For the largest retailers, getting their suppliers to comply to their digital trading requirements is as easy as imposing hefty fines for non-compliance. But for most retailers, the all stick, no carrots approach may not work. Most businesses will do better when they focus on building collaborative relationships to streamline business processes. This blog examines some of the options available to you, when working with trading partners who lack the resources to implement their own EDI program or who are just not ready to trade digitally.
For buyers and suppliers, digital trading makes sense. It’s faster, more efficient and can help build strong, lasting and profitable relationships. The benefits can be extremely impressive. Stanford Global Supply Chain Management Forum found that most companies saved at least 40 percent in processing costs for digital versus manual documents. Research from Supply Chain World (SCW) shows companies with high levels of digitization could improve their cash conversion cycle rates by over three times, reduced transaction costs by more than 20% and double monthly inventory turns.
And, McKinsey research suggests that companies with highly digitized supply chains can expect to boost annual growth of earnings by 3.2% and annual revenue growth by 2.3%.
Why small suppliers have been slow to adopt digital trading
The traditional approach for companies is to establish digital connections with their largest trading partners. These are the partners that have the technical skills and resources to implement solutions such as EDI. However, this probably represents a minority of your trading partner community. According to research from SCM World, most companies digitally exchange information with less than 20% of their trading partners. The remaining 80% – mostly small suppliers – represent the ‘long tail’ of value for companies that can equate to millions of dollars of unrealized cost saving and revenue opportunities.
In the past, small suppliers have always been the most difficult to connect with. Often, they lack the internal technology, skills or resources to invest in and support a formal EDI program. Sometimes, the reason can be more cultural. The small company is very happy with the way that it currently works and doesn’t believe that it transacts enough business to make it worthwhile to transition to digital trading.
The challenge of connecting to your entire trading partner community becomes even more complex when you need to implement trading partners in other parts of the world. You need to consider different geographies, time zones, languages and compliance requirements.
However, today, there are technical options that are ideal for even your smallest suppliers.
Option 1: The invisible touch
A range of technology solutions – such as OpenText™ Email2EDI and OpenText™ Fax2EDI – have been developed around the advances in Optical Character Recognition (OCR) technology that can make digital trading almost invisible for your small supplier. They continue to exchange business documents by fax or email as they always have and all their existing business processes remain unchanged. All they notice is an improvement in the quality of your relationship as process times are accelerated with fewer errors and issues.
You can automatically translate the business documents you receive from partners into digital formats such as EDI or XML. The solutions deploy OCR, ICR (Independent Character Recognition) and IDR (Independent Document Recognition) and adaptive recognition technologies to extract data, validate it and deliver it directly through your OpenText™ Trading Grid capability into back-end systems such as ERP. You only have to manually manage the exceptions and can use those errors and issues to train the system to continually improve its performance.
Using this option, you dramatically reduce manual re-keying and paper handling, accelerate business processing, improve data quality and save money – while your partner doesn’t even need to know anything is changing. It’s business as usual for your partner, ensuring 100% adoption.
Option 2: The no cost, low hassle approach
Intelligent Web Forms are, perhaps, the easiest and most popular option to introduce digital trading to your smaller partners. As the name suggests, the supplier enters all the information through simple and secure online forms. The supplier, wherever they are in the world, can quickly self-register in just a few minutes. Once registered, your suppliers can create, view, edit and manage all key business documents – such as invoices, POs and Advanced Shipping Notices (ASNs) – via the web portal.
The system automatically converts this information into the correct format for OpenText Trading Grid and your back-end systems. The reverse is also true, you create documents in your normal way to deliver to your supplier via the web forms. With business rules and validation built into the system, human error and exceptions are virtually eliminated.
If you so wish, we can bill your trading partners to connect to you via Intelligent Web Forms, turning this low-cost solution into a no-cost solution.
Intelligent Web Forms represent an affordable, easy to use way for every small partner within your community to begin digital trading.
One of the benefits of web forms is that it works extremely well in changing situations. As mentioned earlier, new trading partners self-register themselves to connect to you in minutes. And if your trading partners tend to change the layout or look of their business documents, web forms may be a better option over OCR solutions.
Option 3: The anything goes solution
Often trading partners use separate systems for the exchange of structured and unstructured information. Structured information – such as invoices and POs – is exchanged using EDI or web forms, while unstructured information is exchanged though file sharing services such as Google Drive or Dropbox. Although convenient and popular, these services can lack the level of security you need and aren’t meant for Enterprise-level business transactions. They also add more systems and processes, preventing you from exchange all documents through a single system that can be centrally managed and audited.
For companies already using Trading Grid, our new OpenText™ Core for Trading Grid, available to B2B Managed Services customers as an optional add-on, allows you to exchange all file types with your partners and view all transactions in your Active Documents dashboards. Its simple-to-use, folder-based structure makes it easy for your partners to drag-and-drop files or share files and gain the benefit of added visibility of all relevant documents with the assurance that the information is accurate and up-to-date. OpenText’s Marco de Vries spoke about this new offering in his latest blog.
There’s no one solution fits all
The benefits of digitally trading with all your trading partners are too great too ignore. Connecting digitally with non-EDI trading partners continues to be a challenge but, today, technical complexity, IT skills or geographical location are easier to overcome. You now that various options to overcome the many different reasons and situations for why trading partners are not already EDI-enabled. There may not be a one solution fits all, but instead you have a variety of solutions that are just right for every challenge.
Read this ebook – How to close the digital gap in the supply chain – to get a step-by-step strategy for implementing solutions to improve digital collaboration.