Home Depot EDI Update

The last several blog posts have covered changes in the retail sales landscape and especially the growth of online and mobile sales. Home Depot is an example of a retailer that has aggressive plans for benefiting from these trends and responding to Amazon’s growth.

Home Depot’s online sales increased 50% last year but were only 3% of total sales leaving plenty of room for further growth. Recent ecommerce acquisitions include Blinds.com and Redbeacon. The newly appointed retail president, Craig Menear, was promoted from head of merchandising which included responsibility for online sales.

Profitable growth is supported by specialized order processes and more distribution centers. Home Depot EDI orders include ship-to-distribution center, ship-to-store, consignment (also known as pay by scan), and online orders from Home Depot’s web site. Both Canadian and United States suppliers are now included.

New distribution centers have been built and the entire distribution process has been made more efficient. Home Depot EDI advance ship notices are among the most varied among retailers and now include single purchase order and multiple purchase orders for small packages as well as pallets.

EDI advance ship notice transactions support shipments sent directly to stores, to RDC’s (Regional Distribution Centers) for cartons under 8 feet, to SDC’s (Specialized Distribution Centers) for non-carton or irregularly shaped items, and to FDC’s (Flatbed Distribution Centers) for building supplies delivered by flatbed trucks. Some online Home Depot orders are drop shipped straight to consumers, bypassing the stores and distribution centers entirely.

Home Depot EDI was upgraded to version 4060 some time ago and includes the following transaction types:

  • 753 Request Routing Instructions
  • 754 Routing Instructions
  • 810 Invoice
  • 812 Credit/Debit Adjustment
  • 820 Payment Remittance Advice
  • 850 Purchase Order
  • 852 Product Data Activity
  • 856 Advance Ship Notice
  • 860 Purchase Order Change
  • 864 Text Message
  • 870 Purchase Order Change
  • 997 Functional Acknowledgment

Contact us anytime to find out more about EDI service for Home Depot that is tailored specifically to the needs of small business suppliers.

I’ve Looked at Clouds from Both Sides Now: The Pros & Cons of Cloud EDI

You say you “really don’t know clouds at all.” Are you asking “is cloud EDI right for my small business?”

Let’s remove the fluff and puffery from the discussion and take a look at the facts about why choosing an EDI cloud solution can be a sound decision. First let’s look at the pro side of the discussion for a cloud service that is a complete solution.

Pros of Cloud EDI

Access

Cloud EDI solutions allow access from anywhere that has an internet connection. Your office staff and warehouse personnel can easily use the same secure system. If you use a 3PL (third party warehouse), access is provided for folks there too. Sales people working remotely can view orders and shipping notices.

Compliance

You are probably considering EDI because your customers require EDI compliance. Every EDI customer has different EDI specifications. An experienced cloud EDI provider ensures that you benefit from their prior EDI software development and testing for each customer you need to have implemented.

Scalability

A cloud solution allows you to grow your business by quickly and easily adding EDI customers as needed. Scaling by adding interfaces is facilitated by being able to interface with your accounting system, warehouse system, and any custom in-house systems you develop over time. An interface to your 3PL can be implemented as needed.

Pricing is scalable. Pay-as-you-go pricing means you only pay for what you use each month. You do not have to spend for large investments up front or commit to expensive on-going fixed costs.

No On-Premise Infrastructure

A cloud EDI solution takes the place of owning and maintaining hardware. You will not have to buy expensive EDI software and you will not have to buy, build or maintain complicated EDI maps as your customers change their requirements.

Reduced risks

Staffing is not a risk because you will not have to employee staff or consultants with deep EDI knowledge. Your data is continually backed up. Cloud EDI solutions from reputable providers are serviced from secure data centers with redundant internet connections, buildings hardened against natural disasters, and independent backup power supplies.

Economies of scale

Cloud EDI solutions benefit from using the same EDI maps for multiple clients which is sometimes called a “multi-tenant architecture.” A specialized provider has large economies of scale and the ability to pass the cost savings through to clients.

Cons

I can’t think of any cons for small businesses using a cloud EDI solution as long as the provider has a complete solution. For large big-box retailers and industrial businesses that consider EDI expertise a strategic competency that they want to control on their own and evolve over time, then in-house EDI software and experts are probably the way to go. However, for small businesses that must meet the various EDI compliance requirements of their customers, a cloud EDI solution is very compelling.

Next step – if you are investigating a cloud EDI solution, make sure the EDI provider you are considering has a complete solution that fits your small company’s needs now, and your needs as you grow. Contact us anytime to find out more.

Retail Ecosystem Forecast for 2014

I’m no economist. However, I am a keen observer of the retail ecosystem in which many of our clients participate. The summary of 2014 from my perspective is that it will be similar to 2013 in terms of overall sales growth. Notably though, online and mobile sales will continue to grow significantly as a percentage of total sales.

Retail sales increased 3.7% in 2013 according to the National Retail Federation. Their prediction for 2014 is a slightly higher increase of 4.1%. However digital sales, through online and mobile purchases, are predicted to grow by 9.3%.

Retailer earnings reports for the 2013 holiday season and their predictions for the first quarter of 2014 have been muted. This is pretty much a repeat of what we heard at this time last year. The mood of retailers is cautiously optimistic.

What This Means to Your Small Business

As retailers continue to focus on increasing their ecommerce channel, some will increase their breadth of online product offerings and do more test marketing. Products which consumers are less inclined to want to experience in-person before buying have a better shot at becoming new test market products on the ecommerce sites of retailers.

You may want to point out to your buyers any prior online sales success of your products. You may also find opportunities for developing joint online promotion plans with them.

Drop shipping direct to consumers will continue to increase for many suppliers as online orders continue to grow as a percentage of overall sales. Check out my previous posts on this topic.

Because retailers are cautiously optimist, they will be closely managing their inventory in the year ahead. As a result, there is a good chance that you will have more EDI orders but with lower quantities per order. Be prepared for more flexibility in delivery schedules.

At the end of year most suppliers will have benefited from another year of modest growth. And that is better than another Great Recession!

Understanding Your Customer – Retail Buyer Buzzwords You Must Know – Part Two

Much of retail is managing inventory to satisfy consumer demand while making a profit.

Here are several key inventory management buzzwords you must know in order to better understand your retail buyer’s motivations.

A,B,C Classifications – A method of determining inventory levels by product to balance customer service and costs. The classification for a product may affect whether a push, pull or demand-driven approach is used for procurement. See the blog post last week for more on those topics.

Safety Stock – The level of inventory predicted to be necessary to avoid running out of inventory in response to expected demand.

OOS – Out of Stocks – A measure of the frequency of not having the inventory item customers wanted. OSS typically runs about 8%, but rising consumer expectations are changing what is acceptable in order to retain customers.

Cross Channel Inventory Availability – having an item a consumer wants available regardless of the shopping and delivery channel chosen by the consumer.

Hold Back Strategy – Sometimes also called postponement strategy. Instead of immediately sending product from distribution centers to stores, hold back strategy is the process of keeping more inventory in distribution centers until demand from stores is either better known from actual purchases or better forecast.

Open to Buy – a budget process for minimizing inventory costs by determining how much to buy during a time period but not necessarily which assortment to buy. It is most often used for fashion merchandise. Procurement with Open to Buy has typically been a monthly process, but weekly and bi-weekly procurement is becoming more common. Open to Buy is not usually appropriate for general merchandise.