Dixons wants suppliers to trade online

Dixons Stores Group is determined to trade electronically with all its suppliers.

The Group, which accounts for half of Britain's computer retail business, is using a Web-based ecommerce system to convert suppliers still using paper-based systems but whose volume of business with the group is too low or sporadic to warrant full blown electronic data interchange (EDI).

Currently DSG has 374 merchandise suppliers, 320 of which use EDI. The company has identified a subset of the remaining 54 - which includes some games software publishers - to which it will pitch TradeWeb, a browser-based EDI forms service run by GE Information Services. Dixons signed up for TradeWeb in January and will begin joint visits to suppliers with GEIS to persuade them of the benefits of electronic trade with Dixons.

"In software we might be dealing with a publisher because they have the best game at the time, but six months later we're doing no business with them at all, so it's hard to insist they adopt EDI," said Pam Bingley, commercial systems controller for DSG.

This initiative for smaller suppliers is part of a programme to cut costs from Dixons' increasingly complex supply chain. Since it started using EDI in 1994, the retailer has expanded from two to five national chains, taken on thousands of new SKUs and seen its merchandise supplier base grow by 65 per cent. But efficiencies from electronic trading with suppliers have reduced inventory by 30 per cent and collapsed supplier lead time from a month to a week.

PC manufacturers, many of whom build to order for Dixons, are already benefiting from daily sales tracking data which they receive automatically.

If TradeWeb proves successful for merchandise suppliers, Dixons will extend the system to non-merchandise suppliers, which provide everything from temporary staff to toilet paper. Dixons has about 7,000 non-merchandise suppliers generating more than 500,000 invoices a year.

However, the Web-based service won't be offered to those suppliers which Dixons thinks should be using full EDI, because it does not offer the same levels of integration with purchase order and invoice processing systems.

But Dixons won't be doing any arm-twisting to convert suppliers. "We really like the look of this from the suppliers' point of view and we're keen that they participate," said Bingley. "But we rarely say to suppliers that we won't trade with them. We work in a market where the product is everything and we wouldn't want to do anything to jeopardise that."