This article is written by guest blogger Marc-Andre Huras, DiCentral's channel manager for Microsoft Dynamics AX and NAV.
Often characterized by fluctuating levels of demand in highly dynamic and competitive markets, the retail industry is no stranger to complex EDI. Just think of the challenges faced in routing products and related data across 200 outlets in five countries: purchase orders, invoices, returns, pricing updates, and so on. Not exactly your "Mom & Pop" business anymore. We haven't even touched on shipping yet, but let's drop a "G" bomb into the mix: "Globalization." From this perspective, it quickly becomes apparent why the retail industry is among those at the forefront of a fast evolving EDI world.
In this post, I want to shed some light on what I believe are two absolutely essential characteristics for a retail EDI practice going forward. I'll tread lightly, carefully circumventing the pros and cons of in-house versus outsourced EDI as I would rather leave that question to you, our reader.
1-Scalability: A retail EDI infrastructure should be ready to scale up and down.
I like to think of scalability in terms of a system's ability to take on and handle fluctuating loads of data. For instance, at some point or another all retailers are faced with the decision to either hire more personnel or automate a particular EDI process. Maybe the number of incoming purchase orders has begun to outstrip your capacity to process them and as days get longer in the accounting department, the question of scaling through automation becomes significant.
There are many ways to scale your EDI platform and customers will often start with an ERP-specific EDI adaptor. There are many "out-of-the-box" adaptors on the market and they can help relieve much of the pain related to scaling from a user's perspective, but in reality EDI has many moving parts. Just think of the system as a whole including software, hardware, VAN connections, support, evolving trading partner guidelines, personnel, training, etc. All of these individual pieces need to be ready to scale and seldom are they all found under one roof next to the "easy" button. Earlier this year at Microsoft Convergence, someone remarked to me that EDI is the biggest non-standard standard. I feel that statement describes EDI well.
So how do we scale or "elasticize" our EDI practice?
It is critical to plan for variability in dealing with all of your EDI vendors. This begins with taking a hard look at SLAs and how well they can all be harmonized around your specific EDI needs. Is a vendor capable of supporting you during growth? Will they meet your needs in tough times? Do your vendors offer EDI services and solutions for starting small and a roadmap for growing? You can’t always predict when your business will undergo a period of substantial growth, and because not all vendors are capable of supporting that growth it can be costly to have to seek out and develop a new EDI vendor relationship amidst a period of high stress and fluctuation. In dealing with your internal EDI practice, I would look at the resource plan and governance. Is business continuity hard set into your EDI practice? Is there any single point of failure? This may seem trivial but when EDI knowledge rests with only one or a handful of people, disastrous consequences can result from personnel turnover. Certain EDI providers are equipped to offer the full range of EDI managed services. More and more companies are looking at EDI providers to hedge against EDI complexity and risks.
2-Extensibility: A retail EDI platform should be open to integrating any data format on any protocol.
For me, the most exciting side of EDI is imagining where B2B integration will take us in the future, and the retail industry is pushing the boundaries like no other. This is driven largely by the need for VMI (Vendor Managed Inventory) and DSD (Direct Store Delivery). Just walk through the aisles of any Microsoft Dynamics conference, and the number of ISVs with product add-ons is almost dizzying. I like to think of extensibility in terms of a system's ability to ingest, process, and exchange data from unlimited sources. It's easy to think of EDI in terms of exchanging data, such as invoices, from one point to another, but the web is widening this scope with concepts like cloud computing, non-relational databases, decoupled architectures, mobility, server-side scripting, and so on. Moreover, what the web is showing us is that no one knows what the future holds.
Applied to EDI, a panoply of tools (or extensions) is quickly arising that will enhance and optimize what has traditionally been considered a somewhat binary process. DiCentral, for example, offers DiMetrics, a web-based tool that allows users to create and modify EDI business rules in the cloud. Imagine that you want to use a specific carrier when shipping a product over a certain weight—DiMetrics allows you to create the rules and integrate them as part of your EDI process. I made a reference earlier to Mom & Pop operations. Direct Store Delivery is now surfacing as a critical operational challenge for vendors selling to independent retailers. According to the NRF, 95% of all businesses in the US are sole proprietorships and owner-operated businesses. Selling to these retailers is an expensive proposition since most of them can't support EDI.
So how do we "future proof" our EDI platform?
An extensible EDI platform should be able to integrate data from any source in any format and then use this data to provide accurate, timely intelligence to your EDI practice. When thinking of your vendor solutions, do they offer and support the ability to connect to other systems by way of standard protocols? Web services are popular now and the EDI world is bracing for AS4, an open standard for the secure exchange of business documents using web services. While this is still in development, your EDI platform should be ready to communicate in this method when the time arises. Does your EDI vendor offer products that are built on extensible frameworks? In skimming the web, I read for instance that one vendor uses Flash as the user interface for their EDI adaptor. This may have been exciting in 2002, but the web applications world has largely abandoned Flash favoring other frameworks, notably HTML5. What will this mean in terms of compatibility and support for this product moving forward? In essence, by following trends in web applications development (information in extreme abundance on the web), we can align our EDI platform with applications and solutions that follow best practices, avoiding those that can unexpectedly emerge as EDI landmine products.
These two characteristics are essential in retail EDI because retail is extremely dynamic. While EDI is core to retail business, it’s not the core business. So whether you choose to manage EDI completely in-house or choose to outsource it, these concepts will apply. Naturally, aligning yourself with an EDI partner that you can consult and covers all of these bases is a smart decision.
-Daniel Ford, DiCentral