June 9, 2011

Switching on the Savings – Part One

By Sonia Coleman

Affiliated Distributors (A-D) and affiliates gain supplier integration, support and competitive prices with electronic data interchange (EDI). This two-part article series follows representatives of A-D, Becker Electric, Franklin Empire, and Fromm Electric through their transition to IDEA’s Industry Data Exchange (IDX) for their B2B eCommerce needs.

Sometimes one conversation can lead to thousands of dollars in savings. That’s what John Hanna, president and COO of Fromm Electric Supply, discovered when he sat down to discuss electronic data interchange (EDI) solutions with IDEA at an Affiliated Distributors (A-D) Network Meeting.

“We were excited to take a look at the EDI service integration with IDEA, because most other companies offering EDI transmission lack integration,” Hanna said. Plus, he added, since Industry Data Exchange (IDX) is industry-owned, the company also wanted to support the industry.

Jumpstarted by that initial conversation, Fromm Electric Supply switched from its previous value-added network (VAN) to IDX in June 2010. As a result, Fromm is saving about 30 percent a year on its EDI transmission costs, reaping thousands in savings that can now be added to the bottom line.

“By using IDX, we can streamline processes, including ordering, invoicing and billing. As margins continue to shrink in our industry, we have to find ways to become more productive and remove some of these back-office expenses,” said Hanna.

Flipping the Switch    

Although Fromm Electric had already been reaping the benefits of eCommerce—fewer errors and more efficient document processing—the company decided to consider IDX at the suggestion of David Oldfather, senior vice president of A-D’s Electrical Supply Division. Oldfather had seen the benefits of IDX firsthand since A-D headquarters began using it in 2007. With over 600 customers, A-D transmits a high volume of EDI 820 (payment order remittance) through IDX, both inbound from affiliates and outbound to its suppliers.

“Our situation is unique because of the way our business model is set up,” said Susan Hilberts, EDI coordinator for Affiliated Distributors. “We needed a solution that could handle our volume and ensure that each customer was set up properly so that making the change to IDX would not affect our communications with customers.”

To ensure there was no downtime in the transition, A-D kept its other VAN provider in place and ran it in parallel with IDX for a brief period of time. However, that ended up being just a precaution.

“We didn’t have any issues that came up during the transition. IDEA’s staff was very knowledgeable about our systems and what we were trying to achieve. They made it as effortless as possible for us—in fact, they did the bulk of the work. As a result, everything went smoothly and it was a positive experience,” said Hilberts.

A-D’s relationship with IDX extends beyond its in-house EDI transmissions; the marketing group also recommends IDEA to its affiliates as an A-D-approved supplier.

“We’ve continued to work with IDX because of its ease of conversion for affiliates,” said Timi Pieretti, manager, IT applications for Affiliated Distributors. “IDX already has EDI integration established for a majority of our manufacturers—so it’s easier for affiliates to sign up and do business with their suppliers.”

Seamless Transition

That’s what A-D affiliates have been discovering: the migration to IDX is as simple as promised.

“I was surprised at how smoothly the transition went,” said Tom Snyder, MIS manager for Becker Electric Supply. “Usually when there’s a change like this, you are told how smoothly it will go and then when it actually happens, you find all the areas that require more tweaking than expected. However, the transition to IDX was different—everything went smoothly as promised and no issues popped up.”

With nine branches in Ohio, Indiana and Georgia, Becker Electric is currently using EDI with 40 suppliers, including Purchase Order (850), Invoice (810), Remittance Advice (820), Rebate Claims (844), Rebate Payments (849), Product Activity Data (852) and PO Acknowledgement (855). Understandably, Snyder, who also manages Becker’s Brookville branch, was hesitant to consider switching providers.

“There’s some work in notifying vendors and customers that you’re making a change and then working with them to make some changes on their end, so I was a bit nervous about it,” said Snyder. “Once we looked into IDX and saw the potential savings, we were comforted that we wouldn’t lose our EDI communications as we moved forward with the transition.”

Simple Integration

Fromm Electric Supply had a similar experience when it migrated to IDX. With 11 supply branches and three design centers throughout Pennsylvania, the distributor has 16 of its top 20 line volume vendors on EDI. What results is a volume of over 60,000 lines per year and includes EDI transactions 850, 844, 820, 852, 867, 855 and 810.

“The conversion to IDX was very transparent; we encountered no issues and experienced no business disruption,” said Sean McKee, director of information systems, Fromm Electric Supply. “The process was very easy and only took a day or two to get things going.”

Fromm’s president and COO Hanna agreed, “Our transition took less than a week, which is pretty cool. In today’s technology world, nothing takes less than a week.”

Canadian distributor Franklin Empire Inc. was impressed with the IDEA team, despite encountering a few bumps in the road when it made the switch to IDX a year ago.

“Our experience was largely excellent—a nine on a scale of ten. The implementation team on the IDX side made it as simple as possible, and I was impressed,” said Bob Shapiro, president of Franklin Empire. “We’re doing EDI transactions with at least 30 trading partners, so I expected some issues and that’s what happened. It’s not that I doubted the technology, but there is somebody at the other end of equation on trading partner side that impacts whether this goes 100 percent smoothly or not, and that’s not always in our control.”

Shapiro gives kudos to IDEA’s implementation team, saying that they took care of the communication to the trading partners, did all the appropriate testing and “were proactive from start to finish.”

In the next issue, you’ll find out how these companies saved money after their integration, what they have planned for the future and more about how they are united through A-D.