Wise takes a bite out of EDI costs with EXTOL Integrator

Strategic Migration from Legacy Environment Leads to E-Commerce Breakthrough

For many companies, the challenge of implementing and managing business-to-business e-commerce relationships is not new at all. But executives in these organizations often face subtle and complicated challenges as they take technologies like EDI to the next level. The reason: entrenched and established technologies, business procedures and relationships must be scrutinized and changed, creating discomfort and even resistance if the process is not properly managed.

But change is inevitable in the world of electronic commerce because:

• Business strategies often evolve to respond to new marketplace realities; and
• New technological developments create opportunities to introduce operational efficiencies that have strategic implications

That was the situation facing Neil Bixler, Director of MIS at Wise Foods Inc., as he evaluated his e-business infrastructure options in the wake of a comprehensive Y2K makeover in 1999.

Legacy Systems a Byproduct of M&A Activity
Founded in 1921, Wise Foods is now the largest regional snack food company in the United States, manufacturing and distributing its products - like Wise Potato Chips, Cheez Doodles, Cottage Fries, New York Deli, Waffies and Krunchers - primarily on the east coast. (The company continues to expand West beyond Ohio, and has a growing presence in Alabama, Texas, and other westward states.)

Since its inception, the company has been through a number of mergers and acquisition (Borden in 1964, KKR in 1995 and Palladium Equity Partners in 2000). While the Wise brand and culture has remained largely intact throughout this period, each change of ownership brought with it operational and management implications, as different parts of the company were kept or released based on the specific interests of the parent corporation.

Wise, itself, got into the e-commerce business in the 1970s when it established peer-to-peer data exchanges with major customers using magnetic tapes. In the early 1980s, Borden implemented standards-based EDI technology with large retailers, which created the opportunity for Wise to gain economies of scale benefits by consolidating its billing processes with sister Borden companies.

As a result of this initiative, Borden created an in-house service organization called Resource Partners to support the EDI needs of all Borden companies including Wise.

But during the KKR divestiture of the Borden companies (which eventually saw Wise land with Palladium Equity Partners in 2000) Resource Partner was sold to another company to become an entity separate and distinct from Wise. With its former "in-house" resource now an outside vendor, Wise found itself forced to pay what it saw as exorbitant costs for EDI services. Service levels were also not where they needed to be.

"Whenever we wanted to add a new partner it was a painful thing. If we wanted to create a new transaction or add a new transaction it was very painful and costly. Moreover, it was clear that we now had an added point of failure because they had systems issues, communications issues."
-- Neil Bixler, Director of MIS, Wise Foods, Inc.

This was especially true since Wise had replaced its legacy systems with new AS/400 platforms running JD Edwards Enterprise Resource Planning (ERP) applications to address Y2K issues. A business case to bring EDI capabilities into the Wise MIS operation was thus formed.

However, convincing key internal audiences - including the interim management team and some members of the board of directors - that the business case was strong enough to justify making significant changes on how Wise processed tens of millions of dollars worth of electronic transactions with its trading partners proved challenging.

Eventually, however, Bixler and his team put together an analysis of the issues associated with moving EDI capabilities in house, and came to the conclusion that the company would save a minimum of $100,000 per year by implementing an appropriate solution.

Characteristics of the Solution
The first point of consideration for Wise was to find solutions that operated in the AS/400 environment. While there were many PC EDI applications on the market that claimed to support the mid-range platform, Bixler wanted a native AS/400 solution.

"I've always felt that the closer you are to the source of the data, the less points of failure you're going to have. As I looked at the market for EDI translators and mappers, I felt that the PC-based products were not secure or stable enough to handle the type of volume we were doing. I mean, we were billing between $50 and $60 million via EDI at that time. I had already made a commitment to the AS/400 platform during the Y2K exercise because I concluded it is one of the most stable boxes out there."  -- Wise Foods' Bixler

The company was closely courted by two companies who at that time offered EDI mapping and translation products for the AS/400 platform. After a vigorous proposal process, EXTOL International, Inc., emerged as the provider of choice for Wise Foods.

The implementation proved successful EXTOL implemented the mapping and translation applications, and assisted Wise Foods in establishing the internal infrastructure that managed the transition from Resource Partner to internal processes in seamless manner that was transparent to trading partners.

"As a result, today we have four times the trading partners and have expanded EDI transaction for orders and invoices to inventory movement, vendor managed inventory, remittances and price confirmation. As an added plus, Extol assisted us in transitioning from our previous proprietary value-added network (VAN) to AT&T Worldwide using TCP/IP technology. Furthermore, Extol helped us link up with Cyclone to begin EDI over the Internet."   -- Wise Foods' Bixler

The Bottom Line
As a result of this strategic migration, Wise Foods has expanded its trading partner base, improved the efficiency of the entire supply chain, accelerated cash flow and decreased the costs of EDI services by nearly $100K per year.

Moreover, the EXTOL-based EDI implementation has allowed Wise Foods to engage in price synchronization initiatives (using a service called viaLink).

"We now synchronize pricing with two major retailers (Nice N Easy and Winn-Dixie) and are currently in negotiation with Kmart. And, our Extol mapper allowed us to become the first of 50 companies to register our items through UCCnet to Wal-Mart...this too we will expand to Food Lion, Ahold, Shaw's and many more as they subscribe to UCCnet."   -- Wise Foods' Bixler

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