Tile Manufacturer Turns To Internet-Based EDI System

Dal-Tile International Inc. implemented an Internet-based electronic data interchange system earlier this year to accommodate major supply-chain partner Lowe's Companies Inc. The natural outgrowth of the effort was a more collaborative relationship: Lowe's can share point-of-sale data with Dal-Tile over the Internet--something it couldn't easily do with the old EDI system--and Dal-Tile, with more up-to-date demand information, can better meet Lowe's requirements.

Lowe's, an $18.8 billion Wilkesboro, N.C., company with more than 600 home-improvement retail stores, approached Dal-Tile, a $952 million Dallas tile and flooring manufacturer, last year about using the Internet to transfer documents such as purchase orders and invoices. Because Lowe's is a major seller of Dal-Tile's flooring products, its request was taken very seriously, says David Fling, Dal-Tile's EDI manager.

Dal-Tile considered implementing the new system in-house but then chose to outsource it to IBM Global Services' Internet Data and Document Exchange service. Dal-Tile became IBM's inaugural IDDX client in May. IBM hosts all the hardware, software, and staff required for Dal-Tile and Lowe's to communicate via Internet EDI. In addition to eliminating Dal-Tile's need to invest in its own IT infrastructure, the IDDX service reduces complexity by using the Internet as the standard for all data communications. The alternative is for supply-chain partners to subscribe to private network services.

Dal-Tile's cost savings are about 12 months away from realization, roughly the amount of time it will take to migrate all of its supply chain to Internet EDI. Once this is done, Dal-Tile can eliminate the cost of subscribing to IBM's Advantis network, which charges according to the volume of transactions sent over the network.

Despite paying for both Advantis and Internet EDI systems, Dal-Tile benefits by strengthening its relationship with Lowe's. Because the IDDX service doesn't charge Dal-Tile by transaction volume, Fling says Lowe's can now transfer point-of-sale information it gathers from its retail stores. "We need to know what Lowe's is selling so we can produce what they need," he says, adding that exchanging large volumes of information via Advantis cost too much to do that.