Internet vs. EDI Over a decade ago, there was a revolution in vendor/retailer communication: Electronic Data Interchange (EDI) took over as the industry standard in order procurement. Expensive to implement and involving highly tailored systems, EDI nonetheless enabled both parties to better manage inventory. Fast forward to today. The Internet, is challenging EDI. Yet EDI is not completely succumbing to the Internet juggernaut just yet. On EDI's side is the fact that it is firmly entrenched and works just fine for what it's supposed to do, leading many in the industry to take an "if it ain't broke, don't fix it," approach. Bill Parsons, vice president of corporate trade development for American Greetings, based in Cleveland, OH, thinks the Internet will eventually take over from EDI but says in the short term, "Companies made a big investment in EDI, and they're not going to toss it out the window." Nancy Swartzentrauber, manager of customer information services for Rubbermaid, based in Wooster, OH, also points out the security issues involved in transmitting data over the Internet as opposed to the secure phone line transmissions of EDI. On the Internet's side is the fact that it is much less expensive to implement than EDI and offers many-to-many rather than one-to-one communication. "The Internet will replace EDI," says Don Stuart, partner at Cannondale Associates, based in Wilton, CT. "It's a cheaper and better way to do what EDI does. EDI is a closed, proprietary system that makes it costly for a manufacturer to set up linkages. The Internet will help level the playing field for other retailers out there. B2b exchanges over the Internet eliminate the upfront costs of setting up a proprietary system, and they're open to everyone." The Internet will also enable retailers and manufacturers to strip out inefficiencies like sales calls and paperwork, says Stuart, adding, "The average consumer goods company spends 4-5 percent on cost of sales, so we're talking about billions of dollars that can be done away with due to b2b e-commerce." Debby Bosselman is director of e-commerce strategy and strategic alliances for PFSWeb, an e-commerce and logistics solutions company that delivers outsourced end-to-end transaction management, inventory distribution, and customer care solutions. The Plano, TX-based company sets up systems that will work over either EDI or the Internet. You'd expect Bosselman to be betting on the Internet, where she says she sees the cost savings and innovations taking place. However, Bosselman is quick to point out that "EDI is a system that has worked for many years and it is still a very viable option. In my opinion, not everyone who does EDI is going to move that to an Internet interface, not that it doesn't make sense and they won't save money, but those (EDI) systems are tried and true, and once they're set up, they're bulletproof. " While Bosselman doesn't see a rapid abandonment of EDI in the immediate future, she adds, "I will admit that if you move to the Internet and the technology that exists out there, you can take advantage of real-time capabilities, which is what the Internet is all about." The situation as it exists right now is a coexistence of both systems. The biggest use for the Internet thus far has been in b2b trade exchanges. "These exchanges offer an incredible amount of data that enable the trade to improve inventory flow and in-stock positioning," says Steven Love, vice president, national retail team for Cap Gemini Ernst & Young, LLC. A.C. Nielsen US announced two initiatives at its Category Masters conference held in August. The AC Nielsen Answers for Category Business Planning is a Web-based information intelligence system that will make the practice of category management easier and more accessible for manufacturers and retailers. The system allows both parties to manage categories based on a single definition of each category--the retailer's. Brad Anderson, category management director for Nestle U.S.A., said, "Common language between manufacturer and retailer is very important, so that we can actually spend time trying to get at the decisions rather than trying to collect the information. Too much time in the past has been spent on trying to collect data, match it together, and make sure that we're both on the same page. That left little time to actually make decisions and implementations. So this helps facilitate a way for everybody to look at the category the same way and eliminate all of those extraneous activities."   Copyright© all text 2004 by Ela Schwartz