Managing the Supply Chain – More Accurate Information Is the Key

Customers are evaluating their suppliers and determining which are a “favorite vendor.” If the supplier cannot provide the delivery information in advance, the customer may look for a replacement supplier.

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Everywhere you look, the global supply chain is a mess and shortages of everything from fuel to food and toys are driving prices higher. While it may be easy to point the finger at the pandemic, it only deserves partial blame. Allied Market Research’s article “Supply Chain Management Market” reported that only 6% of companies reported they have full visibility in their supply chain, while 69% of companies do not.  Of the 6% that reported, they believe that information from their tier 1, 2, and 3 suppliers was key to their visibility.

Customers are demanding more and more information and are penalizing their suppliers that cannot provide it. Customers are evaluating their suppliers and determining which are a “favorite vendor.” If the supplier cannot provide the delivery information in advance, the customer may look for a replacement supplier. They will order less from the non-compliance suppliers or eliminate them completely. 

Assessing your current environment to assist in solving some of the efficiencies exposed by COVID is the first place to start. This step can be inexpensive and provide more product information across the supply chain---Electronic Data Interchange (EDI). Yes, that old technology that everyone is doing, but unfortunately not leveraging its full potential. Not managing the backlog of your customers’ requests can cause incurring fines and/or fees, loss of favorite vendor status and loss of revenue.

Most of your largest customers require not only sending their orders to you electronically, but require the corresponding documents to be sent and received. This means that many, if not all, corresponding order to cash documents should be implemented with all your customers. You need to know what documents your customers require and make sure you plan to implement all of them.

There are many ways to approach the onboarding process. This includes:

  • Big Bang approach
  • Phased approach
  • Outsource to an EDI provider

No matter what approach you decide to take to onboard your customers and/or suppliers, you must get an all-departmental team together. Too many companies think that because EDI is a technology the IT department should drive the project. For this reason, many companies fail to implement more documents to gain the full benefit of EDI. While IT plays a major role in the project, every department must be involved. Depending on the document or documents being implemented, different business departments must make the business decisions. For example, if you are implementing purchase order acknowledgement, how is your company handling the acknowledgement? Are you only acknowledging what you have in stock, showing out of stock, back orders, or substituting with another product? IT cannot make these decisions; they can only code for how the exceptions will be handled.

Once you have a project team formed, the next important step is to survey your trading partners. If you are implementing more documents with your customers, you may already have a backlog of requests from them. You will also need to determine what their testing requirements are, their timeline to be able to test, and if they used a third party to manage their testing processes.

If you are implementing new or additional documents with your suppliers, create your specifications for each of the documents you will be implementing.  This will save you a lot of time during the implementation process. Your suppliers will send you your required fields and will know what fields they will be receiving from you.

When implementing new documents with customers, the phased approach is usually the best choice. Your customers may have different testing requirements, other projects on their schedule, or other reasons that could delay implementing the new documents. Developing a schedule based on all your customers’ timelines will assist in facilitating a successful project.

If you are implementing documents with your suppliers, either the phased approach or the Big Bang approach can be used. However, both have their pros and cons. The Big Bang approach means that you implement all the new documents with all your suppliers at one time. This approach requires a lot more testing to ensure that everything goes smoothly when the project “goes live.” Complete end-to-end testing with all your suppliers is recommended so there are no surprises when it runs in production for the first time. The Big Bang approach also means that all your suppliers must be on the same timeline as your project. The phased approach allows you to move your suppliers into production over time. This allows you to work through any issues with a smaller number of suppliers rather than dealing with problems with all your suppliers. Plus, it allows your suppliers some flexibility as to when they can be ready.

You may choose to outsource the project to a third party. A lot of EDI Managed Services providers have trading partner implementation programs. They will manage the process from beginning to end. They will survey your trading partners, create document specifications, set up testing schedules and conduct the testing and validate that the trading partner can send and receive all the documents. This approach takes a lot of the burden from your resources and can help to complete the project faster than if you do everything in-house.

Implementing an EDI project with your customers and your suppliers will provide you with more visibility into your supply chain to plan and make it easier to do business with you.