As the costs and intricacies associated with keeping an internal EDI facilities increase, each supplier must count business risks and challenges related to handling a huge IT facilities against the advantages related to outsourcing this function.
Supply chain partners and suppliers that remain to practice in-house EDI approaches using their own IT infrastructure face costly functional challenges, including:
Failure to remain up-to-date with EDI technology changes
Retail is a continuously changing financial industry, and an EDI system need to be regularly updated to accommodate altering requirements, procedures, and business criteria. For instance, retailers will alter prices designs, volume discount levels, marketing offers, or supply chain procedures on a periodic basis that need to be reflected within the EDI system when products are delivered. Suppliers that can quickly adjust their EDI system to accommodate these changes cultivate a more positive business relationship with their retail clients. Suppliers that can not will risk decreasing the relationship or losing it entirely.
Lack of appropriate EDI resources and expertise
With so much based on a smooth supply chain operation, any considerable modification within an EDI-trained staff has a matching effect on the retailer/supplier relationship. This emerges when new employees need to be re-trained to the unique attributes and procedures with the retailer EDI system.
High turnover and inexperienced workers develop a higher number of EDI system errors and missteps and, eventually, greater operating expense.
Greater compliance risks and costly chargeback penalties
Retailers depend upon the precision and timeliness of Advance Shipping Notices (ASNs). Retailer-assigned chargebacks associated with late deliveries are often the result of incorrect UPC or product codes, errors in deal processing, failure to abide by retailer EDI specifications, or missing/damaged packaging labels. These chargebacks can be costly, possibly slashing off 10 percent or more of a producer’s total revenue, depending upon the efficacy of the system.
Lack of a reliable disaster-recovery plan
For suppliers that have data centers located in severe weather locations, lack of a disaster-recovery strategy develops a risk of extensive downtime that can have catastrophic outcomes for the supply chain operation. Any business that depends on continuous operation needs to have an offsite disaster recovery prepare for their EDI data and systems on the occasion that a disastrous weather-related or other event seriously impacts data center and EDI functional effectiveness.
