Web EDI forces suppliers to change tactics

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Web EDI forces suppliers to change tactics

Antony Adshead and Daniel Thomas

Web EDI forces suppliers to change tactics Asda's switch to web EDI will make suppliers comply and competitors catch up

Wal-Mart has completed the first trials of a web-based EDI system that it will roll out to suppliers later this year.

Analysts said moving to web EDI will change the B2B strategy of suppliers in the retail sector. It will bring cheaper and easier support of supply chain systems for top-tier enterprises, but can increase costs for those lower down the supply chain.

Following a roll-out in the US last September and completion of successful UK trials with Asda on AS2, the system will be with suppliers in October.

AS2, the standard for web-based EDI, began to achieve widespread use and interoperability last year. It is a web-based transport standard which allows businesses to manage EDI messaging over the internet, rather than paying for dedicated lines and service providers, known as value-added networks.

Frank Kenney, an analyst with Gartner Group, said, "Wal-Mart's decision will change its suppliers' strategies. The lack of proprietary line is good, but the downside is the supplier will need software to encode messages into AS2.

"In the short-term it is something for suppliers to learn. It may be a headache for some, but once they have reconfigured to Wal- Mart's needs they will be compatible with other customers."

Asda anticipates major savings >>

Benefits and challenges of AS2 EDI

Benefits

  • No "store or forward" mechanism between suppliers, so transmission is immediate rather than batch
  • Eradicates the cost of traffic paid to the value-added network supplier
  • 128-bit end-to-end security
  • Sends an order disposition notice to the recipient

Challenges

  • Many companies will need to run traditional and web EDI side by side, if mandated to use the new standard by a customer
  • Many EDI systems cannot be upgraded to web EDI
  • EDI is still seeing increasing levels of use.

The effect of web EDI on UK retail

Asda's plan to use AS2 is the "biggest change in traditional EDI in 15 years" and will have a profound impact on the retail and manufacturing sectors, according to industry experts.

The retailer is expected to begin using AS2, which is HTTP based and can transport multiple formats including flat-file EDI and XML, later this year. It hopes to replace value-added networks, which traditional EDI messages are routed through.

Supermarket rivals such as Tesco and Sainsbury's will watch the Asda initiative closely, said Gary Lynch, business development manager at UK standards body e.centre.

"AS2 is going to have quite an effect on the market," he said. "If Tesco or Sainsbury's can see Asda getting measurable benefits, they will have to look at it commercially."

Both the top two supermarket chains already use web-based EDI to communicate with suppliers, but only at a log-on/password level.

To ensure compatibility with AS2, many of Asda's suppliers will have to upgrade their existing EDI systems, Lynch said.

"The small suppliers with only one hub should not have too much of a problem, but the medium-sized and larger players will have to address the issue," he said. "There is no huge drive behind AS2 as traditional EDI is pretty efficient, but anyone who deals with Asda will have to change their EDI systems."

Related Topics: Web software, VIEW ALL TOPICS

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