In many ways, EDI standardized formats have simplified supply chain logistics for retailers, and put them in the driver’s seat in their relationships with suppliers. In short, if suppliers don’t comply, they don’t get the benefit of incentives, and may suffer the consequences of penalties. Suppliers who are often out of compliance will also suffer from a lack of repeat business.
But as a retailer, you know that compliance isn’t a black-and-white issue. Even after a trading partnership begins and EDI documents are tested and validated, you may modify them as your business needs change. Keeping up with changes is a challenge for sellers, and without enough advance notice on your part, the supplier may be technically “out of compliance” but still performing well. That’s just one example (a common one) of how EDI standards can easily move into “gray” zones.
There are many other potential sources of errors. Retailers who only have to deal with a handful of suppliers often find themselves allocating considerable resources to the EDI compliance effort, and those who have to monitor hundreds of suppliers are sometimes overwhelmed by the task. Frequently, staff members are shifted from clear revenue-building sales and operations jobs into compliance monitoring, which can seem like an endless game of whack-a-mole.
Supply chain monitoring is, of course, a critical task. But the obvious tools for enforcing compliance, such as deductions, can seriously hurt relationships with suppliers.
Value-Added Networks (VANs) have been around for more than 30 years. But today’s VAN is definitely not your father’s VAN. VANs have evolved from simply being a managed network on which to exchange EDI information and documents between a company and its trading partners to a more robust service that includes not only the network but also a variety of services aimed at facilitating more effective commerce amongst numerous organizations.
Today’s more advanced offerings – which are more often being referred to as business to business (B2B) integration or even simply business integration services – that include hosted document exchange and managed services offerings. Among the services are combined EDI/XML B2B integration (B2Bi), enterprise application integration (EAI), business process management (BPM), and managed file transfer (MFT) capabilities.
According to Gartner, in its “Market Trends: Multienterprise/B2B Infrastructure Market, Worldwide, 2009-2014” report, B2B integration requires the integration of more than just two applications. Today there is demand for much deeper and broader levels of integration that span companies and involves numeours organizations. Coming soon… cloud applications will be included in this fray. Gartner writes in its report: “The “dumb” network that used to only transfer bulk files between applications and trading partners is turning into a “smart” network that incorporates diverse integration functionality, including communications, translation and workflow, increasingly implemented by application vendors and users using an SOA. The B2B discipline also now must include cloud services integration — for example, how to link services from solutions such as salesforce.com to on-premises applications.”