REPORT ON EDI TRACKS LABOR SAVINGS

DENISE ZIMMERMAN

WASHINGTON -- Manufacturers who implement electronic data interchange can trim about $18 from the cost of processing a typical business transaction, according to a report released today by the Joint Industry Project on Efficient Consumer Response.

By replacing paper-based transactions with electronic transmission of information, some manufacturers and supermarket companies have eliminated entire layers of manual processing and enjoyed significant labor savings. Cost reductions attributed to EDI were quantified in a survey conducted by Deloitte & Touche, Wilton, Conn., as part of the "Integrated EDI: Purchase Order Through Payment -- An ECR Best Practices Report."

The new EDI report concluded that retailers saw even more dramatic labor savings than manufacturers -- as much as $23 per transaction. Wholesalers using EDI for major transactions like purchase orders and invoices estimate that processing costs were reduced by $11.30 per transaction, the report said, while brokers using EDI saved from $4.62 to $8.06 per transaction.

Other benefits attributed to electronic data interchange -- such as reduced clerical errors and shorter cycle times -- are documented in the report, which was prepared by the Integrated EDI Work Group, a subcommittee of the ECR Best Practices Operating Committee.

The report also presents results from two EDI pilot programs -- one in which EDI was used to facilitate electronic funds transfer, and another that illustrates the role of EDI in a continuous replenishment program between H-E-B Grocery Co., San Antonio, and Pillsbury, Minneapolis.

In the latter example, EDI was cited as a key enabler to CRP that drove sales volume from 10% to 30% higher than pre-CRP levels and allowed both the chain and supplier to spend more time on effective merchandising and less time on order management. In addition, H-E-B's inventory levels were reduced from 15% to 50% across two product categories; retail service levels averaged at least 99.5%, and unsalables in one category were expected to decrease 20% to 40%.

The report, released on the eve of this week's ECR Conference in Dallas, follows closely on the heels of two other ECR Reports published this month, "Computer-Assisted Ordering Practices and Benefits" and "Value-Added Network Services." Both of those reports present case study results.

Other ECR reports expected to be released later this month include: "Direct Store Delivery Best Practices Report," "ECR Technology Guide," "ECR: Wholesaler and Independent Retailer Getting Started," "Getting Started in ECR: Building Your Company Roadmap" and "Category Management ECR Best Practices."