SURVEY: EDI GROWTH SLOWED BY INTERNET

COLE CORBIN

WASHINGTON -- With electronic data interchange growth slowing in the supermarket industry, more companies are looking toward the Internet for business-to-business electronic communications.

This was one of the key findings of the 1998 ECR Electronic Commerce Survey, published Nov. 25 by the Food Marketing Institute here.

Mike McLaughlin, a partner with Deloitte and Touche, Cincinnati, which conducted the survey, said traditional EDI, which provides a set of communication standards and often requires third-party value-added networks, will not necessarily disappear from the technological landscape. EDI will most likely combine with Internet functions in the future to form "hybrid solutions," said McLaughlin.

The study, based on a survey of 192 retailers, wholesalers and manufacturers, assessed current progress in implementing EDI. Of the respondents, 13% were wholesalers and 40% were retailers.

Although the initial implementation of EDI was "very broad," the focus of the systems actually used was "very, very narrow," according to the study. While 85% of the respondents use some form of EDI, most of them only use it for basic vendor-managed inventory functions.

"It had been limited to these," McLaughlin said. "There are a number of other applications that are not being used widely."

In fact, the study showed that outside of basic functions, only 15% of the respondents used EDI for 27 other possible functions, including price changes, transportation scheduling and coupon set-up.

The lack of widespread use of EDI's possible functions has companies eyeing other technology for business-to-business communications.

"Implementation of EDI in the supermarket industry has absolutely stalled out," McLaughlin said. "Companies are looking for alternatives to EDI, and they are looking at the Internet to help them.

"The Internet is quickly becoming a significant alternative and supplement to electronic data interchange," he added. Hybrid solutions could combine EDI standards with Internet-based communication vehicles. The potential versatility and cost effectiveness of the Internet are discouraging companies from implementing more traditional EDI programs.

Interest in electronic communication using the Internet varies according to the level of investment a company has made in EDI. Among those companies that already have a high level of EDI implementation, only 27% were planning to use EDI on the Internet, according to the study. Conversely, 55% of companies reporting a low EDI implementation level plan to expand similar functions to the Internet.

Overall, the report noted little indication that the use of traditional EDI systems will flourish in the near future.

"We are not going to see as aggressive a plan (for EDI implementation and expansion) in 1999 as we did last year," said McLaughlin.