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For a growing supplier of consumer goods, getting the business of Wal-Mart Stores must be the ultimate dream.
And the ultimate nightmare, too.
There's a price to be paid for working with the nation's largest retailer. Like it or not, even the smallest supplier must get used to complexity.
Westminster Inc., an importer and exporter of toys, novelties and gifts, has its eyes on those Wal-Mart shelves. But to get there, it will have to demonstrate familiarity with sophisticated information systems for ordering, invoicing, labeling and shipping.
The Westminster catalogue runs the gamut from battery-operated racecars to whoopee cushions. Founded more than 30 years ago, the company still only has revenues of around $14m. But growth is definitely on the agenda, says information technology manager Doretta Levy.
Westminster already has a number of large customers, including Walgreen Co., Party City Corp., the Marshall Field's division of Target Corp., the Carson Pirie Scott division of Saks, and the Belk department-store chain, spread throughout the U.S. Southeast. Most are beginning to demand a higher level of IT prowess from Westminster and other suppliers, regardless of size.
Belk was the first to put Westminster on the path to electronic data interchange (EDI). Levy says fax and e-mail are no longer sufficient for major retailers, who are looking to cut costs through the elimination of manual processes.
EDI is nothing new to large merchandisers. Still, for a supplier the size of Westminster, it can be prohibitively expensive. Sales volumes don't justify the cost of running a full-scale EDI program, or employing the services of a traditional value-added network (VAN) as go-between, Levy says.
Westminster had been making limited use of a stand-alone EDI data translator called TrustedLink from Harbinger Corp. (now owned by Inovis). But that system was "cumbersome and difficult to use," says Levy. It didn't integrate with Westminster's back-end accounting system, Visual AccountMate. Data culled from EDI transmissions had to be manually entered into the system. And Westminster lacked internal expertise to craft an alternative IT solution.
The Price of Success
The company was under growing pressure to embrace EDI. "If you aren't EDI-compliant, [retailers] charge us back for the extra work they have to do," says Levy. A full-scale EDI program was becoming the price of doing business with the big chains.
Westminster briefly considered implementing its own system, but decided the effort was too much trouble. "It wouldn't have been difficult to write," Levy says, "but it was cheaper to go with a third-party."
Instead, it turned for help to RedTail Solutions Inc., a Westborough, Mass.-based provider of outsourced EDI services. RedTail, focused on small and mid-sized suppliers in the retail, grocery and industrial sectors, offered a means of acquiring EDI expertise without heavy investment in internal systems and IT staff.
RedTail gave Westminster a demonstration of its Transaction Manager tool over the internet. It proposed to act as the company's virtual IT department, deploying EDI for the transmittal of purchase orders, acknowledgments, invoices and advance shipment notices (ASNs). RedTail would also play the role of VAN, linking Westminster to its key customers.
"We are a complete service," says Peter Lopes, vice president of sales and marketing with RedTail. "They don't have to subscribe to a VAN in addition to us."
Lopes says the vendor had experience in integrating Transaction Manager with systems such as Visual AccountMate. And it wasn't deterred by the fact that Westminster was running a customized version of the financial software.
Installation and training of the RedTail system was conducted remotely. Lopes says it was up and running with Westminster's dozen or so EDI-enabled partners within 60 days. (The company also sells to a number of smaller businesses, including airport and museum shops.)
RedTail took over responsibility for the mapping, translation and testing of all EDI messages. Under the system, a Westminster customer transmits an order to RedTail. Westminster then imports the data into its accounting package, generating customer-specific labels and transmitting ASNs back to the customer via RedTail. The vendor also transmits invoices in standard format.
Improving the Tool
Small as it is, Westminster has had major input into the vendor's software. According to Levy, Westminster initially found RedTail's method of relaying ASNs to be repetitive and time-consuming. In response, RedTail began working on a way to streamline the process, putting Westminster on its list of customers to participate in beta testing. Previously, RedTail had to manually create "ship-to" notices for each store receiving part of a larger order. ASN documentation and label printing are now being automated, says Lopes.
Westminster isn't afraid to make changes in its IT processes. "Because we're small," says Levy, "we do a lot of stuff by the seat of our pants." She stays in frequent contact with RedTail's development team, seeking help and offering advice on system enhancements.
Acquisition of an EDI program didn't just help Westminster conform to the demands of existing customers. It opened the door to new accounts, like Wal-Mart and Target Stores. "Prior to RedTail, they were out of our ballpark," Levy says. "And we didn't have that many EDI customers. Now it's different."
Levy is open to more sophisticated technology, to keep pace with the growing demands of big retailers. "We're going to do what it takes to satisfy our customers' requirements."
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