- and post-export financing. Cardinale notes, "Our suppliers can access the financial services they need – with the click of a mouse. Meanwhile, we don’t have to tie up our credit lines or take on more administrative work. This solution is permanently removing costs from our supply chain."



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