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June 11, 2012 8:45 AM, EDT

iTECH: EDI Thrives Amid Newer Services

Electronic Data Interchange Keeps Pace With Evolving Technologies
By Jonathan S. Reiskin, Associate News Editor

This article appears in the June/July 2012 issue of iTECH, published in the June 11 print edition of Transport Topics. Click here to subscribe today.

One of the core business-to-business communications tools in trucking — electronic data interchange — is undergoing a period of expansion, even as its core functionality remains largely unchanged.

EDI, which fleets and shippers rely on to transmit large volumes of data, traces its core principles to just after World War II, but its role in the exchange of information for the trucking industry is as vital as ever, fleet executives said.

“EDI is very important to us,” said Don Smith, information technology director for the enterprise services unit of Con-way Inc. “Many of our largest customers want to interact with us electronically, and the vast majority of our customers prefer to use it, especially the largest ones.”

Con-way, Ann Arbor, Mich., has been using EDI almost since its founding in 1983 and currently has an EDI staff of 15, said Smith, who is also the departing chairman of American Trucking Associations’ Information Technology & Logistics Council. Con-way ranks No. 3 on the Transport Topics Top 100 list of the largest for-hire carriers in the United States and Canada.

In trucking, fleets typically use EDI for basic load management and invoicing messages. Industries including health care, finance, insurance and retailing — as well various levels of government — also use it.

The format for data entry and presentation would be recognizable to EDI users from more than 20 years ago, but the technology that supports and moves the data has changed and improved. Value-added networks of computers — which, according to searchnetworking.techtarget.com, are private network providers that are hired by a company to facilitate EDI or provide other network services — have long played a role in EDI. But they have been succeeded in many cases by Internet transmission via FTP (file transfer protocol) sites and AS2 software, said technology managers interviewed for this story.

Also, EDI often has become a part of a larger whole — enterprise software for load management — rather than a stand-alone system.

“It’s not sexy, but it works,” said Vince Biddlecombe, chief technology officer of third-party logistics provider Transplace Inc., Frisco, Texas, which sends and receives more than 100 million EDI messages a year.

The system’s origins are “traceable back to the 1948 Berlin Airlift, where the task of coordinating airfreight consignments of food and consumables — which arrived with differing manifests, languages and numbers of copies — was addressed by devising a standard manifest. Electronic transmission commenced during the 1960s, initially in the rail and road transport industries,” said Roger Clarke, an Australian business consultant who offers a brief history of EDI on his website.

“EDI is still relevant today. In the 1990s, it was supposed to be going away, but absolutely, resoundingly, yes, it’s still relevant,” said Matt Sadecki, senior account manager of Extol International, Pottsville, Pa., a provider of business integration software and services. The company was scheduled to make a presentation on EDI at the American Trucking Associations’ Information Technology & Logistics Council annual meeting, which was scheduled to take place June 11-13 in Tampa, Fla.

Sadecki said EDI is a closed system of communication, not like the telephone or e-mail. Party A and Party B have to agree jointly to communicate with each other in a specific format over a specific pathway.

“EDI got going in the late ’70s when smaller computers started arising. Apparel makers and transportation providers were among the first to adopt it,” said Reeve Fritchman, Extol’s chief strategy officer. Telephone deregulation and the rise of the Internet and personal computers also helped to spur the use of EDI, Fritchman added.

Indeed, while museums are filling up with once-great ideas from the recent past for communications, including typewriters, LP records, videocassette recorders, compact discs for music, basic cellphones and maybe even landline telephones, Transplace’s Biddlecombe said there is a good reason why smart phones and texting have not buried EDI.

“Do you really want to send a thousand orders through your smart phone? It’s the wrong tool for the job,” Clarke said.

“EDI solves a different problem on a system-to-system basis,” Clarke added, likening EDI to a “high-volume fire hose,” handling basic, routine messages.

Fritchman and Sadecki said there is spec’ing in information technology systems, just as there is with trucks. A carrier often can specify which EDI provider’s module goes into enterprise software, and what properties the module should have.

A new application involving EDI is the idea of Web services, meaning the website of Company A communicates with Company B’s website, Mark Denchy, Extol’s director of product management said.

