Electronic Data Interchange (EDI) for Retailers

Driven (roy) by competitive demands to lower prices while maintaining margins, larger retailers have been constantly looking for ways to reduce costs and drive more efficiency in the way that they process business documents to and from their supply chain. Larger retailers such as Wal*Mart and Costco have implemented “Best Practices” approaches to the implementation of supply chain automation. One of the key initiatives has been the implementation of the electronic transfer of business documents (Purchase Orders (PO), Invoices and Advanced Shipment Notifications primarily) using the Electronic Data Interchange (EDI) standards to/from their supply chain partners. The implementation of EDI for these largest retailers has been very time consuming and costly but in the end has yielded significant processing cost savings as they were able to force all of their suppliers to trade via EDI with them.

For many competitors of these retailing giants, EDI was also seen as the “magic solution” to keep their processing cost structure in line with their larger competitors. These retailers spent countless hours and dollars trying to convince their suppliers to receive Purchase Orders and send Invoices electronically to them. They used similar approaches to their larger rivals to convince their suppliers to “Do EDI” with them. A large part of the problem with this group of retailers was that they tried to implement EDI using a similar approach that their larger competitors used without the same clout. For this group of retailers, this approach has not been totally successful as they lacked the resources and experience to properly implement EDI. In the end, this group has saved significant processing costs but they still need to improve their processes to implement “Best Practices” in EDI.

For the small to mid-sized retailer who haven’t implemented EDI, the implementation of EDI by their larger competitors presents threats and benefits. The obvious threat is that the larger retailers are gaining a significant cost advantage by reducing their processing cost for their supply chain. As larger retailers seek to increase their market share, they are able to reduce their cost of doing business which increases their advantages over their smaller retail competitors. The less obvious benefit of larger retailers implementing EDI is that they are “paving the way” for small to mid-sized retailer to implement similar cost saving initiatives while avoiding the pitfalls of many of the earlier retailer adopters of EDI. As Wal*Mart has implemented all of their 14,000 suppliers to do EDI, the non-EDI retailer can take their experience and implement their supplier base quicker and more efficiently than their larger competitors as their suppliers already understand the value of implementing EDI.

Customer Case Study

The “New EDI” Scan Based Trading

London Drugs Western Canada’s premier retailer is committed to provide customers with a superior shopping experience, first-rate personal customer service, and innovative products.

In order to continue achieving this mission, London Drugs Scan Based Trading (SBT) program was developed to support a Direct-Store-Deliveries program where the supplier manages the store inventory and maintains ownership of the inventory until the items are sold at point of sale.

London Drugs realized that one of the biggest hurdles to obtaining maximum value of Scan Based Trading is the need for expertise in EDI, business process and Scan Based Trading approaches. This is why they turned to SoftCare.

London Drugs chose TradeLink EDI Management System and SoftCare because they liked SoftCare’s approach of combining, software, consulting and services to provide an all-encompassing solution to implementing Scan Based Trading for them and their suppliers.

“We were very happy with the products and services we received from SoftCare. They completed on time and on budget with a solution we are proud of. “ says Scott Riddell, Manager of IT Solutions at London Drugs.

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