SECURITY EXCHANGE

MARK TOSH

Amid the continuing search for data communications methods that are secure, standardized and cost-effective, there are growing indications the Internet will eventually open up as an electronic pipeline for the supermarket industry.

The advantage of using the Internet for electronic data interchange, executives told SN, is that it can lower costs and speed up the electronic communications process. Currently, most companies use value-added networks or direct-connect transmissions for EDI transactions.

A few groundbreaking companies have already begun using the Internet to exchange EDI transactions as part of an industry pilot project, while other companies outside the pilot are actively encouraging their trading partners to begin similar tests.

Technology companies are also working on ways to develop "interoperability," making sure their products could interconnect in any future industry Internet communications system.

At the forefront of the effort to test the Internet for EDI transactions are a dozen companies participating in an EDI/Internet pilot test, which is running under the auspices of the Uniform Code Council, Dayton, Ohio, and its Uniform Communications Standard Task Group.

The pilot group's goal "is to come up with a standard for the grocery industry," said Don Flint, manager of EDI and electronic commerce at Nabisco and chairman of the Task Group. "What we need to do is to further refine the standards so that everybody knows what to do if they're going to do EDI over the Internet."

The project has been under way for about two years and is now preparing to launch a second phase of the test. One of the areas to be explored is the addition of a security function to Internet transmissions, which would allow trading partners to exchange information as sensitive as prices and payments.

Among the retailers, brokers and suppliers involved in the pilot are Nabisco, Parsippany, N.J.; Fred Meyer Inc., Portland, Ore.; Kraft Foods, Northfield, Ill.; Dayton Hudson Corp., the Minneapolis-based company that operates the Target discount chain; Bush Bros., Knoxville, Tenn.; H.E. Butt Grocery Co., San Antonio; and Frito-Lay, Plano, Texas.

"One of the ideas behind this is to find whether there is a way of getting EDI into a more modern communication mode," said Dave Hutchings, Kraft's director of supply chain logistics. "Right now EDI uses a fairly old bisynchronous technology for communicating between trading partners and it has some limitations in terms of speed and technical requirements."

Nabisco and its partner, Fred Meyer, are exchanging standard EDI files using Secure Multipurpose Internet Mail Extensions, S/MIME. The messages are encrypted and digitally signed and the system is now automated and running in parallel with production, said Chuck Umbreit, EDI applications manager at Fred Meyer.

"The acceptance of the Internet for EDI exchanges will come slowly," admitted Umbreit. He noted that the technology for secure data exchange is "readily available" and the dependability and speed of the Internet are very good.

"Yet, most information systems departments are still reluctant to commit the time and expense necessary to implement the technology," he added. "The major stumbling block is the programming required to integrate traditional mainframe systems with the electronic mail systems most commonly used to interface with the Internet."

A second problem, Umbreit said, is the lack of a widely agreed-upon guideline for using the Internet. However, he added, this is one of the issues the UCS pilot group hopes to solve.

While Flint noted that the EDI-Internet pilot is still in the "early stages," some of the trading partners are reporting substantial progress.

H-E-B is working with Earthgrains, St. Louis, in the pilot and the two companies have exchanged test data. They also have exchanged S/MIME encrypted and signed data using the 997 Functional Acknowledgement as confirmation of successful receipt.

John Stenske, a manager of electronic commerce programs for Kraft and the supplier's representative in the UCS-sponsored pilot, outlined the advantages of incorporating a security function into Internet transmissions with technology such as S/MIME. With a secure transmission system, trading partners could exchange price lists, remittance advices and other sensitive business documents.

The primary objectives of the encryption process and new software now being tested are to make sure no one except the intended receiver can read the document; no changes can be made to the document without it being detected by the receiver; the sender can be absolutely sure the intended receiver got the message; and the receiver will know for sure who sent the message.

The first phase of the UCS pilot was to test "plain text" transmissions over the Internet as an e-mail attachment without any special security. The test uncovered problems when data is translated from one platform to another, but the group hopes to eventually achieve interoperability among all the different software and hardware systems.

"About half the pilot group is still operating on phase one and the other half is moving into phase two with some success," Stenske said. "In phase two, the software is new and we are finding some problems, even going from one version of the software to the next. But these are the kinds of things you run across when you're almost in a research and development-type mode like this project is."

Spartan Stores, Grand Rapids, Mich., is not involved in the UCS pilot, but has expressed interest in testing the Internet as a communications vehicle with a number of its largest trading partners, according to a spokesman.

"We see the Internet as a viable communication alternative," said Jim Swoboda, Spartan's director of logistics and distribution technologies. He noted, however, that many companies still have concerns about security and service on the Internet. And traditional value-added networks or direct connections include the ability to determine almost immediately whether the transmission has gone through.

"Even with this in mind," Swoboda said, "we're open to testing the Internet."

Graham Clark, group manager of retail and distribution industries at Microsoft, Redmond, Wash., said he agrees the Internet offers potential benefits in the area of cost reductions, but there are still issues involving security and standardization of how EDI over the Internet will actually work.

"However, and this is a big however, a lot of what businesses, including the supermarket industry, do with EDI today is limited to what EDI itself has to offer," he added. "There are some real problems with EDI that don't go away just because you move it to the Internet. "The real future of business-to-business electronic commerce and the real advantages of the Internet won't come about if we limit electronic commerce to what EDI has historically been," Clark added.