Founded in November 2000, AlphaPurchase Co., Ltd specializes in maintenance, repair, and operations (MRO) services. The company also sells office supplies (such as stationery, printers, and other office equipment) and maintenance goods for offices, factories, shops, and laboratories through APMRO, its core indirect materials purchasing system. In addition, AlphaPurchase offers consulting services and procurement systems to help companies reduce their indirect material costs; and facility management services.
With more than 1,000 customers and many more organizations using APMRO indirectly, AlphaPurchase needs to ensure its product database is kept up to date. In June 2001, when the company launched an MRO Web site listing its products and services, it could not obtain product data in digital format from suppliers. Instead, AlphaPurchase staff had to collect paper catalogs from each supplier and manually input pricing and product information, such as model numbers, into the company’s enterprise resource planning (ERP) system.
After a painstaking process of entering 100,000 items in the ERP system for uploading to the MRO Web site, AlphaPurchase discovered only 10% of products listed were contributing to sales, as most were slow-moving items, such as hand tools, safety and security goods, power transmission products, laboratory equipment, reagents, and office supplies.
The lower than expected online MRO sales prompted AlphaPurchase to launch two new consulting services that extended the company’s help to other companies that want to digitize their product catalogs and shorten lead times to develop customer quotes. As a result, the number of products in its ERP system increased at a rapid pace.
“When the number of indirect material items exceeded 500,000, we felt we had hit our limit with manual input,” said Takao Tanabe, head of the consulting department and associate senior corporate executive officer of AlphaPurchase Co., Ltd. “Different suppliers were using different data formats and styles. Collecting data and standardizing the product names required specialist knowledge and a vast amount of time. Also, due to increasingly short product lifecycles and numerous changes in regulations and the legal system, keeping product information up to date was getting harder. The demand for a highly efficient data cleansing technology was increasing.
“We could not increase our sales unless we increased the number of items, but it meant the number of slow-moving items would also increase,” added Tanabe. “The time and cost to manage the catalog would be high, so we had to find a way to effectively manage our master data at a low cost―this was the key to making our business a success.”
In June 2009, AlphaPurchase implemented Oracle Product Data Quality to standardize the classification of product data, and to remove duplicate information from its online catalog. The Oracle software is used in the catalog digitization, quote development, and APMRO indirect materials purchasing businesses.
In the past, AlphaPurchase had to manually match items ordered by customers against supplier products. The issue was the different naming conventions used by customers and suppliers. “For example, a supplier may call a printer ‘#AA123-X’ while a customer calls it ‘No. aa123x’,” said Tanabe. “We had to check to make sure they were both referring to the same printer and model before processing the order.”
This approach was time-consuming and prone to errors due to missing information and manual data entry. AlphaPurchase had to constantly correct and update product data, and the lead time to develop quotes and prepare product catalogs became longer. Sometimes staff simply could not provide customers with the product information they wanted because they could not locate it.
“Oracle Product Data Quality enabled us to automate the product data matching process, improving accuracy and saving us manpower,” said Tanabe. “We can also expand the data cleansing to other areas which we previously could not, such as size, color, weight, and voltage range.
“By revising and updating these categories, users can confidently search for items based on specific attributes. Our staff can also provide quotes in near real time, now that they can quickly locate the desired items.”
When AlphaPurchase launched the MRO business, it required 30 employees to maintain 100,000 items and produce digitized product catalogs. Now, only three people are required to maintain 1.5 million items, making the company effectively 150 times more productive.
According to Tanabe, the increase in productivity was achieved by automating data mapping and the process of aligning digits for display and printing. “Oracle Product Data Quality’s product information management features are sophisticated and the structure is intuitively understandable,” he said. “It would be difficult for anyone to develop such a system from scratch.”
AlphaPurchase reviews its product database at regular intervals, typically after it receives an updated catalog from its suppliers. Before implementing Oracle Product Data Quality, it used to take the company up to two months to revise product information and see the changes reflected on its MRO Web site. Even making minor changes could take up to one month. If the company was negotiating prices with suppliers, this would further delay the updates. The long lead time required to update products on its Web site resulted in lost sales.
“Thanks to Oracle Product Data Quality, data cleansing only takes a few hours,” said Tanabe. “The lead time for checking items in our online catalog now takes two to five days, which means our customers benefit from accurate, up-to-date pricing and we don’t miss out on any sales opportunities.”
The increasing number of product items required AlphaPurchase to expand its B2B e-Commerce system. This involved running the old and new sales and B2B e-Commerce systems at the same time for the past seven years. Doing this normally required the company to check and update master data in two systems. However, with Oracle Product Data Quality, data transfer is easier because it converts and simultaneously distributes information from the old master data management system to the new master data management system.
“Without Oracle Product Data Quality, we would have individual departments creating their own master data,” said Tanabe. “By using Oracle Product Data Quality to check data consistency, no-one is able to intentionally manipulate data and this enables us to synchronize the old and new systems and maintain strong internal control of master product data.”
Due to Oracle Product Data Quality, AlphaPurchase’s MRO business sustained double-digit growth without any major increases in human resources, but the company believes there is still room to grow. Based on its success in maintaining product data quality, AlphaPurchase is now offering master data management services. For example, AlphaPurchase is offering to help companies put MRO catalog data online to make it easier for purchasing departments to view and select products. It also offers a data cleansing consulting service to help companies reduce the cost of indirect materials; and an implementation support service for organizations considering introducing Oracle Product Data Quality.
Generally speaking, this move may cause AlphaPurchase’s knowledge to be leveraged by other similar companies, but Tanabe said, “Compared to western countries, Japan’s distribution mechanism is behind the world in the MRO area. Historically speaking, during the early stages when the distribution network was immature, a multilevel distribution mechanism was necessary. However, this has kept the consumer and the supplier far apart, generating unneeded inventory and margin losses and affecting the international competitiveness of their business. Therefore, it is important for the industry to introduce a system such as Oracle Product Data Quality and enforce distribution network reform.”
In November 2010, AlphaPurchase became part of the Askul Group. Gaining the group’s strong sales network will not only enable the company to expand its business overseas, starting within Asia, but also help reform the MRO business in Japan. “Oracle Product Data Quality’s multi-language capabilities can translate product information into English and Chinese after organizing it,” said Tanabe. “This will enable us to ‘globalize’ our MRO business.”
Tanabe first heard about master data management in 2003 after attending a user conference in San Francisco. He was intrigued by the idea of semantic recognition technology and wanted to see if it could be applied to the Japanese language.
“I’m familiar with rule-based technologies―the way of modeling, which combines term, phrase and, item definitions, and classification, was attractive to me,” said Tanabe. “I saw the potential that Oracle Product Data Quality could bring to our product data cleansing process.”
In 2007, following two weeks of training in the United States and three weeks in Japan, Tanabe’s technicians worked out how to apply semantic recognition technology to the Japanese language and began developing a master data management solution that could be used in AlphaPurchase’s business. After two years of development, the system was put into operation.