May 27, 2009

Finding Ways to Go Electronic in ‘09

Companies of all sizes can increase competitiveness in an age of adaptable and affordable technology

Finding ways to go electronic may seem like an expensive and time consuming undertaking for small-midsize companies with limited staff and resources – especially in today’s economy. Those companies that conduct some or all of their business transactions using manual or paper-based processes should reevaluate ways to go electronic before they are unlinked from the supply chain.

First, ask yourself, “Why does my company still use manual processes?” A popular answer is a variation of, “My company is not large enough to justify the costs or reap the benefits of electronic processes.”

Now look at it from the perspective of your trading partners that primarily conduct their business utilizing automated electronic transactions (e.g. electronic data interchange – EDI). Many of them conduct business with hundreds of trading partners across the globe and your company may just be a pinpoint on their customer map. When these companies evaluate their strategic plans, they may ask themselves, “Are sales from this company significant enough to justify the cost of doing business?”

The industrial and retail industries provide examples of the latter way of thinking. Rockwell Automation, the world’s largest company dedicated to industrial automation and information, requires their distributors to export product and pricing data from a single electronic source, Industry Data Warehouse (IDW), to increase efficiencies and better ensure data accuracy. In the retail industry, Lowe’s mandates all of their manufacturers to utilize GS1’s GDSN data synchronization standards. It is certain this trend will continue as the benefits of automating business processes in the supply chain continue to grow. Now is the time to go electronic if your business wants to compete and trade on a national and global scale.

1. Reevaluate your technology options

It is easier and more affordable than ever to purchase software and services that are customizable to your needs and resources. There are a variety of tools that can help your company go electronic including EDI translation services (any-to-any translation including fax) and web forms. These tools can translate your data into EDI using a simple standardized format and enable you to conduct EDI without investing in an in-house EDI system. In the end, you save time and money and your trading partners perceive your company as larger and more robust.

IDEA partners with top technology companies, Activant Solutions, Sterling Commerce and Faxinating Solutions, to offer inexpensive services that can help your company transform 100% of your manual and paper processes to electronic.

2. Collaborate with others

If outsourcing your electronic processes is still too costly or time consuming for you, consider teaming up with others in your industry to mitigate the cost. You can accomplish this through industry association involvement, building stronger trading partner relationships with your suppliers or even collaborating with friendly competitors.

Last year, four friendly competitors from Buffalo, NY demonstrated teamwork and collaboration to establish an electronic relationship with their suppliers. The companies worked together to reach IMARK Group’s highest eCommerce honor, Gold tier. Since then, they have experienced quicker order fulfillment and improvements in customer service. Read the complete case study.

3. Start small

Going electronic is more than a process change – in many cases it is a cultural change. The best way to begin an electronic initiative is to prioritize based on the processes that are most commonly used. Work on automating those processes and continue to evolve from there.

For example, many distributors transact purchase orders and invoices regularly. An electrical distributor from Illinois decreased their average order error rate on vendor invoices from approximately 7-8% to 1-2% with their most valued vendors after they automated the process. At an average error rate of 6%, the distributor saved $300 ($50 per invoice * 6 Invoices) per every 100 invoices. Taking a small step in automating one business transaction can make a big difference in your bottom line. Read the complete case study.

Every company is unique and so is each route to supply chain automation. The final result will always lead to stronger trading partner relationships, cost reductions and time savings. Once you build a strong electronic business foundation, the possibilities for growth are endless.