Perceptant.com – Supply Chain Management, B2B Intergation and EDI (Electronic Data Interchange) Solutions for 21st Century...
Electronic data interchange (EDI) is a fact of life for most retailers and consumer goods manufacturers; these companies have been trading electronic documents like purchase orders, bills of lading and advance ship notices (ASNs) for decades. But EDI has only recently gained traction in the automotive aftermarket.
EDI adoption may get a boost, though. In September, connectivity solution provider GCommerce donated the data specifications and business requirements for its EDI “Super Spec” to the Automotive Aftermarket Industry Association (AAIA). By making the GCommerce “Super Spec” available to the industry, the company and AAIA hope to help rationalize EDI use in the aftermarket and increase adoption.
“GCommerce will still manage and maintain the updates to the spec, but it will be available to the industry through AAIA,” says Scott Luckett, AAIA vice president, technology standards and solutions. “Companies will be able to use this ‘master map’ of connections whether they use GCommerce or not.
“Companies have an infinite capacity for creating different versions of EDI,” Luckett adds. “What the Super Spec does is allow them to link up and communicate with everybody else.”
AAIA has formed an oversight group to manage the Super Spec that will advise the association and GCommerce on how it should be used and to propose changes or enhancements. GCommerce has also worked with AAIA on its PARTnerShip Network, which allows small- and medium-sized suppliers to exchange data with retailers.
“By doing this, we’re making it easier and faster to use the technology, so we can accelerate adoption,” says Steve Smith GCommerce president and CEO. “The industry can take this the next step forward.”
EDI can substantially reduce the amount of purchasing-associated paper flying around offices, and make it easier and faster to send purchase orders, confirm that the order was received, and know in advance if there will be any differences between what’s been ordered and what is actually being shipped.
Initially, EDI in the aftermarket was relegated to large companies, particular retailers. But as the Internet has made the cost to deploy an EDI solution more manageable, distributors of all sizes have begun utilizing the technology to communicate with trading partners, and this momentum has begun to pull in more manufacturers.
“This is no longer relegated to larger companies because the Internet has allowed the creation of service-based technology,” Smith says. “You don’t have to install any software. The evolution for the technology and the compression of the cost structure has allowed all participants in the marketplace to get involved.”
One of the most successful EDI deployments in the industry has been the partnership between the Aftermarket Auto Parts Alliance and GCommerce, and in May AMR Research gave the system, called the Total EDI Solution, its John Fonantella Supply Chain Innovation Award. The system integrates with Activant and other platforms to connect trading partners electronically. GCommerce facilitates connecting the 53 Alliance members with 249 vendors, representing 89% of the Alliance Group purchase volume, saving an estimated $17 million annually.
Other distributors and program groups have also signed on with GCommerce, the most recent being Federated Auto Parts.
Vermont-based Bond Auto Parts was one of the first Alliance members to deploy EDI with GCommerce in 2007. “As we move forward we’re redeploying people into different jobs, so I won’t have anybody that can physically go out and grab a packing slip off of a pallet to manually adjust a purchase order,” says Craig Bond, senior vide president. “Ultimately, we won’t trade with anyone that doesn’t trade via EDI.”
Bond has moved the majority of its document transactions to EDI (helped in part by the leverage of the Alliance with vendors), but is having some issues with credits and returns. “Aside from that, getting clean data is probably the biggest hurdle we’ve had from day one,” Bond says.
For buyers, the key benefits of EDI are efficiency and cost reduction. “You can get rid of all of this cost and all of these errors, and eliminate waste in the system,” Smith says. That means the elimination of phone calls, faxes and re-keying information into purchasing systems.
For the manufacturers, the benefit is somewhat more indirect, but significant: by adopting EDI, these companies make it easier for customer to do business with them, and can then attract more business. More importantly, most retailers and many distributors are developing policies that will make EDI a mandatory component of any relationship they have with a manufacturer.
According to Bond, EDI will not only reduce paperwork, it will also reduce average turn times and improve ordering.
“If we place an order on Wednesday, once that’s ready to ship the vendor will send us an electronic ASN,” Bond says. “That way, if I order 10,000 pieces and they aren’t sending me 100 of those, the purchase order is adjusted automatically and when I go to place my order next Wednesday, I can add those in.”
Before the advent of EDI, Bond says he might not know the order had been shorted until it arrived several days later, by which point it might be too late to adjust his next order. “Ninety percent of the time, I would place an order and not realize that those hundred pieces weren’t coming,” Bond says. “Now I have that information within three days of placing the order, and I can adjust the purchase order immediately.”
More importantly, the automated systems can manage the bulk of the orders, freeing up employees for other tasks. “The man hours we’ve saved with EDI are just mind blowing,” Bond says. “We’re redeploying those people to help make our inventory chain as strong as it can be.”
In order for EDI to truly become ubiquitous, a few things need to happen. First, system providers have to provide a well-defined, seamless integration of all documents to make these transactions work effectively. And more companies already using the technology have to share their success stories with the rest of the industry.
Bond thinks the donation of the Super Spec to AAIA will also help move things forward. “When the Alliance got involved in EDI, we had a bigger hammer, so to speak, to use with the vendors,” Bond says. “With AAIA involved, this becomes an industry standard. We need that standard because not all vendors are providing information in the same way. With the standard, everyone will be looking for the same type of information.”
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Tags: automotive, EDI, http://www.perceptant.com, logistics, perceptant, supply chain integration, Supply Chain Management
This entry was posted on Thursday, November 12th, 2009 at 12:10 pm and is filed under B2B e-commerce, EDI, Supply Chain Consulting, Supply Chain Software, e-commerce, supply chain integration.
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