Reap the Cost-Saving Benefits of “End-to-End” Business Tools from IDEA

  • 30 Sep 2005

Everyday thousands of transactions are occurring between distributors and manufacturers, requiring synchronization and tracking of product, pricing, invoicing, and order processing data. In order to reach maximum effectiveness, all of this "data" must be internally synchronized and matched with the trading partner in order to maintain efficient, error-free communication.

Electronic Data Interchange (EDI) tools and solutions provide a low cost, highly reliable solution for business communications. One such provider for these tools is the Industry Data Exchange Association (IDEA). Formed as a joint venture between the National Electrical Manufacturers Association (NEMA) and the National Association of Electrical Distributors (NAED) in 1998, IDEA is now a privately owned e-commerce service provider, linking hundreds of electrical manufacturers and distributors worldwide. In addition, IDEA is the e-business standards organization in the electrical industry.

E-commerce solutions provide trading partners with a common language in which to communicate and transmit electronic business documents. IDEA offers the electrical channel a suite of services including:

  • Industry Data Warehouse 2 (IDW2) - a central repository of manufacturer provided product, pricing, and attributed data for authorized resellers.
  • Industry Data Exchange 2 (IDX2) - enables manufacturers, distributors, and service providers to conduct partner-to partner electronic business on an Internet based network using EDI, XML, flat file, or Web Form transaction sets. The IDX2 also provides direct connections to other similar Internet-based networks.
  • Industry Retail Database (IRD) - a central repository of manufacturer-provided retail product data for delivery to retail hard-line and consumer packaged good (CPG) chains via the UCCnet data and the Global Data Synchronization Network.
  • Data Audit and Certification (DAC) - this program measures and rates manufacturer IDW2 data against a specification to ensure that the information that resides in the Supplier's backend system and the IDW2 are in sync and meet the requirements needed to purchase, invoice, ship, and pay for products.

MAXIMIZING EFFICIENCIES
In a recent study, independent consultants revealed these services are generating .05% to 2.0%of additional profit as a percentage of sales for distributors (depending on their current state of transaction automation and the accuracy of their product and pricing data) and a product impact of 0.25% of sales or more for manufacturers.

Bob Witting, Corporate IT Manager for Independent Electric Supply Inc., reports, "We started using IDX2 for all of our EDI traffic in February 2005. Since using IDX2 exclusively for all 850 purchase orders to our Suppliers, we have lowered our monthly EDI VAN charges from an average amount of $1,200 to less than $50 per month."

"IDW2 Affiliate and Supplier customers can synchronize product data free of communications charges," notes Mike Rioux, President, IDEA. "Generally, EDI document 832, which is used to transmit product data, generates over half the traffic volume through the IDX2. Adding to the savings potential, the IDX2 does not charge for extras such as mailbox fees and interconnect fees, which connect to other networks external to the primary VAN. These extra fees can increase bills by 15 to 20 percent depending on the quantity of characters sent and received monthly. IDX2's reliability and service are unmatched in the market," emphasizes Rioux. "Since its inception in April 2002, IDX2 has experienced 100% reliability. The product's ability to communicate with VANs and other similarly situated exchanges allows IDX2 to route and deliver business documents to virtually any trading partner worldwide."

The theme driving the benefits of IDEA services is about increasing the speed and accuracy of business. Individual company staff, systems, and facilities can process MORE revenue-producing transactions per day versus that which can be done manually.

"This makes the channel more efficient, profitable, and competitive, as transactions how faster and resources to resolve errors can be reduced," Rioux explains. "As a result, you will spend more time producing revenue as opposed to addressing and resolving order management errors."

Edgar Cyr, Automation Specialist for Kirby Risk Electrical Supply, notes, "We were able to reduce our head count by two people when we moved to the IDEA system. This system has removed manual errors from the process and has provided us with better reporting, better searchability, and better data. We've also doubled our SPA claim dollars in two years since moving to this system."

IMPROVING BUSINESS RESULTS
Using EDI and synchronizing data with certified manufacturer data sources ensures correct, up-to-date distributor costs and resale price data, which ensures correct customer pricing, expected gross margins, and correct SPA claims. Electronic commerce continues to drive profound changes in the way business is conducted. EDI Service Providers like IDEA help to maximize supply chain efficiencies, allowing Affiliates to conduct business electronically with 100 percent of their Suppliers, customers, and strategic partners.