DOD advances e-business plans
- By Dan Verton
- Jul 04, 1999
Two of the Defense Department's largest communities recently turned their attention to the Internet and electronic commerce solutions as a way to exchange information more effectively with their customers while taking the department one step closer toward its goal of creating a paperless environment.
Faced with the challenge of eliminating manpower-intensive paper-based procedures from their day-to-day operations, DOD's logistics community and retail exchange service focused on World Wide Web-based solutions to help transform their enterprises.
DOD's logistics community and retail exchange service are responsible for two of the department's most complex and far-reaching enterprises. For example, DOD's logistics community, including the Defense Logistics Agency, the U.S. Transportation Command and the individual military services, must share information with more than 600 commercial freight carriers on a global scale.
Likewise, the Army and Air Force Exchange Service operates more than 1,600 retail stores worldwide, spanning 25 countries and serving more than 8 million active, reserve and retired military personnel and their families.
To help standardize and streamline its process of paying commercial freight carriers, DOD has chosen U.S. Bancorp's Internet-based PowerTrack payment service. Signed in March, the 10-year, $1 billion contract
is aimed at eliminating paper from the billing and payment processes used by DOD and its commercial shipping partners, such as Federal Express and Emery Worldwide. This week the Navy, which was not part of the March contract, will sign its own five-year deal with U.S. Bancorp.
In a letter addressed to all of the department's transportation industry partners, deputy secretary of Defense John Hamre lauded DOD's efforts to adopt transportation industry commercial practices, particularly the selection of PowerTrack.
In addition to supporting upfront pricing, electronic information exchange, and automated payment and reconciliation, "PowerTrack...will reduce the payment cycle from an average of 60 days down to three days," Hamre said. "These changes will streamline our procedures, reduce paperwork and eliminate the need for government-unique payment centers."
U.S. Bancorp, the largest provider of Visa corporate cards and purchasing cards in the world, designed PowerTrack to leverage the existing credit card payment infrastructure, such as the government's International Merchant Purchase Authorization Card.
But PowerTrack also provides more brains in the credit card system. The system captures the full gamut of freight payment information, such as bills of lading, providing managers with a view of the entire payment process as it occurs. The system also enables managers to analyze data for trends and problems—a capability that traditional credit cards have not provided.
"With PowerTrack, the credit card is like a Web browser," said Rick Langer, vice president of business development for U.S. Bancorp's corporate payment systems division. "The credit card becomes a tool used to see something," he said. PowerTrack gives "both trading partners true visibility of the transaction and provides true supply-chain visibility," he said.
One of the ways PowerTrack accomplishes this is through tight integration with all of DOD's existing accounting and logistics systems, Langer said. In addition, the Web allows instant access to delivery and payment information through a one-stop-shopping data warehouse, and the Web eliminates the need for reconciling freight bills and invoices, Langer said. PowerTrack also captures critical information throughout the process, enabling government logistics managers to analyze vendor performance and decide which vendor actually is the "best-value shipper," he said.
"The focus is on the value of the payment system underneath the credit card," said Mark S. Coronna, senior vice president of U.S. Bancorp's Interactive Commerce Group. Because it sits in the background and is transparent to most users, PowerTrack is easy for DOD users and small commercial carriers to use and learn, he said. "If you have a phone, a bank account and a browser, you can use the system," Coronna said.
Likewise, the Army and Air Force Exchange Service (AAFES) has relied on Micro Focus' Net Express Web development tool to move all their legacy applications as well as their hard-copy product catalogs to the Web. Net Express enables organizations to rehost their mainframe applications on Windows NT and Unix systems, and its also handles the development of new Web applications.
In addition to a pilot project that uses kiosks for catalog access, AAFES has developed other tools designed specifically for the Web. Those tools allow AAFES' trading partners and customers to automate the process of conducting research on invoices and the status of payments.
In fact, all of the processes that once were done by hand or over the phone are now done more quickly and accurately using the Web, said Clyde Todd, section chief of AAFES' Fast Action Support Team.
"The majority of our applications, such as our catalog, had been running on our mainframe for years," Todd said. Now, because AAFES has moved to a Web environment, "two-thirds of the business coming across the Web is new business for us," he said. "The Web gives us a better medium to get to our customers more quickly."
The movement to the Web using Net Express has been so successful for AAFES that the agency is planning to use the product to develop a corporate intranet that will enhance employee training and human resources services, Todd said.