Earlier this year, Forbes magazine ran a very interesting article asking how many suppliers were too many for the supply chains of global organizations. It looked for the point where supply chains become overly complex, costly, and ultimately, ungovernable. This got me thinking how it’s similar to EDI providers. The more you have, the more complicated and inefficient things get.
One passage from the article really struck me, with the author commenting “The instinct of every large organization is to multiple complexities. The enormous scales of modern global supply chains testify to that effect. However, with concerted effort suppliers can be counted and, once listed, reduced. And with that reduction in supplier numbers, companies begin to reduce unnecessary complexity”.
While I might question whether large organizations are naturally inclined towards complexity, the consequence of the accelerated pace of business and its increasingly global nature means companies can acquire suppliers and other trading partners without a firm strategy on how to effectively manage them.
Complexity by osmosis
EDI is a perfect example of this phenomenon. Often business expansion and acquisition leads to organizations with multiple business units on multiple continents. Each has its own service provider or – even worse – portfolio of service providers. Alternatively, organizations often gain new EDI systems as they extend the business they do with new customers and suppliers – implementing new EDI solutions as trading requirements dictate.
We recently experienced a situation like this when a large enterprise approached OpenText™ to help consolidate its EDI capabilities. The company had over 200 separate EDI Value Added Network (VAN) providers. Each EDI contract had its own capability, costs, performance and terms. The company had created EDI silos throughout its business where very little information sharing or interoperability was possible. It felt like they’d reached that point through a process of osmosis rather than planning.
Inadvertently building inefficiency into your supply chain
However, cost and complexity are not the greatest dangers of a fragmented EDI infrastructure. This also affects your ability to conduct business, which will ultimately lead to lower customer satisfaction.
This is exactly where leading workwear company Carhartt was headed when working with multiple EDI suppliers. According to Mark Hurt, manager of Enterprise Integration, “Our EDI process was not streamlined. We had multiple tools to manage EDI transactions, which didn’t allow communications and direct connectivity functionalities … we had delays in our process, which sometimes delayed shipment dates”.
After careful consideration of some of the options out there, Carhartt selected OpenText™ BizManager™, an on-premises EDI platform, to improve information exchange with its trading partners. Hurt commented: “The biggest value that we’ve seen is the speed and improvement of processes. We now have EDI set up with our vendor community and our retail/wholesale community – our suppliers as well as our customers … when you increase speed to market, you’re increasing your value-add to partners”.
A major challenge when using multiple EDI solutions is the lack of visibility across all your supply chain information. You are working with a number of different business documents in a number of different formats exchanged using a number of different communications methods. In effect, you’re building inefficiency into your supply chain.
According to the Forbes article, rationalizing suppliers allows business to take control of key trading information where “the ultimate goal is that the data are centralized into a single source of the truth”. What’s correct for the supply chain as a whole also applies to EDI providers. Not only does this make the entire system easier to manage – with less errors and delays – it improves productivity by radically improving the process of on-boarding and trading with customers and suppliers.
This is certainly what Carhartt has found as it now has real-time visibility of into the status of every transaction, which Hurt describes as “one of the hidden gems of the solution”.
Working closely with trading partners creates agility
OpenText has been working with a large UK retailer, Dixons Carphone, that required a lean and cost-effective means to trade with its suppliers. As a traditional ‘bricks and mortar’ retailer, the company faced stiff price competition from online rivals and realized that it needed to work very closely with suppliers in order to deliver excellent customer service if it was to remain competitive.
The company chose OpenText Trading Grid™ Messaging Service as a central cloud EDI solution for key suppliers but soon saw that it enabled them to quickly on-board its entire supplier community. Today, the company has nearly 100% of its suppliers connected and trading digitally–reducing on-boarding time from a number of weeks to under three days–enabling it to have far greater stock visibility and improve customer response times.
Carhartt has also been able to respond much faster to its internal customers through working with a single EDI provider. Whereas business users may have had to wait months previously for requested changes to be made to the EDI systems, it can now be accomplished in days. This means that the business can react much more effectively to market conditions.
Daryl Morgan, EDI Analyst at Carhartt, says, “I think our reputation internally with our business departments has improved. They know they can come to us with pretty much any request, and we’re going to be able to supply what they need, using the BizManager tool.”
Single source of the truth, single source of compliance
As businesses become more globalized, working with multiple EDI providers can quickly make compliance a costly logistical and administrative nightmare. New local and regional regulatory changes have to be accommodated within your business processes, which means making changes to many different systems often from EDI providers that either don’t include the capability within their product or don’t have the capacity to keep pace with regulatory change on a worldwide basis.
When Italy upgrades its eInvoicing regulations in January 2019 it will be one of over 50 countries worldwide with its own legislation – each different from the next. This is only one example of dizzying amount of new and changing regulation that every business faces. Few companies can keep on top of global compliance requirements. A single global EDI provider, like OpenText, offers compliance expertise in all regions to enable appropriate changes to be made quickly to your EDI solution to ensure you remain compliant.
If you’d like to know more about the benefits of working with a single EDI provider, how to choose between an on-premises or a cloud solution, and how OpenText can help, please contact us.