(FNS) -- More retailers are moving their internal communications through the Internet, considering it a cost- effective, faster method of exchanging all kinds of information, including electronic data interchange files.
In addition to keeping stores connected to headquarters, and supplying them with critical company information, many organizations are giving suppliers and trading partners access to ordering, forecasting and planning capabilities through extranets. Similar to intranets, extranets, which also use Internet technology, are surrounded by fire walls and can only be accessed by authorized users with valid passwords.
Though Internet technology continues to evolve, some larger organizations are leaning toward so-called "virtual private networks," which rely on direct modem connections, eliminating the need for a service provider or browser to access data.
This communications link is still emerging, however, and retailers expressed concern about security and costs associated with these private networks.
Many retailers are getting more usage out of intranet technology. Raley's Supermarkets, West Sacramento, Calif., will use an Internet browser and third-party software application to roll out an intranet by the end of the year.
The intranet will provide access to a help desk, training initiatives, store communication and time sheets, according to Tom Jones, director of technology operations at Raley's.
United Grocers, a retailer cooperative in Portland, Ore., is also developing an Internet-based intranet. Its stores will use a Web browser to provide access to data pricing, invoices, product catalogs and other information. "The beauty is that you don't have to have a whole bunch of technology to do this -- it's just a database on the Web," said Mike Brown, director of retail systems at United.
In addition, he said independent retailers would have an inexpensive method to get into new product areas quickly, which would allow them to better compete with chains.
Setting up a work station to provide access to an intranet would cost each independent about $1,500, according to Brown.
Topco Associates, Skokie, Ill., is setting up an intranet that is scheduled to be live by next spring, and plans to make it accessible to vendors and suppliers as well as retailers. "It's an issue whose time has come. We're seeing it as a growing communications business," said James Crouch, director of information technology at Topco.
Many wholesalers say they are transferring at least some of their EDI files over the Internet. Topco will join this group when it begins transferring the majority of its EDI files via the Internet in about six months, according to Crouch.
"We did a study and validated [its] necessity in business," he said.
Although Certified Grocers of California, Los Angeles, has had a third-party provided extranet for years, the wholesaler is looking at expanding communications to the Internet. "It is possible to conduct a lot of business [via the Internet] that we currently conduct. It's inexpensive," said Marty Simmons, director of retail information systems at Certified. Though retailers and wholesalers are communicating more via the Internet, there are still barriers.
"The trend has moved fairly slowly at this point because of the infrastructure that they already have, such as value added networks [VANs] and direct connections," said Terry Morgan, senior practitioner for food retail technology practice for Deloitte & Touche, N.Y. In addition, retailers are still concerned about security, even though there are fire walls in place. "Commerce over the Internet is problematic. If you're doing something on the Internet, you really need to do encrypting and have the data go only one way," Simmons said.
Taking a step beyond the Internet for internal communications, larger retail chains are looking into private networks for sharing company information. Some retailers say these connections have the ability to send a wider range of data than Internet transmissions can.
Raley's is considering this option to electronically connect about 115 stores. Although this method is costly, it is not any more expensive than other emerging technologies, according to Jones.
"When you're rolling out to 1,600 to 2,000 work stations, you're faced with fairly significant costs, regardless of whether it's private or public," he said.
Jones said he believed there were still too many uncertainties in an Internet-based private network for Raley's to jump in. "Until vendors can guarantee service levels, and there are standards that can deliver voice and data packets, we don't want it," he said.