Gearing up for EDI.

• Author: Burke, Donald P.
• Position: Electronic data interchange - State-of-the-Art Treasury Management

Some companies are waiting to see how other firms fare with electronic data interchange before they experiment with the technology. Others aren't.

THE QUALITY MOVEment in America has reached virtually every aspect of corporations today. At Georgia Gulf, a manufacturer of chemical and plastic products, much of our quality focus is on the flow and storage of information. How do we respond to this rapidly changing environment? First, we look for ways to improve.

When several top Georgia Gulf executives created an information management team (IMT) to target areas in the firm where continuous process improvement would have a dramatic impact on information, they found that the most effective way companies can transfer and manage information between each other is electronically. So the IMT's first strategic directive was to initiate a task force to research how information flows to and from customers and ultimately to develop a strategic plan for Georgia Gulf.

The task force members were selected according to their areas of expertise, bringing together a national sales manager, a credit manager, a customer service representative, a systems analyst, a sales representative and an accountant. After five months of discussions, the task force came to this conclusion: Georgia Gulf needed electronic data interchange (EDI) to be competitive.

JUST WHAT IS EDI?

The first item on the task force's agenda was to learn more about EDI and how Georgia Gulf could incorporate the technology into its operations to better serve our customers.

The best definition of EDI the group came up with is "communicating common business document data between two different business management systems using standard data formats," with the key phrase being "between two different business management systems." This phrase implies the following: that trading partners have computerized systems in place, so data can be integrated directly into or out of systems; that, to gain the greatest benefit, EDI must be integrated into computerized systems to eliminate redundant clerical effort, the need to mail documents, processing time delays and errors from moving information; and that EDI applications can be found in virtually every business management system.

The task force determined that nearly 70 percent of the data in any computer originates from or will be transferred to another computer. This fact makes the application of EDI a massive shift in information management for a company. But many companies find the change worthwhile. When information is transported via EDI, which keeps data in a digital format, the need to reenter data is eliminated. Because most corporations use standard mail services to transport data, they have to transform digital information into paper form before sending it and then back into digital form upon receipt. With EDI, a translation program enables the computer to convert data automatically so it can be sent directly over a communications network to trading partners.

EDI Research, Inc., conducted a survey to find out the primary reason why firms use EDI and discovered these motivations: their customers request it (35 percent); they get quick access to marketing information (26 percent); they gain an advantage over their competitors (14 percent); their data is more accurate (13 percent); and they save money (12 percent).

TRY AN EDI SURVEY FIRST

Because we wanted to know where Georgia Gulf's customers...