EDI is an essential ingredient for successful supply chain management. It allows companies to handle business transactions with any trading partner using a standardized electronic format and makes many once onerous processes easier. However, there are challenges to making the most of EDI, particularly if you are expanding your capabilities or in high-growth mode.
Top 5 EDI Challenges You're Likely to Experience
These challenges have multiplied as the supply chain has evolved to a point where vendors can sell an item they never owned, then arrange for it to be delivered by someone else to a home with a mailing address provided by a customer yet not listed in their database.
Challenge One: Scaling Your EDI Program
While EDI is a standard protocol, the reality is that trading partners often have their own flavor of EDI transaction sets. A “standard” EDI purchase order is different from industry to industry and trading partner to trading partner. So, when you start to add more customers, accommodating unique requirements and business rules can be an issue.
There are three things you need to do to scale your EDI program:
- 1. Ensure that your EDI software accommodates multiple sets of trading partner business rules and document types. Many trading partners can have up to 100 unique business rules. This includes individual document fields, data elements and business rule-driven validations, like store number or ship-to location.
- 2. Integrate your EDI transactions into your ERP systems. A couple of trading partners can be managed with “swivel chair integration,” where data is manually entered into the ERP from a stand-alone EDI system. Scaling beyond that, you’ll need a direct ERP integration.
- 3. Consider outsourcing your EDI program to an EDI provider. All of the trading partner management, communication and testing can be a pain. This activity can be conducted by a 3rd party. Not only can this be less expensive that managing EDI in-house, it can also free your staff to focus on more valuable business activities. To help you determine what EDI provider works best for your organization, read, “In-house vs. Outsourcing: Best Practices for Choosing the Right EDI Solution"
A word of caution: Many EDI providers offer direct integration into your ERP as part of their service offerings. However, check to make sure they don’t outsource this project to third-parties, which can lead to project delays and unforeseen costs. (For more information, read How an ERP Implementation Can Get You Fired (And What You Can Do About It.)
Challenge Two: Overcoming Bad Data
60% of B2B business transactions are affected or suspended because of some data related anomaly, according to a recent report we published with SAP. That’s a staggering number and one that has to be managed with better data governance in order to fully realize the value of EDI.
I like to say it all starts with the order and that’s where so many data related issues occur. This is both a business issue as well as an EDI issue. In the report, we found that 16% of orders per month include an incorrect price, 20% involved out-of-stock or discontinued items and 8% include a duplicate PO.
Add business rules to your EDI processing that monitor transactions for items like price differences, valid POs and product availability dates. This business rule exception management tool can automatically send alerts to your team and your trading partner to catch bad data before it hits your ERP system.
Challenge Three: Moving at the Speed of Commerce
Do you know if your ERP (Enterprise Resource Planning) system is ready to process EDI transactions on demand? It’s one thing to have your EDI system deliver documents in real-time, it’s another for your ERP system to process those when they’re received or ready to be sent.
In the past, you might have pulled all your EDI documents from the network once a day, usually in an overnight batch. However, the speed of business and increased customer expectations mean you need to be prepared to work in real time. You can either have documents forwarded by the EDI network when they’re received or setup mailbox pulls throughout the day.
Set up alerts and notifications that let people to know when documents are processed or are stuck because of some processing error.
Challenge Four: Mastering the Art of Transparency
Supply chain visibility is difficult to master as every system that touches an order needs to be exposed to outside trading partners. EDI started as means to streamline manual business processes…and it’s been wildly successful…but as supply chains becomes more complex, the value of EDI shifted to provide better visibility of inventory.
As the industry shifts from strictly bulk fulfillment to one-to-one/direct-to-consumer models, transparency between trading partners is more critical than ever. You can also enable more transparency by implementing new EDI transaction sets that support inventory availability (EDI 846), bill of lading (EDI 211), motor carrier tender and response (EDI 204/990), shipment status message (EDI 214), carrier manifest (EDI 215) and package status (EDI 240).
Challenge Five: Going on the Offensive
You’ve bought-in. You’ve embraced EDI and have responded to trading partner requirements…and you want more. Luckily, you’ve got opportunities with customers, suppliers, transportation providers and financial service providers like banks and insurers.
Being proactive with customers can move you up in their implementation cue as well as demonstrates your commitment to the relationship. Look to your suppliers to help streamline inbound inventory and supply chain visibility. Many of these companies can support EDI already. If they can’t, there are lots of EDI specialists who can assist with getting them enabled.