February 2004 | Case Studies | I.T. Toolkit

QRS: Getting in the Electronic Trading Game

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Using Web Forms, no player is too small for electronic commerce.

If you can't link up, you can't play. That's true in the world of online computer games, where a fast Internet connection is a basic requirement. More and more, it's also true in the retail world, where many companies won't place orders with vendors that can't conduct business via electronic data interchange (EDI).

"Many retailers won't give you an order unless you have EDI," says Ronit Levy, EDI controller at Novelty Plus, a Brooklyn, N.Y., women's wear firm. She cites retailers such as Federated Department Stores, Saks Fifth Avenue, and Nordstrom as examples.

Officials at Novelty Plus wanted to gain Federated as a customer. So two years ago, they decided to investigate EDI.

Unfortunately, EDI is too complicated and expensive to fit the operations of many small vendors.

"To do EDI traditionally, at the very minimum you need a translator, a software package that costs several thousand dollars," says Renee d'Ouville, vice president of product strategy at technology vendor QRS in Richmond, Calif. The translator converts data received via EDI into a format the user's internal systems can read, and converts data from those systems into EDI format.

The user also needs someone to build "maps" that route data from each trading partner's EDI messages into the correct fields in the company's internal databases. "Creating those maps is a one-time process, but then they have to be upgraded continually because the standards change every year," d'Ouville says.

The company must also maintain the connection between the translation software and its back-end systems through any changes those systems might undergo.

"EDI means increasing head count, increasing systems, and increasing complexity. That's often more than a small vendor can bear within its profit margins," d'Ouville says.

Small Suppliers Join the Game

A provider of value-added network (VAN) services, QRS has been routing EDI messages between retail firms and their suppliers for 15 years. As the company expanded its portfolio of e-commerce solutions, it decided to develop an application that allowed small suppliers to join the electronic trading game. Thus was born QRS Web Forms, recently upgraded to Version 7.0.

QRS Web Forms allows suppliers to conduct EDI transactions via a browser interface. Purchase orders and other communications from vendors appear as easy-to-read screen displays. Suppliers use fill-in-the-blanks forms to create and transmit EDI transactions such as advance ship notices (ASNs) and invoices.

QRS is not the only vendor to offer a solution of this kind. Motorcycle manufacturer Harley Davidson, for instance, uses a web forms product from Sterling Commerce to conduct transactions with approximately 200 parts suppliers.

Focus on Retail

The QRS product stands out from others because of the company's long-time focus on the retail industry, d'Ouville says. Suppliers who join the QRS community gain ready access to 80 major retail companies, "some of which they may do business with today, some of which they may not. But they can when they're ready."

Levy says she investigated another forms-based EDI solution but found QRS Web Forms easier to use, with more functions she could perform without calling the vendor for help.

Implementing QRS Web Forms took Novelty Plus about a week, Levy says. The process was especially fast because QRS took responsibility for making sure electronic transactions flowed smoothly between the vendor and its customers.

"When you're on Web Forms, you don't have to do any testing. QRS does the testing for you," she says.

To get up and running on QRS Web Forms, a supplier downloads a small piece of software that runs on the client machine and gives QRS a list of its retail partners. QRS establishes the necessary connections between the vendor and retailers. Each time one of the supplier's employees logs into the system, an initial screen displays the logos of its customers.

"If they click on any one of them, they'll see all of their purchase orders for that retailer," d'Ouville says. "And from there, they can begin to fill orders."

Users can also view all activity with that retailer for the past 90 days, including the dates when the retailers sent ASNs, and when orders were picked, packed, and received.

Vendors don't need to spend much time configuring the system to do business with their particular customers because QRS already works with most of those retailers and has encoded their requirements in the software.

"We know which retailers place orders at the store level and which place them at the distribution center level," d'Ouville says. "We know which ones require ship notices within some period of time. We know how they like their labels configured to be printed on their boxes. And we build all that into the software, so the vendor automatically complies with the retailer requirements just by following the software."

Pack and Print

Novelty Plus uses QRS Web Forms to receive purchase orders (EDI 850) from retailers, prepare orders for shipping, transmit ASNs (EDI 856), invoices (EDI 810) and functional acknowledgements (EDI 997).

Levy says she doesn't need to remember to send acknowledgements when purchase orders arrive—QRS transmits them automatically. To ship an order, "all you have to do is pack, put the quantity you want in this carton number, press the ‘print' button, and the label is printed out," she says.

Getting the labels right every time saves money for Novelty Plus because the company doesn't have to pay penalties for mislabeled shipments, Levy says. Retailers change their labeling requirements often, and keeping up with those changes takes a lot of work, she says.

Avoiding Penalties

Vendors also avoid penalties when they use the system's packing wizard to prepare shipments according to each retailer's specifications. When a retailer places an order for multiple stores, for example, the software makes sure the vendor packs the right number of items in each carton. That allows the retailer to crossdock the cartons at the DC, rather than unpacking and repacking them for shipment, d'Ouville says.

Because QRS helps retailers trade with thousands of suppliers through standard EDI, Web Forms and a service bureau, it's in the retailers' interest to keep QRS up to date about their needs.

"Whenever they change their requirements, they call and tell us," d'Ouville says. QRS reflects each change in its software. "So the next time a Web Forms customer receives a PO with some new fields or new requirements, it's automatically displayed," she adds.

Novelty Plus trades electronically with several retailers who use EDI but are not QRS customers. QRS receives messages from those retailers' VANs and routes them to Levy through a mailbox on the QRS Data Exchange EDI service. Those messages are harder to interpret and manage than the ones that come through Web Forms, Levy says.

Using QRS Web Forms has helped Novelty Plus gain new customers, Levy notes. The company still uses paper with retailers who don't require EDI. With electronic trading partners, though, fewer disputes arise because it's easier to document exactly what was ordered and what was shipped.

Here's Proof

In the past, if a dispute arose over a bill, the staff had to hunt for supporting paperwork and fax it over, Levy says. "Now we have proof right here. We can tell them, ' sent you an 810 on this date and I got an acknowledgement.' If they say they didn't receive those documents, all we do is call QRS. They give us a control number proving the retailer got it."

The latest version of Web Forms adds a feature that should eliminate another kind of misunderstanding. The new function notifies the vendor by email each time a retail customer transmits a purchase order through the system.

"If a vendor has infrequent purchase orders from Saks, for instance, they might not be checking every day," d'Ouville says. "But when an order does come, the vendor has to respond immediately to fill the order on time and not receive a chargeback. The email notification has been a great addition, in that it helps vendors better respond to their customer without more overhead on their part."

To use Web Forms, a supplier pays a startup fee of less than $500. Then the company pays a flat monthly fee—usually less than $100—to cover an agreed number of transactions.

Without paying very much, the vendor can do business with any company it wants and provide better service, possibly winning more business, d'Ouville says. Web Forms also levels the playing field between large and small trading partners.

"It lets two companies do business together even though they're operating at very different levels of technical sophistication," she says.

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