Whats and whys of electronic data interchange

By Jim Turner National Product Manager Versyss

exchange of information via modem from a computer in one location to that in another. The value lies in the effective sending, storing and merging of transmitted information.

Story at a Glance

Typical uses include purchase order transmission and acknowledgement, customer catalog updating and vendor price changes. In non-technical terms, information is sent via modem over ordinary telephone lines from the sender to the receiver's temporary "holding" file. The receiver accesses the holding file to input the information into their computer system, updating their data faster with less manual effort. EDI is part ofthe technology designed to create a "paperless" work environment.

Although it has limitations, most EDI users feel negatives are far outweighed by benefits, If EDI is properly installed and maintained, for instance, users can immediately benefit from 'Just in time" inventory.

Because purchase orders can be directly input on the computer and instantly transmitted via EDI to the recipient, the reduction in manpower traditionally necessary to create purchase orders is a savings in itself. In addition, EDI allows faster customer service, ordering and inventory.

EDI can be used in a variety of ways. For example, Perry Builder's Outlet, a client of DataFlow Inc., Durham, N.C., a Versyss distributor, uses it to communicate with Lowe's. After the treated lumber wholesale specialist receives purchase orders from Lowe's, both an order acknowledgement and invoice are electronically transmitted to provide faster customer service.

Trident Supply, a customer of another Versyss distributor, Team Solutions, Redding, Ca., significantly increased their business through the use of EDI. According to them, the convenience of EDI provides an incentive for their customers to place orders.

Catalog updates transmitted electronically can replace old pricing with a simple key stroke. This effortless updating assures accurate, up-to-date pricing information and saves margins. Large suppliers such as HWI, True Value and Ace use EDI to keep customers updated on price changes, product and catalog changes, special pricing promotions and other merchandising.

One of the downfalls of EDI, however, is that if a vendor changes his system or format, the change creates a domino effect among customers, requiring them all to adapt to the new methods. Computer vendors must keep pace with changing technologies and be comrnitted to assisting their customers to successfully receive and merge information.

As increased numbers of companies recognize the benefits of EDI, its use will become more commonplace. When companies evaluate the pros and cons ofthe technology, they should consider their current and future needs and think imaginatively about how EDI can help their business become increasingly profitable and customer oriented.

Gommunications

(Continued from page l3) ume and value ofhundreds ofwood and paper products for every country in the world, and the 1992 United States Wood Products Trade CD ROM, featuring imports and exports of all wood products between every customs district in the U.S. and all other countries.

Lumber companies are also finding new uses for fax systems. TNT Lumber, Alamo, Ca., now distributes a weekly fax bulletin, providing lumber buyers and sellers with current weekly price and availability updates. Buyers simply submit the lumber products they use to receive their customized list.

Their inquiries are in turn faxed to nearly every U.S. West Coast and Canadian sawmill or to certain ones by group, species or size. Currently more than 400 buyers and sellers are subscribing to the free TNT Fax Network.

A new communications system developed by American Intemational Facsimile Producers (a division of American Intemational Forest Products) is changing the image of fax from a convenience to a mail altemative for the delivery of bulk business documents. The Host-Fax system, which looks and acts like a printer to almost any host computer system, handles the entire process from building the document to managing the faxing. Intemal copies of the outbound documents are printed on an attached laser printer to replace the bulky line printer and multipart forms. Any documentthat canbe printed from the host system canbe delivered via fax for the price of a 30-second phone call. The cost for most organizations is less than 70 per page.

Pope & Talbot is among the first to use the technology to cut transit times for documents and save considerable costs.

They deliver in excess of 4,500 invoices and order acknowledgments monthly directly from their IBM mainframe computer systems to their customers via Host-Fax.

The system requires no changes in the way Pope & Talbot does business or operates its computer systems. It takes the information that would be printed on a line printer on multipart forms and creates an exact image of the finished document for delivery via fax. The data from the computer is laid over an electronic image of the multipart form background and the completed document is delivered by fax over regular phone lines to its destination fax machine.

Because the document is created and delivered electronically, it is higher in quality and readability than the mailed document with instant delivery. Wood products credit manager Roger Brown, who championed the project at Pope & Talbot, has seen a significant drop in costs related to mailing documents as well as other tangible savings. Days sales outstanding has dropped 10%, partly from the quick delivery of invoices and partly because the Host-Fax is an easy way to send out reminders to customers. Previously, Brown's staff had to call on all late invoices, often sending a faxed copy. Now they call dnly on those thatare seriously past due with Host-Fax handling routine reminders automatically.

In determining paybackforthe HostFax system, use a cost of 80Q per piece of mail. If 100 pieces were faxed each day instead of mailed, payback based ona2I day month, could be as little as 9.2 months, depending on the model purchased. Naturally, the system would be most feasible for a large company.

In 1991 about 2% of all business documents were delivered by fax. As thermal fax machines give way to plain paper models, the figure should balloon to 2OVo by 1995. Visionary companies are already improving utilization of these new communication innovations.