Giant food retailer Tesco has completed an Internet-based electronic commerce trial, which involves its small suppliers for the first time.
Tesco has 2,000 suppliers enabled to use electronic data interchange (EDI), but also trades with more than 600 small and medium-sized companies, many of which have limited IT, let alone EDI. These smaller suppliers usually receive and settle orders from Tesco via post or fax, which makes them slow and inefficient.
But the recent pilot, conducted in conjunction with EDI systems supplier GE Information Services, used an Internet-based electronic trading system as a gateway to Tesco's EDI for these small partners.
"Prior to this trial we had never even used a Windows PC," said Peter Munn, managing director of Telford-based Kingcup Mushrooms, a 30-employee Tesco supplier. "The project worked exceedingly well, providing us with instant access to the Tesco ordering system. We also had the benefit of knowing that our invoice had arrived instantaneously, rather than relying on the post. It removed a lot of manual duplication of effort." The PC running the browser interface to the system was supplied by the supermarket.
The results of the pilot project are being evaluated by management consultancy Roland Berger Partnership before Tesco progresses further.
"It means Tesco can handle small suppliers with the same EDI systems that it uses for the rest of its trading partners," said Colin Billinge, marketing director of GEIS. "Which has got to be good news for the small suppliers."
Electronic data interchange has previously been a luxury enjoyed by only the very largest trading partners, which have sophisticated transaction processing systems and can afford to operate the private data networks required. There are up to 20 million businesses in the UK, but only 17,000 EDI users.
Some analysts have predicted that the rise of Internet-based ecommerce will mean the demise of traditional EDI, but Billinge disagrees. "The rate of growth of new EDI systems has slowed right down, but this Tesco trial proves that EDI can be integrated with Internet commerce. Soon it will be hard to tell the difference between EDI and Internet-based systems." Whereas EDI systems require a permanent trading status between partners, Internet-based trading can be set up on an ad hoc basis.
GE has an 83 per cent market share of EDI in the UK.
GEIS also announced that it will integrate into its EDI systems the products recently announced by Actra, its joint venture with Netscape. The Electronic Commerce Xpert suite, part of Actra's Cross Commerce range and comprising Order Xpert, Merchant Xpert and Publisher Xpert, is aimed at integrating Extranet-based ecommerce software with legacy systems.
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