SEARS’ EDI SOLUTION
Byline: Kim Ann Zimmermann
HOFFMAN ESTATES, Ill. — For Sears, Roebuck & Co., dealing with more than 7,000 vendors makes transmitting business documents via electronic data interchange a necessity, not a luxury.
And checking that all of those vendors, especially new vendors, are sending EDI messages in a readable form has in the past been a huge task that ate up a lot of staff time.
However, over the past year Sears has saved about $1,500 for each new vendor by outsourcing the task of certifying that EDI messages are compatible with Sears’ internal processing systems, according to Pete Rector, director of vendor relations for Sears.
“We’ve got 4,500 vendors serving our full-line stores and another 2,500 vendors serving our off-mall formats, including hardware-only stores, Western Auto and the new Great Indoors format,” Rector said.
“We estimate that it costs $1,500 to bring a new vendor completely up to speed on our EDI requirements, and that is on the low side. Now that we have outsourced the task, the cost to us is close to nothing,” he said.
New vendors are provided testing software through the third party free of charge so that vendors can test their own EDI messages. Rector declined to name the third party.
If additional testing is required by the third party vendor performing the certification, the vendor is charged $75 per test.
According to Rector, Sears does not pay the outsourcer for the service. He said the outsourcer provides the service in an effort to win business from vendors who need to transmit their EDI documents to Sears through a third party.
He said many of these vendors are larger and are experienced in EDI transactions; some are smaller and require an individual to work with, to get the EDI transaction in a format that works with Sears’ systems.
“And each retailer may want things in a slightly different way, so for the vendor to have to keep who wants what straight is also a chore on their end,” Rector said. “We realized that if we were going to enforce our rule that we accept no paper invoices without having our staff invest a huge amount of time with each vendor, we needed to outsource the job,” he said.
The process runs much smoother now that it is outsourced to a third-party vendor. “The third-party vendor is 100 percent focused on EDI transactions and they know our requirements,” he said. “The new vendor has a certain amount of time to run a test EDI message through the third party, and they can offer a variety of solutions to make sure things work, something our staff couldn’t be completely focused on,” he noted.
Rector attributes the test to Sears’ high degree of accuracy in EDI messages. “We have a 99.79 to 99.8 percent accuracy rate,” he said.
“This is very important to keep the flow of goods moving,” he explained. “If we have to stop because an advance-ship notice doesn’t match an invoice, for example, it significantly slows down the whole process when you’re processing 8,000 or 9,000 cartons an hour.”