Woolworths makes big savings as it switches to EDI invoicing

Woolworths is making it compulsory for suppliers to provide its accounting department with an Electronic Data Interchange (EDI) invoice.

The scheme will cover 54 suppliers that receive orders directly from and deliver directly to stores. It will no longer be an acceptable excuse that a store made an order by fax or telephone rather than EDI - an EDI invoice will still be required.

EDI is a common way for companies to place orders and for suppliers to deliver invoices electronically, though these have tended to be larger suppliers in long-term relationships, and often requires investment in equipment at either end.

In the Woolies project, which started in January and is due to finish in December, suppliers have been encouraged to use a tool called Spectrum from Freeway Commerce. This enables them to use common accounting packages, such as Sage and Pegasus, to generate an EDI invoice.

Woolworths EDI invoice co-ordinator Fiona Banks said the hardest bit was 'persuading seasonal suppliers to invest in integrated EDI'. The project had been going 'very well', said Banks, adding that the mountain of paper invoices had been considerably reduced. Of the 54 suppliers, fewer than 10 are still sending paper invoices, she explained.

Banks said Woolworths will not refuse to pay paper invoices, but said: 'Paper invoices are not processed so efficiently'. Suppliers for the program include Bristows of Devon, Hanaco, John Hinde and Universal Cycles.

The main advantage has been greater efficiency. 'By receiving the invoices electronically, the labour-intensive tasks of opening envelopes, data entry, copying, filing and storage disappear, along with human error,' explained Banks.

As a further bonus, the system cost nothing for Woolworths to implement.