Juwel has implemented EDI What may be learned from it?

EDI (Electronic Data Interchange) is also becoming increasingly important in the pet industry. The reason for this is that larger retailers and/or manufacturers are starting to require that their suppliers have EDI.EDI offers cost reductions and lower amounts of stock thanks to the automation of the flow of orders of goods between the parties involved.

PETS International (PI) conducted an interview with Juwel to get an impression of the reasons why it has chosen EDI as well as its experiences with the implementation of EDI.

PI：Why did Juwel start with EDI?

Wolfgang Durmeyer：

We started introducing EDI with one of our customers as part of our IT Strategy.

We had been using SAP R/3 for almost 6 years and are continually focusing on streamlining the processes involving manual input as much as possible. When you look at the work involved, first on the customer's side (input of ordering data into their system, printing the order, mailing or faxing it to us, checking our order confirmation) at the time the order is placed, and then on our end as we receive the order (input of the order fax, checking the stock positions and other relevant information, printing the order confirmation and faxing of mailing it back) you immediately realize that there is a lot of dupl.ication in the work being done, and thus a large amount of errors being made in the process.

We looked at EDI to automate this process at the customer's end as well as at our end, and have so far created an enormous time savings within our Sales Department. The process is completely automated now including even the dispatch of delivery notes and invoices. Similarly, at the customer's end, the process of receiving the goods, having them checked against the delivery notes and getting the invoices processed, is fully automated as well.

PI：When did Juwel start with EDI?

We started using EDI in the summer of 2003. since our main IT – System is SAP R/3, the integration was a piece of cake and went very smoothly. We were able to take the first electronic step within 4 weeks from the time we ordered the necessary hardware.

PI：What Juwel's definition of EDI?

For us, EDI is the most logical step for automating our purchasing and sales administration. We will focus on introducing all of the processes involing our suppliers and most of our customers into the #DI standard step-by-step, eliminating the need to double capture and avoiding error-prone manual operations. Thus, EDI may be defined as the instrument used to allow our highly qualified staff to concentrate on their areas of competence, i.e. getting the best raw materials available at the most competitive prices, as opposed to worrying about the accuracy of IT- Input.

PI：What role does EDI play in the management of the warehouse and the level of stock at Juwel?

In our opinion, these are two different things. We have been using automated warehouses for quite some time, both before and after our introduction of EDI. The control over our stock levels, re-ordering levels etc. are built into our main IT-System SAP.EDI, as we use it, will not have much of an effect on this already functioning system, other than to make the purchasing and sales activities involved easier.

PI：What does EDI mean to Juwel's clients as well as to the Juwel organization?

As I mentioned before, our clients save a lot of time by allowing the electronic processes to take over a great deal of the activities involved in ordering. The prerequisite is the presence of a system on their end, which will be able to automatically use the data transmitted by EDI. If this is possible, there will be a lot less work involved in checking order confirmations, inputting delivery notes, and processing invoices.

PI：What kind of limitations does Juwel face in terms of suppliers/buyers and clients?

The limitations are mostly associated with the fact that not all of the IT-Systems used are capable of immediately linking into EDI. Thus, the costs involved in the introduction appear to be high initially. For this reason, the introduction of EDI will not be of much benefit for our customers or suppliers if they do not have or require the fully automated administrative process which we would require.

PI：What is the reason that a large number of pet suppliers have not yet implemented EDI?

This, I believe, is a point which should be viewed in its entirety, not simply within the pet Industry. I suppose that the reason for this is that IT- Systems are, in general, very expensive when it comes to those systems that are truly integrated. Thus, the cost effectiveness of these IT – Systems is the biggest stumbling block when it comes to introducing EDI. EDI on its own means very little.

PI：What does the near future hold for EDI within the pet business, in Juwel's opinion?

I believe that introducing EDI is a very slow process for all small- to medium-sized businesses regardless of the Industry in which they operate. But this is mainly caused by the need to invest in sophisticated IT – systems in order to manage the business as a whole, and I can remember the difficulties quite clearly that we had in justifying the costs involved in introducing SAP within our company.

PI：If Juwel were to list the advantages and disadvantages of EDI, what would this list look like?

Wolfgang Durmeyer

The list would be very short：

a.       reliability of transmission

b.       time savings

c.       reduction in processing costs

d.       ability to respond quickly to stock shortages and delivery times.

These are the advantages. Juwel does not see any disadvantages to EDI.

Source: PETS International Magazine (issue 3,2004)