Seven Keys for a Successful EDI Compliance Initiative
Understanding and leveraging the key advantages of EDI over manual data entry has revolutionized the way retailers operate, saving billions of dollars in bottom line costs since the inception of EDI. The application of EDI technology and processes as a core business function provides retailers tremendous strategic advantages and has become a required aspect of retaining competitive strength in the marketplace. Effectively deployed, EDI technology has the potential to drastically improve both the efficiency and the profitability of a retail operation. But how do you ensure that your organization’s EDI compliance initiative is successful? The following are seven keys for a successful EDI initiative.
1. Document your requirements. You should incorporate your electronic transactional requirements in a common-facing environment that you already provide your supplier. This may be your supplier portal, your online supplier requirements document, the new supplier enablement form, etc. Make sure your electronic supply chain requirements are easily available to your suppliers.
2. Establish accountability. Although this type of initiative becomes subsidized by IT, it is critical that it is adequately and properly supported by the rest of the organization. It is critical that if the merchandising organization owns the supplier relationship that it understands and embraces the initiative. Enable controls such as your new supplier enablement form to highlight and acquire the right commitment from all parties.
3. Assign responsibility. Depending on the strategy for execution, this may not be a tech-heavy initiative and may not need project leadership from IT; it is likely this initiative won’t require a full-time resource. However, you will need resources to drive the initiative and provide assistance to the suppliers during enablement. Make sure people understand their specific responsibility and can promptly respond when needed.
4. Develop an enablement strategy. The majority of effort to the retailer will be bringing the suppliers on-board. You will need to develop a tiered communication strategy to let your suppliers know what you as their customer are doing and why. You will need to over-communicate the benefits of the endeavor, both for you and for the supplier. You should explain exactly what the process for enablement is and a tentative timeline for execution. You should be aware that this will likely evolve into a “carrot-and-stick” activity. Many of your suppliers will complete their respective responsibilities quickly, but there will likely be some suppliers that will avoid the effort, citing technical or budgetary constraints. At this point, if you haven’t already done so, you may need to introduce a chargeback penalty for lack of compliance with your supply chain requirements. Often, this motivates the outliers.
5. Test, test, test. Each supplier should be tested to ensure their transactions, and yours, flow seamlessly into your respective host systems. The enablement process should have a comprehensive test script that gives you and your suppliers peace of mind that the integration will function properly, as designed. This doesn’t have to be a time-consuming process, but it can be tedious.
6. Prepare for exceptions. Even with the effort behind testing, there may be reasons why transactions have to be manually edited. Often, these reasons stem from bad inbound data from the supplier, i.e., garbage in, garbage out. Make sure your system properly traps and escalates the exceptions on a timely basis. Sometimes, things just go wrong. Make sure you have the right monitoring controls in place to know when they go wrong and processes for remediation.
7. Have empathy. This may be a big change, both for your retail operation and for your suppliers. It may take time for your suppliers to execute the change. It may even take time for your organization to warm up to the idea.
For most retailers, whether you are strictly a brick-and-mortar chain or you have a multi-channel presence, the key to long-term growth and profitability is to have an efficient supply chain model. A key component of a strong supply chain model is the high level of integration you have with your suppliers. Whether your goals are simply to have a systems-based Procure-to-Pay cycle or to have collaborative planning, forecasting, and replenishment, you fill find it painfully difficult if not impossible to achieve without EDI. Remember, the best operators in retail are usually the ones that win.