NASH FINCH CONNECTS VENDORS TO INTERNET EDI

DAN ALAIMO

MINNEAPOLIS -- With the advent of new forms of e-commerce, some predicted the demise of electronic data interchange (EDI).

But many big players in the supermarket industry, including Nash Finch here, feel this is far from the truth.

In TradeWinds EC, Dallas, an application service provider, Nash Finch has found a Web-based program that facilitates the transfer of EDI data, a process that allows for the use of electronic purchase orders and other supply chain documents.

Nash Finch is about a third of the way through implementing the program designed to enable its smaller suppliers to become EDI compliant.

"This allows us to get very, very close to 100% EDI and therefore start eliminating some of the manual inefficiencies in processing data between us and the vendors," said Bruce Cross, senior vice president, business transformation at Nash Finch.

Industrywide, the 20% of large suppliers representing 80% of sales submit their purchase orders by EDI. The rest pose a huge paperwork challenge.

Business-to-business exchanges and XML (Extensible Markup Language) projects might be a solution in the future, but Nash Finch and others were looking for more immediate answers.

Nash Finch did about $4 billion in sales last year, operating 119 supermarkets, and servicing about 2,000 independents through its wholesale operation.

EDI is a long-standing method of communicating data between suppliers and supermarket distribution companies.

With the TradeWinds EC system, smaller- and medium-sized vendors submit purchase orders, invoices and other e-commerce documents over the Internet through a process that resembles e-mail.

The vendors fill out forms on the Internet and send them electronically to the TradeWinds EC data center. The forms are translated into the EDI format required by Nash Finch and then sent to the distributor.

The cost to process a paper transaction is $14.50, while the cost to process an EDI transaction is $1.38, according to TradeWinds.

"TradeWinds has the coordination point with the vendors. Our task is to get them set up in our EDI system," Cross said. "We have been EDI for years. This gives vendors that are not EDI-enabled an Internet interface so they can send a transaction to us that looks exactly like an EDI transaction on our end."

The program is free to Nash Finch, as vendors pay TradeWinds EC.

However, for vendors the cost is less than it would cost to become fully EDI compliant. The only other investment required of the vendor is a computer capable of running at least Windows 95 and Internet access.

"This is an efficiency that is on an EDI platform. This extends and supplements standard EDI with an Internet-based capability so you can have more of your vendors participate," Cross said.

In the longer term, Cross sees the industry using both EDI and an Internet-based XML format that is still being developed.

"There is such an investment in EDI, that it doesn't make sense to throw it out and start over," he said. "In our case, I view this as an opportunity to expand the population of vendors that can use the standard EDI format."

Responding to those who would say that EDI has a limited future because of new technologies, Cross said he doesn't think services like this will prolong EDI's life.

As for B-to-B, "there are a lot of questions still to be answered. In the interest of lowering costs for Nash Finch, and making sure that the investments we make are the right investments, we are being very diligent in terms of how we evaluate each one of these options.

"The tactical solution that is being provided by the TradeWinds-type companies may just by default support the longer-term direction," Cross added. "Logic would dictate that if you have vendors out there with limited systems capabilities, this gives them an entry point. Once they get the data formatted and into the system, it gives them an entry point that could be used in the long-term in this overall data exchange arena."

For Nash Finch's retail stores and the retail customers of its wholesale operation, "they would not see any direct difference [from the EDI project]. But indirectly, our goal is to take costs out of our operations, and once you gain those efficiencies, we like to think there's an indirect benefit for both our stores and our customers," he said.

Overall, he concluded, "expanding our EDI capability allows us to reduce manual processes and take costs out of our systems, which really benefits the company, the shareholders and the customers."

Other supermarket distributors using TradeWinds EC include: Albertson's, several Ahold USA divisions, C&S Wholesale Grocers, Fleming, Food Lion, Giant Eagle, Hannaford Bros., H-E-B, Meijer, Publix, Safeway, Wakefern and Winn-Dixie.