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EDI is Hot. Click to Connect TM PDF Print E-mail
Written by Rob Guerriere   
Oct 10, 2011 at 12:05 PM

EDI - more than just Electonic Data InterchangeThere has been a noticeable shift in the last couple of years.  When talking with supply chain professionals for the world's largest corporations the term EDI has taken on expanded meaning.  No longer is it EDI or XML or IDOC or flat file, it's all of them wrapped up under the term EDI.

Professionals don't talk about what format or version of the document.  They assume business partners will use a network or SaaS managed service application company and that the company is connected, as AT&T is connected to Verizon, and can speak all of the necessary industry languages.  Furthermore, to even be considered by a large corporation, a provider needs to have multilingual support.

That is interesting considering a few years back the market seemed to be moving in another direction with EDI vendors; not using the term EDI on their website.  Some of these vendor providers got their initial capital to be the replacement of EDI.  But as Gartner pointed out earlier this year; EDI is hot.  (I think Paris Hilton is Gartner's new spokesperson). 

I am just finishing up another leg of a two week tour of meeting with large and leading supply chain centric users.  I have been surveying the needs and near future plans of big corporations.   One observation from the road - Business is booming.  Hey Wall Street wake-up.   I don't know what metrics you are waiting for but I can tell you first hand that retail sales, a leading indicator, are up and some by double digits.  Businesses are investing in real estate, capital equipment, new talent, and technology.  From the streets of Seattle down to San Diego, the young and old are three rows deep buying the best whiskey at the local taverns.  It reminded me of the mid 1990's.  What a great time to double short gold GLL (I am).

Looking back two years and reading the Future of Supply Chain and EDI piece again, contributed by the industry technology leaders from Inovis/GXS, Crossgate (now SAP), e2Open, Elemica,  Boomi, and Liaison, THEY WERE SPOT ON.  Check out the piece here.  The big boys are gobbling up the B2B integration companies, SAP - Crossgate, IBM - Sterling Commerce and Cast Iron, HP - EDS and Autonomy, Dell - Boomi.  Platforms are all SaaS, and customers expect SaaS now, software is dead.  The SaaS systems are getting closer and closer to full self-service.  

But what is most interesting is the difference of how the game is being played from just five years ago.   EDI is not about just transmitting and integrating business transactions, it's about integrating many data types and business processes with integration happening in the cloud with pre-set integration modules and web service connections.  Then take that a step further and add in content management systems, product catalog databases, shopping carts, and discovery.  Now you have what IBM refers to as Smarter Commerce.  An offering that allows companies to connect in context, adding content and communication to simple transactions, and having the tools to manage that communication for multiple groups of trading partners privately.

It is what I envision as Click to ConnectTM, a trademarked term which I see as customer's new expectation of EDI service providers.   For example, Company A, let's call them Pop, sell specialized popcorn to both the retail food and food service industries.   They are a mid-size provider, with three third party co-pack manufacturers spread out in different regions of North America, a 3PL provider, and still utilize Quickbooks while the field sales guys manage their leads in SalesForce.  They have a basic website with who they are, what they do, and how to contact them.  They may also use one or two web EDI providers, like SPS Commerce and DataTrans Solutions, for connections to Wal-Mart, Kroger, Safeway, and Wegmans.  That's today. 

Tomorrow, Costco discovers Pop, while searching an online directory of food providers, and contacts Pop's sales group for a trial run of their product.  Pop gets the Costco business and logs into their web EDI provider to open up private access for Costco to download the product data into their procurement system.  They click a button to turn on the EDI transaction gateway, and click the option buttons to have the orders sent directly to SalesForce and the link to accept the invoices from their Quickbooks system.  Furthermore, they assign automatic forwarding documents to the necessary co-pack facility and to send alerts to their 3PL carrier on shipment schedules.  They may also turn on an optional button for invoice receivables factoring financing.  This feature sends the invoice to an auction house that bids down the financing rate and pays the invoice to their bank lock box in two days.   

In a matter of 10 minutes, Pop Co. has set himself up in the Costco buying system, turned on the connection for business documents to flow, setup an automated flow-through supply chain process with their third party providers, and has finished the order to cash process with the necessary bank deposit information.  Many parts of this are already there.  It's a matter of making the seams seamless, which may only take a few to a handful of months more due to new web services integration.

The Pop Co. example thus far is mentioning the standard order to cash process from the point of the order.  But the industry drivers are that Costco and others are moving to scan based trading.  This means that Pop Co. is responsible for the inventory at Costco and owns it until the consumer purchases it at the register.  Basically it's consignment selling.   Again, this is something that is handled under the term EDI today, which includes receiving store level product movement data and other helpful metrics and placing it in a meaningful spreadsheet like application for the Pop Co. user to make decisions on what to ship  and where.   This is a movement that has been a long time coming, about 11 years, but is finally gaining mass acceptance due to technology providers putting low cost effective tools on a SaaS platform.

Thus, the retailer has reached the apex of existence.  It is almost a self-service vending machine.  Now that Pop Co. is one step closer to the consumer, what other front end consumer-pull demand-marketing tools can be integrated to the online supply chain?

For the last few years, the GS1, an industry association and inventors of the barcode, have been touting the importance of controlling the quality of one's data tied to a barcode label.  This is mainly driven by mobile applications on an iPhone that allows the user to scan a barcode and do a Google search for additional price and specification information.  The GS1 believes that this is an optimal marketing opportunity to share, publish and control mobile data for the end user at the point of purchase decision.  The marketing information might include nutrient information, recipes, deals, and complementary products that might be of interest to the consumer.

Sure, this sounds great but how does Pop Co. do it?  Now we are talking about publishing data in multiple formats for multiple marketing channels to reach our consumers.  How does Pop Co. cost and time efficiently publish content in context?  This is exactly why HP just paid 10X run rate revenue for Autonomy, a UK based and leading content management system used by some of the top company and brands in the world.  This is also what IBM has in mind when talking about Smarter Commerce.   It's the next step of driving business, and attaching these demand generation tools to the electronic order to cash process for Pop Co. 

Who would have thought that barcodes, EDI, and the supply chain could ever get this sexy?  Gartner is right; EDI is hot.  In the next issue, we'll approach some simple solutions to tracking cantaloupes through the supply chain.  A piece that might help save your life.

Related Content that might be of interest:

8 Things to ask your EDI Provider

EDI Service Provider RFP Builder

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Last Updated ( Oct 10, 2011 at 03:20 PM )

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