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Why EDI is Important to the Retailer
It used to be tough to talk EDI with a retailer: “Why should I replace a convenient FAX P/O that goes directly to the keypunch operator with a 'rip and read' document that must go through the data processing department before we ever get it?" The introduction of the electronic invoice caught their attention with faster payments. Now a host of new capabilities are available to help the retailer.
In the past, balancing the retailer's supply and demand issues were only reactionary. But now, merchants have many new and powerful ways to be proactive, improve their business and prevent problems before they happen. The opportunities are almost limitless and only governed by their unique business mode of operation.
I will make the educated guess that improving inventory turn is the “big bang”. Retailers have “always” bought and stored inventory from their suppliers in warehouses, cross-docking locations or just sitting in trailers. Then they wait for demand to send to retail locations or even directly to customer. Forecasting was a “Ouija Board approach. It is polite to call this unproductive inventory, but it is really wasted BIG DOLLARS. The “instant knowledge” that only EDI can provide will let the retailer attack this money drain?
Another “heavy hitter” is to optimize pick/pack for distribution. Use EDI documents to tell suppliers your packing preferences. Some options are inner-packs of smaller quantities for picking, “master-packs” or cartons for warehousing. Different pack sizes based on quantity. The object is to make merchandise floor-ready with minimal effort by store personnel. Watch those labor costs drop!
A related project is to have suppliers label and prepare products right for the selling floor. Supplier can save steps by barcoding and marking the product with the proper product identification and price label. Furthermore, the retailer can even specify instructions to hang and fold.
Get logistics involved. Yes, you know how the merchandise is going to the stores. The ASN will even allow warehouse instructions so that cartons are not held up by warehouse in-out delays.
The PO acknowledgement saves countless hours of reconciling receipts to orders and that a PO change was accepted by the supplier.
Listed above are solid money-saving ideas, but remember, retailer's performance is judged every day by customers who expect “their” product is always available. Publicly traded retailers are under the eagle-eye of Wall Street Analysts. Less-than-outstanding performance gets spread all over the place. Look what happened to Radio Shack!