The state of e-commerce in the Alcohol Beverage Industry
Like most other industries, the AlcoholBeverage Industry (ABI) has adopted Electronic Commerce (EC) tools, such as ElectronicData Interchange (EDI), to best manage their day to day business process. EDI offers awealth of benefits: it cuts administrative expenses, decreases clerical errors, eliminatesthe burden of paperwork, enhances customer service, establishes closer links withsuppliers, and facilitates just-in time inventory systems. Also, it improves theprocessing of documents, increases productivity and profitability, provides faster andmore accurate information flow, and reduces business transaction cycle time and inventory.However, even with the implementation of EDI and today's technological advances in theglobal marketplace to automate business, the Industry is still confronted with twosignificant hurdles year 2000 (Y2K) compliance and item coding.
Though Y2K issues are common to allindustries and companies, they present significant problems to the ABI if not addressed.Traditionally, business information such as invoices, payments, purchase orders andshipping and receiving records, have been exchanged on paper. The introduction oftechnology into the marketplace has provided a competitive advantage and the rapidexchange of information electronically. There would not be so much interest in Y2Kcompliance today if conventional business methods were still being employed by a widenumber of industry members.
The ability of computer systems andapplications to process turn of the century dates is a major concern. Numerous systems andapplications developed and utilized by the ABI do not incorporate four digit years. Ordersbeing processed with ship dates in the year 2000 may never be shipped if the systemreverts to a ship date of 1900. Forecasting data will not be reliable since systems maynot be able to forecast into the year 2000 and above.
With help from business management,Information Technology can identify which systems and applications need to be modified andhelp implement the appropriate changes. The latest e-commerce initiative in the ABI is thedevelopment of a Y2K Task Force to address year 2000 capabilities. The Distilled SpiritsCouncil of the United States, Inc., NABCA, Wine and Spirits Wholesalers of America, Inc.,and ABI EC Group established the Task Force to share technical expertise and accelerateefforts to resolve Y2K issues that many of our industry members are still facing.
Another major issue in the ABI is itemcoding. In the ABI, the Uniform Product Code (UPC) is used primarily at retail checkoutthrough scanners for automatic pricing and product identification. The Shipping ContainerCode (SCC), Interleaved 2 of 5 Symbology, has been the industry standard for case shipperssince June 1995. Though the Industry agreed on adopting the SCC symbology some suppliersstill have not incorporated it into their business process. The code allows uniqueidentification of the case such as quantity within, products within and any specialpackaging variations including gift cartons.
Fig.1 Bar Code symbol representations
In order to achieve successfulimplementation of EDI, members in the supply chain must be able and willing to support theSCC. Many industry members rely on their own numbering schemes. Without a common standard,trading partners are forced to support many item codes in order to automate the EDIprocess. This presents a major barrier in implementing EDI.
The establishment of unique item numbersfor various ABI products would greatly benefit the entire Industry. Though it may be awhile before industry takes on such an enormous task, corporate executives could build theUPC and SCC into their daily business operations. In turn, this maximizes EDI in thesupply chain.
Currently, the Virginia Alcoholic BeverageControl Board utilizes the SCC to monitor movement of inventory through the warehouse. TheSCC is used to facilitate Virginia's inventory management function. This is done since theSCC is a bar code symbology that facilitates various business and logistical functionswhich the UPC cannot. Manufacturers can use the SCC to track production output andshipments. It is also an important element of an overall Quick Response (QR) program.Retailers, or in this case, Virginia, can track product movement in and out of thewarehouse or store. The SCC is a key element for automated inventory control programs andreordering systems for retailers.
E-commerce provides many tools for businesses to thrive, remain competitive, achieve Y2Kcompliance and establish unique coding schemes. As an integral part of e-commerce, EDIallows participants to streamline the business process. This reduces errors, createsefficiencies throughout the supply chain and reduces operating costs. In this way, thebusiness can lower product costs. Through e-commerce, the flow of information is advanced.The possibilities to shape business strategies in a technology driven marketplace becomeendless.
Susan J. Hilaski is EDI Coordinator ofthe Alcohol Beverage Industry Electronic Commerce Group who's mission is to research,promote and assist in the implementation and development of common business practices thatfacilitate Electronic Commerce in the Alcohol Beverage Industry.
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