If you’re like most companies that have initiated EDI programs – maybe as part of wider strategic initiatives to cut costs, improve productivity and obtain real-time visibility – you are likely to have been successful in connecting electronically with most of your largest suppliers.
But, you may be finding it more of a struggle to onboard the masses of small- and medium-size businesses (SMB’s) in your trading community. This is very common, in my experience, but something that you really do need to fix, rather than avoid. You need to connect with these SMBs in order to maximize the value of your investment in your EDI program.
In the next few blogs, I’d like to share some of the common mistakes I’ve seen companies make when onboarding their suppliers and discuss ways that you can avoid them. Also, I want to provide you with a handy Supplier Enablement Program Checklist to help you do it right!
Pitfall #1: Inconsistent messages to your suppliers
If others in your company – such as your Buyers – are not on the same page as you regarding your EDI program, they may be telling suppliers that they can continue to receive orders manually rather than encouraging them to move to EDI. This effectively sabotages your whole initiative.
SOLUTION: Be sure to educate and obtain the buy-in of all internal stakeholders in your company who come in contact with suppliers. They need to understand why your company is moving to EDI, the benefits to them, the benefits to your company and also, importantly, the benefits to the supplier’s company in doing so.
Also, they need to understand the steps that suppliers will need to take in order to participate. This way they can support the program by encouraging suppliers to participate at every opportunity. The time spent doing this education will produce real dividends in the future!
Pitfall #2: No incentive for your suppliers to participate
If your communications to your suppliers describe only the benefits that the EDI program will deliver for your company, your suppliers will be less likely to participate.
SOLUTION: Your EDI initiative must be viewed as a win/win for both your company and those of your suppliers. The “stick” approach can work for some companies – i.e. “Do it or you won’t be eligible to be our supplier” – because getting the revenue from your orders may be reason enough for them to implement EDI. But, that approach won’t be good enough for most companies and is not the best way to work collaboratively with your partners!
In my experience, an informative message to your suppliers that highlights the true benefits to both parties works best every time. If you can offer additional benefits, all the better – for example, offering suppliers the opportunity to be paid faster in return for receiving your EDI orders and sending EDI invoices is an excellent win/win message.
If the supplier can then look forward to becoming a “preferred supplier” with the potential for additional business that status brings, and can also benefit from improved cash flow and shorter Days Sales Outstanding (DSO), a key performance metric within the supplier’s company, you will have a willing partner in your initiative.
Pitfall #3: Outdated information about your suppliers
For many companies, the information available about their suppliers is usually old and out-of-date. Frequently, the supplier list is in an Excel spreadsheet on someone’s PC. Even if it’s in a database, the information is still likely to be out-of-date, as there is rarely an efficient process in place to maintain this ongoing.
When you notify your suppliers, requesting their participation in your EDI program, you need good contact information to start with! Without it, your program will languish and the ROI from your project will be delayed.
SOLUTION: Survey your suppliers to collect their latest contact information as well as their level of readiness. For example, in addition to the contact name, address, phone number and email address, find out if the supplier has implemented EDI with another company. If so, record the company’s EDI address and communications and translation methods used as well.
Ideally, you will also take advantage of new capabilities available today to store the fresh data in a single, centralized repository of supplier data that is easily accessible by all appropriate personnel. Ideally, make this one that enables suppliers to maintain their own information on an ongoing basis.
In my next blog, I’ll highlight three additional pitfalls you should avoid.
In the meantime, have a look at the Supplier Enablement Program Checklist, in which you’ll find a listing of the detailed steps you should complete for each phase of your supplier enablement program, along with a description of each step.