1. EDI is very much alive. Although there are many other options, legacy systems will keep EDI alive. However, the latest e-commerce systems are now incorporating the EDI protocols. For example, Websphere, the software that runs this web site, has an option, Data Interchange 3.2, that integrates EDI quite simply. So, although there are less than 1% of all small and medium businesses using any form of EDI, it is getting easier to implement every day. If you going to do business with big business, at least begin looking into Internet-based EDI (This link goes to a technical paper).

2. What is EDI?

2a. In our episode about EDI, the founder/owner, David Arnold talked about how Wal-Mart, Target and the big retailers all demanded Electronic Data Interchange. It added a level of security not available with standard Internet-based e-commerce.
After David explained how good they were at EDI, Hattie comments to David: And Seiko said, `That's what we want. We want a company like yours that is already on the front edge...'
DAVID: That's correct. Our distribution systems were as good as anybody's. Our customers were very happy with us. Every retailer operates very lean.

2b. How does EDI help my business?
Sterling Woody is the operations visionary who was alway pushing as close as possible to becoming paperless. Sterling commented, "The technology is changing so rapidly that if we're not on the edge of technology, then we're going to get left behind. We could not be where we are today if we weren't on EDI. We're doing roughly 250,000 orders a year. Ninety-seven percent of them are electronic. We send all of our orders via the Internet. We send them purchases via the Internet. We send projections on the Internet, and offer them access to our AS/400, so their information is out here. All this is done electronically."

3. Who is that group that allows Sterling to sleep at night?
Software provider Butler and Curless provides 24-by-7 connectivity service and support.

STERLING: All of this used to be done with paper. We used to take orders by mail and by fax. We still do, but today 90 percent of our orders are now paperless. When we get an order via EDI, the machine immediately sends back to them a confirmation that we received it. It's paperless. We then send them an Advance Ship Notice -- an ASN -- of what we're going to send. Then, we invoice. As much as possible, we don't even send paper invoices any more. They're all electronic invoices. And we are now working with customers that they pay us electronically.

Since we brought our first customer on doing that, the savings has been phenomenal. We had a customer that would send us a check, a remittance, that would be over 100 pages long because we sent them invoices. Now that's all done electronically and it's matched, and it can be posted to their account in a matter of minutes or hours vs. days or weeks.

We also get information the customers share with us, the sell through information, which is absolutely critical for our business. We know what's not only selling to our customers, but to the ultimate customer, who is the consumer.

HATTIE: (Voiceover) Doing business with big business will always require those of us who are small to have big technology, and today, it's cheap. Wal-Mart, Kmart and Target all require EDI.

4. More answers to the question: "What is EDI?"
(from the show on the McGilvrays).

MICHAEL McGILVRAY: ... electronic data interchange or interface. It's a system that allows people to communicate electronically between the vendor and the retailer, whether it be a vendor who's working with Penny's, whether they're working with Dayton-Hudson, it's a communications that allows them to look at their orders. They transmit orders electronically, again, same day, same hour, you might say. Also, the vendor, because it's all being done electronically, is getting paid faster.

EDI Services:

• Helps maximize business efficiency through reduced processing time and lowered costs;
• Allows the exchange of virtually any information in electronic form;
• Facilitates data interchange via the Internet or value-added networks (VANs);
• Helps prevent unauthorized data access with built-in security features; and
• Provides a solid foundation for implementing e-business.

Before you know it, you will be using PGP, then SET, and you'll be putting up a few firewalls and opening extranets for your customers and Intranets so your people can process orders from anywhere!

We invite your questions or comments.