OKLAHOMA CITY -- Fleming Cos. here, the nation's largest wholesaler, is giving suppliers until Sept. 30 to begin transmitting key information by electronic data interchange or face the prospect of heavy fines.
The wholesaler will impose fines of $110 per purchase order if vendors fail to transmit purchase orders and invoices via EDI by the September deadline. In addition, Fleming will require its suppliers to bar-code all cases by July 1996, said Gary Capshaw, vice president of product supply services.
Fleming, along with retailers such as Wal-Mart Stores, Bentonville, Ark., and H.E. Butt Grocery Co., San Antonio, are pressuring vendors to comply with specific efficiency standards to help streamline operations and cut costs throughout the supply chain. Kroger Co., Cincinnati, is reportedly
considering a similar move.
Other retailers, such as Food Lion, Salisbury, N.C., and Albertson's, Boise, Idaho, have reportedly produced similar guidelines, but without any set penalties.
A system of deadlines and fines is needed to ensure full supplier compliance, Capshaw said. "At this point, some of us are going to have to take a stand to push this over the edge," he told SN.
In a recent letter to suppliers, Fleming set a deadline of July 1, 1995, for developing a plan to meet EDI requirements, while setting a Sept. 30 date for complying with the demand.
Suppliers were first notified of the impending deadlines in a letter sent by Fleming last November, Capshaw said.
The wholesaler also said it is waiting for industrywide bar-coding standards to be established by the Uniform Code Council, Dayton, Ohio, and supermarket industry organizations, before setting a deadline for bar-coding.
"Several suppliers have asked us and the industry at large to consider a postponement of some packaging requirements until further guidelines are made known to the industry," Fleming officials wrote in the letter. "There is obviously a need to have as much information as possible before production line investment is made."
The letter was signed by Capshaw and John Huffman, senior vice president of category management.
"We want to be fair and give our suppliers the benefit of the latest information," the letter said. "We will republish our minimum requirements after the first of the year with a new compliance date. We expect this date will be July 1, 1996."
Manufacturers and food brokers said the changes mandated by Fleming's deadlines were inevitable with the increasing emphasis on Efficient Consumer Response.
"We've had enough communications with Fleming to see the handwriting is on the wall," said J.D. Milliken, vice president of logistics for J.M. Smucker Co., Orrville, Ohio.
Case bar-coding in particular is inevitable, Milliken added. "We're going to need to do this sometime," he said. "We're not just doing [bar-coding] for Fleming; it's going to happen" throughout the industry.
"Fleming has really stepped forward," said one industry analyst. "They're one of the early ones to really list what they require to meet their minimum operating standards and then what they're going to levy on their suppliers that fail to achieve them."
"Somebody always has to set the ball in motion," said Bob Drury, vice president of management information services for Pet Inc., a division of Pillsbury, Minneapolis. "In this case, it's Fleming."
Manufacturers credited Fleming with responding to complaints that its initial July 1, 1995, deadline for bar-coding came too soon to get the needed case marking equipment in place.
"I think everybody was scrambling and saying, 'That's a short timeline. We're working on it, we hear you, but I'm not sure we're going to be ready by July 1,' " Milliken said.
Bar-coding represents a substantial investment for manufacturers, Milliken said.
"We have to install printing equipment on our production lines," he said. "To print the code in a machine-readable format takes a particular kind of quality." The manufacturer also needs to invest in more durable corrugated cardboard.
Fleming expects to increase its operating standards over the next few years, including mandatory EDI for price changes, promotional announcements, advance ship notices and product activity data, along with standardized pallet weights and heights.
"Over time, our requirements and usage will change as the industry adapts and we will communicate those changes," Fleming said in its letter to suppliers.
