EDI still has an important role in B2B e-commerce
Much has been written in this column about the need for distributors and retailers to invest in new technology to survive in the digital economy. But, one of the oldest and proven B2B technologies is still relevant and wins new adoption every day. EDI – electronic data interchange – still deserves consideration by distributor/retailers and their supply chain partners as a way to reduce cost, improve strategic relationships and increase channel visibility.
The auto care industry is really a tale of two supply chains. From the service retailer to the parts store and warehouse distributors, a handful of business technology providers have dominated the solutions that are used for inventory management, procurement and information exchange. These companies succeeded by focusing on a single industry and concentrated their development efforts on the needs of those businesses. Much of the technology was proprietary. But if the shop and the store and the warehouse all operated systems from the same supplier, what did it matter?
Connectivity and integration between distributors and their supply chain has proven to be a much greater challenge, however. There are several contributing factors, not the least of which is that most manufacturers operate an assortment of software and systems from highly diversified, global technology vendors. Virtually, no two are exactly alike. So for a distribution partner to communicate with these systems requires a custom integration every time. This is where EDI comes to the rescue and where the aftermarket industry has a unique advantage.
EDI is the machine-to-machine exchange of business documents in a standard electronic format between business partners. Think of purchase orders, shipping notifications, invoices and remittance documents going back and forth between buyers and suppliers. One would think that in this age of digital connectivity, manual processes would be all but eliminated. It’s common for there to be integration with the 20% of the partners who represent 80% of the volume. But, it’s also typical for 80% of the process costs to be devoted to those partners who represent only 20% of the volume. If end-to-end integration is good for your largest partners, why stop there? Why don’t more businesses integrate with 100% of their customers or suppliers?
One obstacle with EDI is that there is really nothing “standard” about it. Every supplier and distributor is free to define their own data specification for use in their business documents. Imaging trying to conduct a meeting where everyone in the room was speaking a different language. That’s why EDI traditionally requires a data map or translator to define the connection between one buyer and one supplier. When the supplier goes to integrate with the next buyer, the data map is again unique and must be redrawn. This makes EDI connections expensive and time consuming to set-up and maintain. One-to-one data mapping is the biggest deterrent to widespread adoption of EDI. It simply doesn’t pay to go to that trouble for your smallest customers or suppliers.
But, the auto care supply chain has an important resource that is a game-changer when it comes to the ROI decision for EDI. Imagine if, rather than coding a unique data map for each trading partner, you could code a single data map to a neutral specification. When your trading partner also maps to the super-specification it dramatically reduces the number of one-to-one connections that have to be maintained and restores the economic “return” into an EDI investment. A number of years ago, the industry recognized the value of a master EDI document map and the Super Spec® was born. Any company seeking to EDI-enable all of their business partners can integrate with the Super Spec® one time, and be assured of almost complete reusability with each additional connection. Channel partners in the aftermarket have seen 75-90% reductions in the time required to set-up a Super Spec™ connection versus a one-to-one data map.
The Super Spec® is administered by the Auto Care Association, and is available at no cost from the Technology page of the association web site (www.autocare.org). End-to-end integration is now practical and affordable for all of your trading partner relationships – not just the largest.
About the author: Scott Luckett is the vice president, industry strategy for GCommerce Inc. Previously, Scott held several positions at the Auto Care Association over 17 years and was most recently CIO with responsibility for the Technology Standards Committee, the Telematics Task Force and the National Catalog Managers Association