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.