Seeing the signs: Hillman Group reaps the value of EDI as a managed service
by Jean Thilmany, contributing editor (thilmanyj@gmail.com) -- Manufacturing Business Technology, 2/1/2009 12:00:00 AM
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Cincinnati-based fastener specialist The Hillman Group relies on EDI to communicate with its 200 trading partners. |
When The Hillman Group started keeping track of all the costs—and the hassles—of maintaining its EDI operations in-house and saw that they outweighed the benefits, it began outsourcing EDI software and translation functions. In the process, Hillman says it gained supply chain visibility and business intelligence tools not available before.
The Cincinnati-based distributor of fasteners to hardware stores and big-box retailers relies on EDI to communicate with its 200 trading partners, says Hillman Group CEO Jim Honerkamp.
Moving supplier and customer purchase orders, invoices, and related documents electronically means calling upon both EDI software and related translation functions. Analyst Dwight Klappich, a VP with Stamford, Conn.-based Gartner Group, likens EDI to email. Though sender and receiver may use different email providers, their messages can pass back and forth and be read just fine.
Hillman already was a user of Sterling Commerce EDI software, but more recently brought in Sterling Commerce Managed Services to direct all of the EDI operations. Before the move, Hillman housed translation operations within its own IT department, Honerkamp says.
“But then we asked, instead of hiring our people to do that, why not reach out to Sterling?” Honerkamp says.
Sterling’s managed EDI service runs about the same price as maintaining software and translation operations in-house, says Brian Michael, Hillman Group EDI manager. But outsourcing those operations frees up IT time and takes the EDI onus from a company that doesn’t derive business value from maintaining translation capabilities along with the software.
“Anything that’s important and necessary but doesn’t give us a competitive advantage in the marketplace is something we need to look at to see if we can do it better by outsourcing it,” Honerkamp says.
Sterling also brings more functionality to the table than Hillman’s own IT staff, including the capability to interrogate and analyze EDI data.
The outsourcing operation involves setting up each new or existing trading partner with a Hillman account maintained at Sterling.
“Sterling knows Hillman, but it doesn’t know our back-end business processes,” Michael says. “So I articulate that to Sterling. I say, 'I have a customer that wants to do purchase orders with us, or send us bank statements, or invoices.’ Based on the type of purchase order or request, Sterling will set up a different type of EDI.”
A payoff for Hillman—and something the IT department would need to invest valuable time and funds to set up itself—comes from the capability to analyze the EDI data and follow EDI transactions via the Web, Honerkamp says.
Using the supply chain visibility feature, Hillman employees log onto a Web site to see when the EDI document was sent and acknowledged, and whether it met with problems along the way.
“It [enhances] our business intelligence,” Honerkamp says. “We may find out that we need to make more of [a particular product] because we always seem to be shorting our customers.”
The Sterling tool also includes dashboards and reporting features, which Hillman users can access via the Web.
“We’d have to hire programmers to develop those tools,” Honerkamp concludes. “We couldn’t develop the EDI skill set in-house to rival what Sterling does.”
