As the worldwide apparel industry moves toward more sophisticated use of communications technologies, it's becoming increasingly apparent that old Electronic Data Interchange systems - commonly known as EDI - are not enough.

Before web-based EDI, S Schwab Co, of Cumberland, Maryland, struggled to stay pro-active on the normal set of problems that would arise in its array of offshore manufacturing plants. The maker of Ralph Lauren childrenswear and the Me Too line of childrenswear couldn't have its offshore plants invest in expensive traditional EDI, and that might not have been quite the ticket anyway.

"Previously, when a factory had a problem, it would just e-mail everybody, and everybody would think somebody else was handling it," says Doug Schwab, vice president of technology. Before, factory production status was communicated weekly on spreadsheets, often at too great a lag to do anything about problems too old to fix properly. With web-based EDI's nearly instantaneous transmission, Schwab can track production step by step, both sides can generate reports and identify potential problems, such as materials or capacity shortages, before they occur, and react to them with alternative plans.

S Schwab is currently in the process of moving from pilot to reality in three Colombian plants, with managers there trained on the e-SPS system for Internet sourcing and production from New Generation Computing, a Miami Lakes, Florida-based software supplier.

EDI is a venerable success by the standards of the pre-web world. Communicating purchase orders, invoices and ship notices electronically is at almost full penetration among large apparel makers and retailers, at first via separate dial-up connections to each retailer, and now through value-added networks (VANs) through which multiple sets of communications can flow.

But that's only part of the story. EDI, pressed on apparel makers by retailers, is expensive and complicated. Even though there are, ostensibly, a set of EDI standard communications documents, each retail chain still requires variants of them. These factors, plus the sheer expense and IT expertise necessary, have shut out many smaller vendors from EDI, and created headaches for the larger ones. To get the most out of EDI, it has to be fully integrated into a company's existing systems, whether enterprise resource planning (ERP) or simpler accounting and manufacturing packages. Otherwise, apparel makers are stuck with the time and errors of rekeying and the expense of VAN charges, which fall far more heavily on the suppliers than on the retailers. Plus, EDI's disadvantages — its slowness and batch-oriented nature — are becoming more apparent as companies strive for real-time visibility of the supply chain.


"EDI is a never-ending cost"
That's why about 20 per cent of the apparel makers engaged in EDI are experimenting with web-based EDI, in which web-based software, often provided via an application service provider (ASP), can send and receive EDI documents, translating them when necessary, and deliver them to a customer's VAN. Using the web eliminates VAN charges, speeds information, thus increasing visibility throughout the supply chain, and enables both smaller vendors and offshore manufacturers, as well as logistics providers to join the party for the benefit of all.

"EDI is a never-ending cost," says Fred Isenberg, New Generation Computing's vice president of sales. "There are always new trading partners and new EDI demands to be integrated into your system. For example, Kmart is the only retailer that requires an appointment time for shipments to be part of the EDI documentation, and on paper manifests. When you're dealing with JCPenney, you're in another world."

Ease of use
Schwab's use of web-based EDI solves a problem of great concern to the industry. Most tier-two and tier-three global suppliers aren't EDI-enabled because of the expense and difficulty, but it's easy and cheap to become web-enabled. "The web is easy to use, requires no maintenance by its users and can feed right into retailers' systems," adds Isenberg. "It's user-friendly, and can enable companies to track purchase orders from inception to reception."

EDI also doesn't measure up to the web in a couple of other ways. Because it's so linear a system — information goes from point A to point B and back — it doesn't allow for the kind of exception reporting and subsequent problem-solving collaboration that Schwab is so eager to use.

Russell-Newman Inc, the Denton, Texas, intimates maker, has been in on EDI since its beginnings. "We've been using EDI since it was separate proprietary lines to each retailer, and then VANs," says Trey Martino, vice president of administration. "I'm happy with the efficient transfer of information, but not with the cost."


"VAN charges alone ... are one-third of Russell-Newman's IT budget"

VAN charges alone, which have been rising as retailers have demanded smaller, more frequent deliveries, are one-third of Russell-Newman's IT budget. (The sender pays the fee, but vendors' fees are high and retailers' relatively low.) On top of that, it can take hundreds of thousands to a million dollars to properly integrate EDI into a company's internal systems, a continual process as new retailers are added, or retailers change their EDI document demands.

