EVALUATING SOURCES OF SUPPLY

Evaluating sources of supply may be more critical than evaluating what’s being supplied. After all, the best equipment or service on the planet is greatly diminished in value if it can’t be depended on. Repair, replacement parts, and upgrades are important life cycle extenders. The latest gadget has diminished value if your organization gets sued for patent infringement by the supplier’s competitor and the entity the gadget was purchased from isn’t around, or doesn’t have the resources to defend itself and its customers in such an action. No matter who is right, the outcome is less than satisfactory.

If your organization uses a purchase order process (i.e., limits the power to commit funds to be paid in exchange for goods and services using a purchase order form) then it’s likely the individuals authorized to issue POs can conduct supplier due diligence. Initial or preliminary due diligence is general in nature and does not require any technical subject matter expertise beyond a qualified purchasing representative’s knowledge of buying what the acquiring organization needs for its business. As project planning proceeds and technical concerns arise, subject matter expertise will be needed to complete the due diligence process.

Evaluating sources of supply is a process whereby accounting, contractual, legal, and technical subject matter expertise investigate and quantify potential risks of doing business with an unknown third party. It involves an examination of the entity’s financial health, ability to produce deliverables in the level and amounts required, and its ability and reputation for post-deliverable support of whatever type is required by the acquiring organization.

Evaluating the financial health and stability of a potential supplier can be accomplished by examining a set of audited financial statements covering a period of time in the past. Publicly traded entities that are potential suppliers are required by law to file quarterly and annual financial statements. If the potential supplier is not a publicly traded company, then there may be other sources of financial information such as Dunn & Bradstreet. D&B is a credit rating organization, providing credit history and assessment. As such they have access to information on most any entity that wishes to do business on credit. They also collect information about how the subject pays their bills. 

For example, do they pay on time, or according to agreed on terms, or are they occasionally or perpetually behind? These same agencies also monitor and report on lawsuits and extraordinary events that may have an impact on the company. Considerations or concerns about the potential suppliers intellectual property rights may be found in simple searches that can turn up patent or copyrights granted.

The overall concern amounts to the ability of the supplier to produce and support the required quantity of equipment, software, or facilities and services for the time required, typically ranging from 2 or 3 years to longer than 10 years. The ability to conduct due diligence isn’t rocket science; it’s mostly a matter of common business knowledge. You and your peers in accounting that deal with purchasing, contracting, and paying bills can undertake and complete it with a reasonable amount of time and effort.

Event Sources and Tracking ; Mediation Devices ; CDR | Billing Process

Billing Process

Billing systems are composed of computers and software programs that track usage within a network (events) and converts them into a single detailed billing record. Events within a network can come from many sources; a switch, data router, application service provider and they must be converted into a standard format.

Billing and customer care systems may be developed and managed by internal staff or contracted to other companies (outsourced).

Companies that provide complete managed billing and/or customer care services (called turnkey) to other companies are called service bureaus.

Event Sources and Tracking

Billing system events are measures of network usage. Events can be stored in the network device (Data Collector) for transfer at predetermined time intervals, when a specific value has been reached (event trigger) or when the billing system requests the information (called polling).

Some common event sources include central office switches, routers, and application servers. Central office switches are devices that route Source: The Billing Collegecalls from one subscriber to another. They track the time one port is connected to another port. Routers are intelligent switches that forward packets toward their destination based on their routing address (and possibly type of content). Routers can track the amount of data that is routed between two ports over a period of time. Application servers are computers that process information at the request of a customer (called a client), and can track the beginning (launching) and termination of an application.

Mediation Devices

A mediation device receives, processes, and reformats event information in a telecommunications network to a suitable format for one or more billing and customer care systems. This processed information is either continuously or periodically sent to the billing system. Mediation devices are commonly used for billing and customer care systems as these devices can take non-standard proprietary information from switches and other network equipment and reformat them into messages billing systems can understand.

Switches usually report their usage information (e.g., switch connection time) in binary coded decimal (BCD) format and these record formats are often proprietary to the manufacturer of the switch. Each record may be variable length and several events (e.g. switch points) may be recorded in the same system for a single call. There are at least 60 switch manufacturers and each has several models of switches that may result in different billing record formats.

There are other network parts or devices that may be involved with connecting a call or providing value added services (VAS). These devices also can produce cal detail records and these records are in a different format.

Figure 1 shows a mediation system that takes call detail records from several different switches and reformats them into standard call detail records that are sent to the billing system. This diagram shows the mediation device is capable of receiving and decoding proprietary data formats from three different switch manufacturers. The mediation device converts these formats into a standard call detail record (CDR) format that can be used by the billing system.

Figure 1: Mediation System

Call Detail Records (CDRs)

Billing information regarding specific calls are contained in call detail records. CDRs hold the origination and destination address of a call (who), time of day the call was connected and duration of the call (when), the call type and its details (what), the connection location(s) of the call (where), and the cause of event recording (why). When the call detail record holds information other than telephone billing information (e.g., the name of a movie watched), it may be called an event detail record (xDR). xDRs hold billing record information about services that are non-traditional telecommunication services such as an information services that are provided through the Internet.

Figure 2 shows the basic structure of a call detail record. This diagram shows that a call detail record contains a call detail record identification number (unique identifier), who originated the call, the called number, the time the call started and completed. This diagram shows an additional charge for operator assistance and that a call detail record can dynamically grow as multiple events add information to the call event.

Figure 2: Call Detail Record (CDR)
Source: The Billing College