Retail giant Wal-Mart Stores — which has headquarters in Bentonville, Ark., and ranks No. 4 on the Transport Topics Top 100 list of the largest private carriers in the United States and Canada, based on the number of tractors in its fleet — insists upon EDI. It tells suppliers why on its website:

“EDI has proven to be the most efficient way of conducting business globally with our suppliers, by electronically sending and receiving core business documents. Walmart/Sam’s Club has EDI documents to support these business areas: supply chain management, global indirect sourcing, accounting, inventory management and logistics.

“The process of EDI is accomplished by having business documents translated into EDI format as defined by industry standards. Data [are] then pushed to the receiver via the AS2 communications protocol.”

As to where the data pushing takes place for trucking companies, it is usually in central operations that use dispatching software.

“Customer service representatives will access the EDI application from their desktop with the specific purpose of accepting load tenders or reviewing status messages to return to their customers,” Matt Cacace, chief operating officer of McLeod Software Inc., Birmingham, Ala., said.

“The initial setup or configuration of the templates used is typically a one-time technical activity,’ Cacace added.

“We have an EDI module built into LoadMaster and PowerBroker,” Cacace said of McLeod’s transportation management systems for carriers and freight brokers, respectively.

He said the strength of EDI is its well-established and consistent format.

“True EDI is not written. It’s not an e-mail, and in its raw form, the elements are nonreadable. There are national standards for EDI in terms of its formatting and presentation.”

In contrast, Cacace said, “E-mail is not standardized. EDI lends itself to better accuracy, and that most shippers grade and rate carriers on their EDI accuracy and timeliness.”

TMW Systems Inc., Beachwood, Ohio, also incorporates EDI into its TMW Suite package, said Matt Ruth, vice president of professional services.

TMW offers three levels of EDI service for trucking companies, Ruth said: 1) do it yourself — for advanced carriers with in-house expertise and capabilities; 2) VAN [value added network] provision — for carriers that want the use of a network; and 3) full service — providing mapping, translations, a VAN, etc.

“The use of EDI is exploding. It keeps getting bigger and bigger. Originally it was just for the largest of companies, like Procter & Gamble or General Mills, but now the usage is 20 times larger than what it was 10 years ago, although 10 years ago we heard it was going away, but that’s just not happening,” Ruth said.

He also agreed that e-mail and texting do not lend themselves to load management.

“E-mail can get distorted, and it’s not always received accurately. There are too many inconsistencies with it.”

EDI has made beachheads even at small trucking companies.

“I have one customer whom I provide with EDI by Web interface. He has 25 to 30 trucks and he doesn’t want dispatch software, but he has a major customer who insists upon it. EDI runs from a carrier like this up to a huge, gigantic scale,” said Terry Wood, vice president of Intelek Technologies, Norman, Okla.

“Because the system is automated, with EDI you don’t have to spend the day hitting ‘F5,’ or whatever the key is, to refresh your screen and look for loads. This affects the quantity and quality of the loads you handle,” Wood said.

“When a carrier makes a huge investment in enterprise dispatch software, EDI is the easiest way to get loads into and out of the system.”

While Intelek does have stand-alone business, much of what it makes becomes modules in larger systems.

Truckload carrier Riverside Transport Inc., Kansas City, Kan., has been using EDI since 2006 and the volume of transactions has been increasing, said Brian Hedge, information technology director.

“It can be a lot of work, but all of our customer-service people need to know how to use it. It certainly helps with customer service. There’s no more manually booking loads and doing load checks,” Hedge said.

EDI requires training because “it has to be done in the correct manner. Customers check on this as part of issuing freight.”

Riverside pays a flat annual subscription for an AS2 account, and Hedge said he prefers that to VANs, which usually charge by 1,000-character batches of data transmitted. The company pays a monthly subscription to its EDI vendor.

EDI uses flat files with text, said Chris Paternite, vice president of sales and marketing for Pro EDI.

After the file is created, it is often transmitted through an FTP site to the trading partner, “so there’s no phone call or e-mail involved,” he said.

There’s “translation” on two ends: flat file to EDI by sender, and then EDI to flat file for recipient. Pro EDI’s software does translation and mapping for transactions. He said the actual files involved are usually small.

“When I started here 8½ years ago, we had a few customers who used EDI, but now all of our top 100 customers use it — for load tenders and acceptances, and status reports for shipments en route,” said Laurna Brown, EDI coordinator for truckload carrier USA Truck, Van Buren, Ark.

Brown said a big advantage is speed. Invoicing and load information go out more quickly, meaning a company can get paid or accept a load faster. USA Truck ranks No. 50 on the TT for-hire list.