"EDI is supposed to be standardised, but it's really a bunch of different dialects," says Martino. "You used to need a four-inch thick instruction book — often a different one for each customer — and PhDs to figure out where to put the shipping instructions," says Schlomo Bitter, vice president of business development for Computer Generated Solutions, a New York City-based software firm to which Russell-Newman has turned for its web solution.

The web-based EDI that Russell-Newman is embarking on offers the same benefits of EDI at a 60 per cent savings over VAN charges, and at faster speeds: seconds versus up to two hours for transmission. Furthermore, reliability of transmission is much greater on the web simply because traditional EDI is so slow. With the latter, if you lose the telephone line prematurely, you have to start the transmission again from the beginning.

Making moves transparent
Because retailers — with their huge investments in EDI's mainframe infrastructure and low VAN charges — have less incentive to move to the web, apparel makers have to make their web moves transparent. In other words, these moves must have no effect on the way retailers do business. Even so, some retailers, such as Dillard's, won't accept EDI documents that have been translated through web software.

Russell-Newman is using Computer Generated Solutions to supply its EDI web connection in the form of a site hosted by a partner ASP called Fountainhead, which specialises in EDI document transmission. The company has an interconnection with the ASP, which hosts the EDI documents and forwards them, translated into the proper format, to the retailers' VANs. Messages from the retailers are directed to Fountainhead. That connection costs less than $1,000 to create.

Russell-Newman's Martino is moving cautiously. He says he waited until he felt the web was secure and reliable enough to depend on, and he's planning to run the new web-based systems in parallel with the old ones for long enough to assure that the web-based system works perfectly.

Some of the


"Nimbler retailers communicate via a web server, making it possible for even the smallest vendors to participate in the electronic conversation"
nimbler retailers, such as Linens & Things, have decided to communicate with vendors via a web server, making it possible for even the smallest vendors to participate in the electronic conversation, as long as they have an Internet connection and a browser.

According to Bitter, smaller vendors, and the tier-two and tier-three vendors to large apparel makers, long for an Internet solution. Even the Information Systems Committee of the American Apparel & Footwear Association (AAFA) backs the use of the Internet as an industry-wide advantage.

Oxford Industries, based in Atlanta, Georgia, is almost exclusively a traditional EDI user, but that may change. "For our supply chain enhancement project, we're looking into web-based EDI where it makes sense," says Mark Kirby, director of global logistics.

Where it makes sense is in increasing logistics visibility. Oxford is looking to web-based EDI as a way of communicating with forwarders, brokers and carriers. Through LOG-NET Inc, a Little Silver, NJ-based ASP, Oxford also hopes to create an ongoing transaction database for more efficient auditing and limiting of chargebacks.

Delta Apparel, a Duluth, Georgia-based knitwear maker, has taken the ease of web-based EDI a step further, and is using it to increase the visibility of its supply chain during ocean shipping.

For years, Delta managed its communication with ocean carriers by telephone and fax. Now, the company has shifted to a web-based application provided by GT Nexus, which has gathered a consortium of 12 leading ocean carriers to create a common, web-based standard for performing shipping transactions.

Delta uses the GT Nexus platform to analyse sailing schedules, submit shipment bookings to carriers, receive confirmations, prepare and edit shipping documents such as bills of lading, and get accurate in-transit shipment status information from its carriers. They also use the GT Nexus platform to send regulatory documents, such as export declarations, to US Customs automatically.

As a result, Delta has been able to reduce staff in its logistics department, while taking on more volume, and introducing more consistent cycle time to its manufacturing. Delta has eliminated VAN charges, and investment in new EDI IT hardware and software. In fact, the carriers pay GT Nexus, not the apparel makers, because they realise efficiency benefits as well, along with improved data quality.

As the apparel industry moves toward more sophisticated use of communications technologies, it's becoming increasingly apparent that old EDI is not enough. EDI has been unsuccessful in moving downstream, and apparel companies are spending too much time on EDI-related IT work instead of being able to focus solely on their core business. Web-based EDI is a way of outsourcing a lot of EDI headaches, while cutting costs and widening the visibility and problem-solving potential that more and better information can bring.

Bobbin contributing editor Laurie Aron is also a contributor to Crain's New York Business; The Manufacturer; Plants, Sites & Parks; and other publications. She also has covered technology and supply chain issues for Global, a publication of Deloitte & Touche.