Sam Bayer


Understanding the future of EDI

Electronic Data Interchange (EDI) is the “The Workhorse of the Value Chain” according to a recently published Supply Chain Insights report.  In late 2013, they surveyed 79 Manufacturers/Distributors/Retailers, each generating over $250M in annual revenue, and inquired about their use of EDI.  Here are some of the survey’s highlights:

  1. 55% of their inbound orders were EDI/XML
    • 14% are phone/fax/email
    • 10% come in via a Web Portal (like ours at b2b2dot0)
    • 7% are from multi-party exchanges (left over from the dot com days?)
    • 13% are either “other” or “don’t know” (other than walk up counters, what else is there?)
  2. EDI order processing times were halved (from 6 to 3 days) if they went through without manual intervention
  3. However, only 34% of orders are hands free.

So if I do my math correctly, that means that 66% of all EDI orders are falling out of the “system” and have to be handled manually and are therefore being delayed by a factor of 2.  Doesn’t that really make an EDI order only a tad better than a faxed order?  I get the fact that EDI nirvana is a hands free world for everyone in the value chain and when that happens life is good.  But that dream has been around as long as the “paperless office”…and I still have a bunch of paper in my office.  I’ll bet you do too.
So what’s really going on here? (evidently not much new since I last posted about EDI almost 4 years ago in “Five Things You’ll Never Hear from EDI Lovers”.)
In order to better explain the dynamics of the Supplier-Customer relationships that I’ve come across over the years, and what drives their investment decisions, I’ve developed the following taxonomy of Customer Services Organizations:

  1. The Dictators
  2. The Supplicators
  3. The Utopians
  4. The Realists

The Dictators are at the top of their supply chain and have a perceived monopolistic hold on their customers.  Their attitude is “if you want to buy from me, here is how you have to communicate with me”.  It’s your job Mr. Customer to play by my rules or you’ll simply have to find another place to buy your goods.  That’s a nice place to be, but I wonder how long that can last in this hyper-competitive world which we live in.
The Supplicators are so happy to have customers that they will do whatever their customers ask in order to attract/retain their business.  They will jump through internal processing hoops to play by their rules.  I guess if you want WalMart as a customer you’ve got to pay the price and swallow your pride.  In case you’re interested, here’s a list of the “minimum” requirements to become a WalMart supplier.
The Utopians live in a dream world.  They know today’s EDI world is inefficient (remember that 66% of EDI orders are kicked out for bad/missing data or need to be changed upon receipt), but they believe that there is a “right” way to live and everyone in the value chain should strive to get there.  What’s the right way?  Global Data Synchronization.  This is a forty year old effort whose vision, according to the GS1 website, is to foster “a world where things and related information move efficiently and securely for the benefit of businesses and improvement of people’s lives, everyday, everywhere.”  Sort of like world peace.
The Realists live in the here and now.  All too often they have to play the Supplicator role and there are days when they really would love to put on their leather jacket and boots and play the Dictator role. But they know that that’s only a passing fantasy.  They are long past ever believing that Utopia is attainable.  Although every time they hear a pitch from an EDI Managed Service Provider they think that dumping the problem on them might just be a form of personal Utopia.  They then wake up from their dream state, return to reality, and get back to work cleaning up those 66% of errant orders.
The Realists are also pragmatists and are always looking for a way to improve things.  They don’t want nirvana.  They just want to improve things bit by bit and give themselves hope of a better day.
And that’s where b2b2dot0 comes in.  In my next blog post I’ll share with you some of the great ideas we’ve been hearing from the Realists amongst our clients and prospective clients.
I love hanging out with Realists.