About FIDX

News December 2005

AHFA's E-business Taskforce: Much accomplished, much to do
Industry now has an extensive electronic infrastructure in place
By Brian Carroll -- Furniture Today, 12/26/2005

High Point— Much has happened in the five years since the American Furniture
Manufacturers Assn., as the American Home Furnishings Alliance then was known,
formed its E-business Taskforce. In fact, a history of the task force is a history in
microcosm of e-business in our industry.

When the task force was formed in May 2000, the hysteria and hype surrounding the dot-com bubble was at its height. The flurry of new companies brought hundreds of millions of dollars with them, and when the bubble soon burst and
these suits-and-Powerpoint types vanished, they took all that new money with them, or at least what little they hadn't
already spent.

They promised answers to questions we never asked and, because of their brief lifespan, left unanswered the many
fundamental questions we did have.

Out of this fog came the E-business Taskforce, which began as and remains a pan-industry advisory group charged
with analyzing the status of information technology in the furniture industry and providing recommendations on how
the industry should proceed.

A uniting force

So, how has the task force performed? Where are we vis-à-vis e-business, and what remains to be done in 2006 and
beyond?

One of the first things the task force did was join several industry organizations in developing and endorsing data
standards. These other groups included the Furniture Industry Data Exchange, or FIDX, the National Home
Furnishings Assn. and the Home Furnishings International Assn.

It's been a long, tough slog to develop the standards and to promote their adoption. These standards include the ANSI
Electronic Data Interchange, or EDI, standards, the Uniform Code Council, or UCC, bar-coded 128 shipping label and
emerging UCC XML (for eXtensible Markup Language) standards, among others.

If your head hurts after such a parade of acronyms, you are beginning to grasp a big aspect of the challenge facing the
task force as it tried to communication about standards adoption.

The group quickly developed a list of business requirements to evaluate the viability of e-business applications,
which, again, was sorely needed in 2000–01. With slick marketers like those employed by Homepoint, Retail-Metro,
Furndex and others promising the moon, confusion reigned.

This writer remembers being called over to the La-Z-Boy showroom in the thick of market. "Furniture/Today has to
help us calm the storm and deal with the fears," the La-Z-Boy executive implored. "I'm trying to make sense of it,
too," I replied, in between Powerpoint presentations from dot-coms promising to "revolutionize the industry."

The task force also invited retailers and suppliers to contribute to an inventory of business requirements, an inventory
that served as the raw material for an elaborate mapping of the supply chain for residential furniture in the United
States.

The entire industry benefited from this exercise, and this rare collaboration produced a database relevant to most of
the industry's members. (An historical side note: Much of that original mapping quickly became obsolete because of the wholesale dislocation of domestic manufacturing caused by Asian factories, then just coming online.)

To help retailers and manufacturers discern the good from the bad in the blizzard of technological "solutions" being
pitched to them, each with impressive rosters of early adopters and financial backers, the task force met with several
of the e-business players, much as employers interview potential hires. Based on these meetings, the task force
determined that a viable solution for the industry did not exist.

Financial barriers

For a not-so-brief time, the group considered and even pursued developing an industry portal to incorporate both the
endorsed standards and the industry-identified business requirements. The costs associated with such a venture were
soon deemed far too high to be born by AFMA or any coalition of industry associations. Until and unless a private
entity saw opportunity in it, such a portal would have to remain on the wish list.

As has been the case with so many technology-based programs, many if not most were in favor, but scant few were
willing to contribute money or human resources to it.

So, as 2006 dawns, there is much to celebrate and much more to do. FIDX has made marked progress in developing
and communicating two phases of XML transactions. Industry conventions have resolved UPC, for Universal Product
Code, numbering issues. That was particularly tricky with custom upholstery, given the huge number of variables.

Conventions also have been developed that address serial numbering of both case goods and upholstery products, and
the foundation has been laid for migration to RFID, or radio-frequency identification, inventory systems when the
time comes, and it is coming soon.

FIDX established, and still maintains, a centralized schema library so all furniture industry schemas can be found at
one location. This library can be accessed on the Web at http://www.fidx.org. This is significant, because a 2004
survey showed that 85% of manufacturers receive at least some of their orders electronically.

Collectively, these efforts have reduced the cost of entry for EDI and e-commerce from more than $100,000 to only a
few thousand dollars. Remember that, in 2000, EDI was the only practical choice for large-scale e-commerce, because
security issues and hardware/software incompatibilities significantly limited the Web's reach.

A team effort

The cooperation between and among AFMA/AHFA, NHFA and HFIA has been crucial. NHFA helped its members
figure out e-commerce and validate electronic business efforts by establishing programs with FurnishNet and Exim,
among others.

Virtually all the specialized furniture carriers have completed upgrades to their computer systems, enabling them to
provide online, real-time status for product in transit.

Understanding and use of UCC barcode labeling standards, and the 1994 AFMA Furniture Industry Conventions that
support those standards, is on the rise. FurnishNet alone says it has connected 125 retailers and 600 manufacturers.
And more than 250 retailers are using MicroD's Exim Commerce platform to connect with nearly 630 suppliers.

An extensive electronic infrastructure is in place.

In addition, a handful of manufacturers, including Drexel Heritage and Bassett, are creating electronic industry
standard FIDX catalogs, which enable accurate custom-order configurations in stores, and custom-order validations at
manufacturers/importers.

Ashley is using XML for its electronic transactions and is driving a lot of electronic transaction development. Century
has had for some time its supplier network online.

Broyhill has connected more than 2,500 retailers to its extranet. Most of Broyhill's incoming orders are processed over
the Web, and the company has a sophisticated online system to track those orders once they hit the road.

At least two major retail operating system suppliers are able to enter orders at point-of-sale. This means sales
associates and consumers can configure the special-order product, view the configuration, complete order entry, and
quickly receive an acknowledgement from the manufacturer, all while both are in the store.

So, a physical layer is in place, a transaction layer is in place, and hundreds of retailers, manufacturers, carriers and
suppliers are doing business electronically. E-business is alive and well. It should be an exciting year.

Acknowledgements
Thanks to David Purvis, vice president at AHFA, and Ron Martell, CEO at MicroD, for providing the basis for this
report and, more importantly, for working long and hard to develop industry data standards and push their adoption.