eC-BP.org interviews Associated Food Stores

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Two years ago Associated Food Stores was trying to increase its EDI transaction volume by contacting its vendors and requesting they start using EDI. The company found that many of its vendors weren't able to make the switch for a variety of reasons. The answer to the problem came during a local user-group meeting. eC-BP.org promotes the establishment of Best Practices in e-Commerce. This is an example of the kinds of successful implementations eC-BP.org promotes.

When Associated Food Stores, (http://www.afstores.com) headquartered in Salt Lake City, Utah wanted to bring the bulk of its vendors online, it turned to web-based service providers like Owens Direct for help. The company supplies almost 600 independently owned grocery stores in the Western United States. "Converting our vendors from paper invoices and purchase orders to EDI has let us reduce our accounts payable department from 25 to 10," says Doug Carlile, EDI Coordinator and accounts payable manager, for Associated Food Stores.

Two years ago Associated Food Stores was trying to increase its EDI transaction volume by contacting its vendors and requesting they start using EDI. The company found that many of its vendors weren't able to make the switch for a variety of reasons. And AFS's staff simply weren't trained to "sell" its vendors on the benefits of e-Commerce. The answer to the problem came during a local user-group meeting. Carlile explains, "We have an active EDI user group in our area, and through the group I discovered that there were simpler and less expensive alternatives to the more traditional EDI programs. These Internet-based solutions seemed to be a good fit for our vendors that had not yet come on board with EDI transactions."

Associated Food Stores already had nearly 250 of its suppliers doing business electronically. And while those 250 suppliers represented nearly 60% of the company's volume, more than 1,200 of AFS' other suppliers were still doing business on paper. By promoting web-based EDI to its suppliers the company has been able to bring the number of participating suppliers to over 1,000, representing about 80% of its business transactions.

According to Carlile, "Owens Direct has helped us substantially increase online participation with our less sophisticated partners. We provided them a list of our suppliers that were not using EDI, and they took it from there." Owens Direct contacts AFS's vendors and presents the solution to them, along with the benefits they can gain from doing business electronically. Once the vendor is ready to start, Owens Direct does all the technical work to assure transactions are processed without errors, then trains the users to manage their accounts.

"We haven't mandated participation in our EDI program, and we probably won't. Still, I believe we can achieve 90 to 95% participation eventually. But many of our suppliers are small, local farmers, and just aren't interested or capable of doing business this way."

Constant flow

Since AFS started working with Owens Direct, new vendors come online at the rate of two or three each week. "One of the great things about having Owens Direct handle our vendors is that we don't have to test transactions with each supplier. We only had to go through one test. Owens Direct handles the setup and testing of each supplier, then lets us know that they are going to start sending transactions," says Carlile. The AFS staff sets up the vendor's account in their EDI software and transactions simply happen. "It takes us about five minutes to enable a vendor. We couldn't have come this far if we had tried to do this ourselves."

Open options

AFS lives out eC-BP's tenets by offering options to its vendors. "We didn't want to be making mandates with regard to implementation timing or software selection," says Carlile. "We tell our suppliers that we strongly recommend that they start doing business with us via EDI, and then we offer them choices with respect to what provider they use. We don't get any kind of commission from the companies we recommend, and we don't want to be seen by our vendors as forcing our choice on them." For that reason, AFS works with more than one web-based EDI provider, letting its suppliers choose the best fit for their operations.

More than just reduced staff count

AFS estimates its cost to process non-EDI invoices and related documents at between $25 and $50 each. "That cost doesn't represent the additional space required when documents are scanned and stored in our digital filing system," says Carlile. AFS has implemented a document storage system to retain digital images of all its business transactions. "We get about 1,500 to 1,800 invoices each week," he says. EDI transactions are converted to digital images and stored automatically in the company's digital warehouse. "When we have to scan document rather than create them directly from EDI data not only do we have to spend the time doing the scanning, but the scans take much more space on our system's hard drives."

Carlile concludes by adding, "Working with Owens Direct and companies like it has been great for us. It has let us take advantage of technology and expand in ways that we could not have done by ourselves."

About eC-BP.org

eC-BP.org is a forum for discovering and promoting the Best Practices for e-Commerce. eC-BP.org Newsletter is distributed to those interested in understanding how their peer organizations are archiving their goals with regard to EDI. Free subscriptions are available at http://www.ec-bp.org/go/?pr

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Scott Koegler
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