Few industries move as fast as the fashion industry. Every season demands a new collection with never-before-seen products and fresh marketing initiatives. For Marc Jacobs, the fashion house known around the world for its avant-garde advertising campaigns and fine-arts-driven brand, each season brings the company into contact with some of the best and brightest suppliers, photographers, marketers, and bloggers. But, even in the midst of such innovative and dynamic work, the company must manage the prosaic and complex job of purchasing and paying for the materials and talent it needs.
To create new products for more than 100 stores around the world, a vast wholesale network, and countless online orders—and to create its distinct brand image—Marc Jacobs must manage a vast supply chain of direct and indirect spend. In any given week, the company engages 50 new vendors in work that, over the course of a year, generates more than 54,000 invoices.
The combination of a decentralized purchasing model and a high volume of transactions puts Marc Jacobs at risk for what so many other retail companies face: electronic invoices sitting unopened in employees’ inboxes, paper invoices mailed to one office but requiring approval in another, misplaced papers, and spending that is unaccounted for.
“The challenges stem from the way fashion companies operate,” says Regis Litre, Marc Jacobs’ Chief Information Officer. “Every time we have a collection, we change everything. We buy services at all stages of the product development. And this changes every four months. We don't have any notion of central purchasing because, for every collection, we work with new vendors. Managing the vendor invoice process and tracking the expenses can become very challenging in this context.”
And besides the fact that so many incoming bills cause a significant administrative challenge, a high volume of indirect spend also can translate into a dangerous financial blind spot. For companies with decentralized sourcing and paper-based processes, budgeting can become a real guessing game.
Fitting the bill
After helping Marc Jacobs move to Microsoft Dynamics AX as its enterprise resource planning (ERP) solution, Litre wanted to centralize and automate the supplier invoice workflow. He knew that simplifying the routing and approval process for Accounts Payable (AP), digitizing invoice-related data, and creating a clear line of sight into what the company owed vendors at any given time were essential for helping the business keep up with the industry’s competitive pace.
To do this, Litre reached out to Medius, a leading provider of cloud-based AP invoice automation solutions, to help it modernize the way it managed supplier invoices and tracked expenses. Because the MediusFlow solution integrates directly with Dynamics AX, the implementation team could easily connect MediusFlow to Dynamics AX so that it could begin interfacing data between the two solutions.
“Medius has a very strong standard Dynamics AX integration, and we molded our implementation around that,” says Maulik Patel, Senior Manager of IT Finance for Marc Jacobs. “It pulls supplier information, accounting, cost centers, and payment terms from Dynamics AX, so after spending just one day mapping the best way to route invoices, we were able to come up with a solution that works very well for our company.” Using Azure’s Logic Apps to model and automate the relevant business processes, Marc Jacobs’ developers easily implemented the new workflows without having to worry about building hosting, scalability, availability and management.
Because MediusFlow runs on the Azure platform, the team was able to deploy the technical solution in a matter of hours. “Because MediusFlow is in the Azure cloud,” says Patel. “We were able to implement quickly and get a very strong ROI. We were able to break even in less than a year, which is very hard to say with most software implementations.”
In fact, deployment time from the beginning of the project to go-live—including training and the organizational change of moving from decentralized to centralized invoice reception—was just 21 days. “Usually integrating tools is the most complicated part,” says Litre, “but after MediusFlow was integrated with Dynamics AX, we actually tested the first invoice the following day. It was like a miracle for me.”
Tailoring a cloud solution
The MediusFlow cloud application is built on the Azure application platform. Within the MediusFlow solution, Marc Jacobs uses a designated Azure SQL Database. The company’s short-lived data goes into Azure Redis Cache, and invoice images and attachments go into Azure Blob storage, where MediusFlow aggregates average and best-in-class values for all its customers. With this data at hand, MediusFlow can benchmark Marc Jacobs’ process performance, track how many invoices are automatically connected to the correct orders, and measure how it compares to others in the industry for total processing lead times.
