• EDI – A curse or a blessing?

Since I introduced EDI at my last company in 1994 I have worked with many different EDI Applications & Solutions (in-house and outsourced).

We traded mainly with the Retail, ‘Big-Box’, Club-Warehouse and Home Improvement Industry in the earlier years, but included in 2002 also the 3PL industry and in 2004 trading with the banking industry.
At this time I would like to elaborate more on the first group, which I will continue to summarize as retailers,  trading documents/transactions was at first limited to:

  • 850 (Purchase Order) 
  • 810 (Invoice) 

but was later extended to

  • 856 (ASN or Advanced Ship Notice) 
  • 860 (Change Order)
  • 852 (Product Activity Data)
  • 820 (ACH or Electronic Payment)

As long as your EDI transactions are not integrated into your ERP Solution all transactions are fairly easy to setup. Many software solutions and EDI hosting providers offer standard document templates that allow you to print any received document from your trading partner.
When integrating the transactions into your ERP System even 850 and 810 are usually very easy to setup, since most trading partners adhere close to the ANSIX12 Standard. When it comes to 856 things get traditionally more complicated due to the extremely different requirements each trading partner has. 860, 852 and 820 are rarely integrated into an ERP System but either printed or exported into some sort of “standalone” database or spreadsheet or some other third party solution.
At my last company we for instance imported the 852 information in a third party ‘standalone’ Sales Forecasting and Requirement application called ‘Demand Solutions‘.

EDI, depending on your available resources, can be a blessing or a curse for any supplier. Retailers usually dictate not only which ANSIX12 standard to use (3010, 4010, 5010, 5020, …) but also how they use this standard, and their can be a world of differences on how information is mapped for transaction within these standards. Some even use the so called VICS substandard. This all can make it extremely difficult for a supplier to integrate this information into any back-end system, since one and the same information can be mapped to different EDI Segments or elements for different retailers often also using different identifiers within an element.

These retailers are usually very unresponsive to your needs. Which can result in addtional manual labor for a supplier before being able to integrate the transaction into your back-end ERP System or forcing a supplier to go the manual way of printing and re-entering information into and from an ERP or EDI System, which defeats the purpose of EDI completely, since it adds not only additional labor but also additional cost to a suppliers business. On top of this many retailers demand better pricing for a product you are selling to them with the argumentation that you are now able to wprk more efficient and there for have a reduction in operating cost in doing business with them.

And may God have mercy with you, and there is a mistake in one of your transactions (which could be as extreme as missing a product description even if a valid SKU is sent) or your transactions had not been transmitted in a timely manner (especially 856), these retailers are very fast in hitting you with charge-backs for non-compliance. Over the years I worked with large well-know companies that had actual charge-back profit centers.  This has been a known fact in the industry. These charge backs at some time could be higher than the value of an order or wipe out all your profits on an order, since some of these retailers have set fixed charge-back amounts, where others may use a percentage of the order value.

I would like to end here with the following summary:

As long all retailers don’t comply with the ANSIX12 standard 100%, think twice before you business with these big-box companies, unless you have the resources (personnel & financially) to deal with this. And I am saying that most small and mid-size organizations usually do not have these resources readily available or time to recuperate the investment made.

Advertisements
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: