April 9, 2008

Make the Impossible Possible with Outsourced Integration Technology

NINE MONTHS. It may take that long to set up an electronic trading connection to a major supplier or customer. Nine months for each and every one? This may be a familiar scenario at your company because you are engaged in doing all the integration and connections yourself. Worse, those connections – whether via email, the Web or EDI – may all be supported by different and ultimately inefficient processes inside your company. Some companies have to chase down orders via phone, fax or email or manually key in electronic data interchange (EDI) data into their enterprise resource planning (ERP) system – not very efficient and prone to errors and delays.

Plenty of today’s supply chains are slowed and even crippled by entrenched manual processes and disconnected enterprise systems. An Aberdeen Group report from late 2006 showed that 60% of companies described their current supply chain processes as manual, spread sheet intensive, only partially automated and dependent on different software systems within their own companies. The reason for the disconnect (s) are many: the company may be struggling with their own ERP applications never mind connecting to and integrating with their partners. Again the Aberdeen survey indicated that complete internal integration would give them a competitive advantage – if only they could manage to do it.

Most back office enterprise systems were not designed to support the multi-application external facing services that real time supply chains require – they are pretty inflexible. Whether you realize it or not those that think that they can connect multiple external systems, have the staff and money to do it and the communication protocols like EDI and XML will somehow integrate their supply chain information for them are not in tune with mainstream thinking. Fortunately there are hosted third party solutions that can blend the traditional capabilities of a Value Added Network with supply chain information. Whether using EDI, Flat File, EDIFACT or XML standards these systems act as a gateway for partner to partner collaboration – a single electronic connection to all customers and suppliers. This strategy has so transformed the possibilities in supply chain networking that companies that have not investigated it have an obsolete understanding of the market.

In a July 2006 survey by IDC, companies were asked how many ways do they collaborate with their supply chain partners; 88% cited email, 73% fax, 62% telephone and 50% stated mail. These methods, which depend on manual labor, have prevented many companies from capitalizing on real B2B collaboration. Of the so called high tech methods Microsoft Excel was cited as the most popular supply chain planning system – Yikes! As most know Microsoft Excel is not scalable and it does not promote collaboration either internally or externally.

While EDI has been a staple for many decades many companies shied away from adopting EDI because of the costs that have made EDI via a Value Added Network very expensive and complex.

With the advent of Industry Data Exchange (IDX), a web-based communications service, companies can communicate through a single location to all their trading partners, suppliers and customers that are using other VAN or exchange services. IDX can also complete a direct connection to trading partners that have set up their own system connection such as AS-2. Order management information may also be delivered from Industry Data Warehouse (IDW) via IDX at no charge to the customer. Product and pricing data obtained from IDW is used for completing purchase orders in either, EDI, Flat file or XML formats, which are subsequently routed to the trading partner via IDX. Both IDX and IDW are designed to interface with all ERP applications with set up and implementation at the users pace – even as fast as 1-3 days.

Implementing IDW and IDX requires a few basics:

  1. Computer or business operating system
  2. Internet Service Provider and Web Browser
  3. Enterprise Resource Planning (ERP) application

If you plan to implement EDI you would need:

  1. EDI translation software or
  2. EDI module that may be part of your ERP program

Alternatively, if you don’t want to invest in EDI translation software or an EDI module you can adopt industry Flat File standards and use those file formats for exchanging purchase orders, invoices etc.

The big advantage to using IDX and IDW is the ability to communicate with different communication protocols found in today’s supply chain. For example, one company may communicate in EDI while another is using Flat File or XML. IDX enables the front end translation from one language to another at no charge as long as the customer is using the industry standards and maps (custom maps may be created at a nominal fee).

The IDX Tracker also provides tremendous document visibility and summary information that keeps the customer abreast of specific business document activity.

Many companies are locking on to the IDX and IDW way of doing business with their suppliers and customers. And given the results to date, no one wants to go back to the old days of sending emails and faxes.


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