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Text File | 1996-08-23 | 4KB | 69 lines

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         │IS ELECTRONIC DATA INTERCHANGE IN YOUR FUTURE?│
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OK, so you've just finished qualifying for the European
market's ISO-9000 quality standards requirements....  You're
up to speed now on bar-coding all your products to keep your
domestic retailer customers happy.... What next?

Electronic Data Exchange ("EDI") is the next hurdle your
small business is likely to have to face, just to be able to
deal with large customers.  Pioneered by large companies
like Wal-Mart, EDI is filtering down to smaller companies now.

Briefly described, EDI is computer-to-computer exchange of
business information (such as inventory data between retailers
or wholesalers and their suppliers, in its classic form)
between trading partners.  It allows firms who do business
on an ongoing basis with each other to eliminate the costly
and time-wasting processes of generating and mailing paper
documents that must then be re-keyed into the recipient's
computer system.  Transferring such information, which is
in many cases very time-sensitive, by modem not only avoids
mail delays and costs, but tends to sharply reduce the errors
that can result from having to retype the information to
input it into the computers of the receiving entity.  (Some
experts estimate that over 75% of the information printed
from a vendor's computer has to be re-entered manually in
the purchaser's computer, where EDI is not being used.)

What allows EDI data swapping to work effectively is a number
of "transaction sets" (designated X12) created by the American
National Standards Institute (ANSI), for such common business
documents as purchase orders and invoices.  Using the X12
transaction sets, and in most cases relying on third-party
value added networks (VANs), it is now possible for otherwise
incompatible computer systems to communicate seamlessly.

The downside in this otherwise cheery picture is that many
big vendors are requiring even the smallest suppliers to
set up EDI links, if they want to do business with the large
firms.  In addition, more and more government agencies that
contract with small businesses are requiring bidders to have
EDI capability to be considered for government contracts,
except for the very smallest dollar amounts.  Thus, if you
aren't up to speed on EDI, you may be out of contention for
most government contracting purposes now or in the very near
future, as well as being unable to deal with many commercial
firms that require EDI.

This trend is spreading rapidly across the country, so if
your firm is a supplier to large customers, you may soon have
to gear up your operation for EDI, or lose those customers.
For most small suppliers, this will mean signing up with a
VAN that can act as the intermediary between the supplier
and its large customer.  Relatively affordable EDI software
packages are also available now that can make the transition
to this way of doing business relatively painless.

RECOMMENDATION:  Do your homework and gear up for EDI now.
Otherwise, you may be caught later in a tight situation when
a major customer announces suddenly that it will henceforth
require EDI links with all its suppliers.  Many Small Business
Administration offices are now offering seminars on how to go
about setting up your firm on EDI.  For assistance or to find
out where you can attend a seminar on EDI, contact your local
SBA office, SCORE chapter, or the nearest Small Business
Development Center.