“We run HAProxy, the open source software TCP/HTTP load balancer on Linux in the Azure platform. Even with open-source tools in the mix, our team can depend heavily on Microsoft PowerShell to manage and automate system administration in the open Azure platform,” says Mattias Wolff, Cloud Operations Manager at Medius. “And Microsoft’s OSS support makes our team really efficient in our daily work. Almost everything we do is with PowerShell rather than doing things manually, which frees up time to focus on delivering new MediusFlow releases to end users at Marc Jacobs and bringing data from the application back to our developers and product teams.”
Medius uses Azure HDInsight’s Hadoop-based big-data services internally to see how customers are interacting with the application. That data helps the team constantly improve the product. “Before we moved to the Azure platform, Medius was a software company,” says Daniel Saraste, VP of Product Management at Medius. “And we felt all the pain that came with multiple code bases for on-premise deployments and the pain that came to our customers with patching, hot fixing, upgrading, unpredictable lifecycle costs, and not being able to benefit from innovation quickly. With Azure, we have changed our business model and dramatically reduced the time it takes to deliver innovation to our customers. We can also offer our customers best-in-class security and rapid best-practice implementation.”
The best-dressed invoice
Today, 93 percent of Marc Jacobs’ invoices get automatically routed to the correct approver without any human intervention. When an invoice arrives in the central AP inbox at Marc Jacobs, MediusFlow automatically codes it, sends it to the appropriately defined role, and captures the related data. The Marc Jacobs’ employee receives an email notification that an invoice has arrived and is prompted to click on a link to navigate to MediusFlow for approval. Because it is a web browser-based solution, employees can process and approve invoices on their mobile devices from anywhere, at any time.
Now that the AP workflow is centralized and the approval process can happen on any device, Marc Jacobs has cut its invoice processing lead time from 45 days down to 11. Not only does the company eliminate the risk of losing an invoice, it eliminates the expense of late payment fees, and it tracks exact expenses from the general ledger down to an individual invoice. Moreover, the invoice is digitized, which means Accounts Payable has more control and visibility over the entire process, from the moment an invoice comes into the system until it is posted on Dynamics AX.
“The Accounts Payable invoicing process is an important part of the business, but it shouldn't be our main focus,” says Patel. “We're supposed to be focusing on creative projects. Thanks to Azure, MediusFlow is available for accounts payable as well as approvers at any time, on any device. With MediusFlow, we can route invoices directly to the right person for approval. Invoices are in a closed system, so they can’t get lost. And, for the first time, the business has clear visibility into everything that’s been processed and everything that’s in the queue—with almost no data entry needed—which makes everyone more confident.”
The big payoff
The solution Marc Jacobs deployed is a hybrid solution, with MediusFlow running on Microsoft Azure and Dynamics AX running on-premises. Because MediusFlow is in Azure, Marc Jacobs stays up to date with bug fixes and feature enhancements on a monthly basis. “Having all the smart rules to make the invoice process as efficient as possible and having the flexibility to manage changes and exceptions is very powerful for us,” says Litre. “We need a high level of functionality for processing all the invoices, but we also have new situations all the time and a lot of exceptions to manage. MediusFlow on the Azure platform and Dynamics AX are a very good fit for the changing demands of our company.”
Since deployment, Marc Jacobs has been able to redirect employees from the considerable time spent maintaining spreadsheets and managing AP information. In just four months after deploying MediusFlow, the company was able to justify the investment. One year from deployment, it expects to have made $150,000 in productivity gains.
As mundane and clerical as invoices may be, they still require the approval of managers, VPs, directors, and even CEOs. Rather than spending hours of their week on clerical work, creatives and decision-makers need to be able to quickly take care of back-office tasks. “With MediusFlow on the Azure platform and Dynamics AX, we found a very flexible way to route, approve and process invoices,” says Litre. “In the end, this is really about agility. We're in a world where things change very quickly. Sometimes we have to set up a new warehouse in a couple of days or engage with a new vendor in a country where we’ve never operated. With AX and MediusFlow, we are able to react very quickly.”
By modernizing its solution for invoice processing, Marc Jacobs can easily manage its complex supply chain and get back to the creative work of designing and delivering next season’s collection.
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