PETCO Moving from VAN to 'Net

Taps IPNet solution to transition top suppliers from value-added network to Internet-based data exchange

Newport Beach, CA  February 12, 2003  Pet food retailer PETCO has tapped a solution from IPNet to securely exchange business transactions with its suppliers as the company makes a transition away from electronic data interchange (EDI) over a value-added network to data exchange via the Internet.

San Diego-based PETCO, with sales greater than $1.3 billion, operates more than 600 stores, stocking 10,000-plus pet-related products.

The company is using IPNet's BizManager BizLink to move interactions with its supply base that currently occur through EDI over a value-added network (VAN) to the Internet in a bid to reduce its transaction costs and streamline its payment processes.

"Prior to IPNet, all of our EDI business was conducted over a VAN," said Eric Rosenzweig, director of information technology for PETCO. "With over 50,000 transactions per week, the costs were becoming astronomical. We made the decision to move to the Internet not only to eliminate these costs, but to reduce errors in data entry and better facilitate the payment process."

When PETCO began its companywide EDI initiative, the goal was to have its more than 600 merchandise suppliers participate. As the suppliers adopted EDI, PETCO's VAN charges escalated. With increased costs, the company re-evaluated the program and determined that the top 10 suppliers accounted for the majority of the traffic and corresponding costs.

"By bringing our top 10 suppliers online with IPNet, we'll reduce our VAN charges by more than 60 percent," Rosenzweig said.

One of the challenges PETCO faced was getting its smaller suppliers connected. Because the retail industry is made up of many small and midsize enterprises (SMEs) with little to no technical sophistication and a limited resource base, PETCO needed an overall solution that included a SME product that was easy to implement and cost-justify. The solution also needed to transport a broad variety of business documents over different protocols.

"We looked at several Internet EDI solutions," said Rosenzweig. "We chose IPNet because it is secure and can handle everything from AS1 and AS2 to secure FTP and e-mail. We can also use the solution for more than just EDI. Now, we can transfer an assortment of data between our suppliers, including flat text files and other B2B documents."

"PETCO is representative of many large retailers today," said Colleen Edwards, vice president of marketing for IPNet. "To keep their supply chain competitive, they're bringing their suppliers online and cutting significant costs in the process. The demand for Internet EDI continues to grow at a rapid rate and is becoming a high priority initiative for retailers who have not yet adopted the technology."

In addition to working with IPNet, PETCO has also licensed a supplier relationship management solution from PeopleSoft to manage its procure-to-pay cycle, according to that solution provider.