The Reasons of EDI Failure

Have you ever thought about what life would resemble without standardization? How about buying a set of tools that are only compatible with one specific brand of screws, nuts and bolts. And could you picture the problems that would emerge if every laptop had its own unique connection ports instead of the standardized USB ports that work with many popular devices like thumb drives, digital cams, and smartphones? It’s safe to say that without global standards, life would be chaos. But thanks to human ingenuity, we have established a wide range of global standards that help everyone to save money and time.

In the business world, there are similar industry standards designed to minimize confusion and save companies time and resources. For circumstances, electronic data interchange (EDI) has transformed into one of the most typically made use of B2B communication standards in the world. In fact, EDI is depended on by more than 300,000 companies worldwide. EDI was first established in the 1980’s but only really began to take off in the 90’s thanks to affordable personal computing and the extensive adoption of the Internet. Today EDI has become the ‘universal language’ for data interchange in a variety of industries including retail, banking and manufacturing.

EDI has changed the way that companies share information, ensuring that data isn’t compromised by human error. EDI has ended up being the common language for interchanging files and information such as: Product Activity Data (EDI 852), Purchase Orders (EDI 850 e), and Shipment and Billing Notices (EDI 857). Rather than sending tedious faxes or emails for each individual event, EDI allows computers to communicate directly with each other, ensuring greater accuracy and instantaneous notice.

As technology has continued to advance, retailers have shifted their focus to user-friendly data sharing alternatives, such as self-service vendor portals. In addition to having product data sent to vendors through EDI 852 reports, merchants are adopting web-accessible databases which enable suppliers to evaluate and download product data in a self-service way. Unfortunately though, this shift has come with a range of consequences for both the retailer and vendor alike.

By adopting proprietary retail vendor portals, sellers are now moving away from the standardization principles that brought forth greater efficiency in the retail industry. And by moving away from standardization, retailers have inadvertently introduced more work for vendors that must collect data from numerous retailers. Whereas EDI is a universal language for sending information like product activity data, self-service portals require vendors to become familiarized with each retailer’s unique vendor portal. Worse yet, portal data is typically formatted in a different way from one retailer to the next, resulting in hours of additional data management for vendors selling through more than one retailer.

EDI has been for many years the work-horse for any sizable company that desires to effectively conduct business with its trading partners (suppliers and customers). But EDI has one annoying tendency: message failures; that is, a message (order, invoice) that failed to reach its intended receiver. No message, no PO, no invoice, no deal, no sale, no cash.

EDI messages have lots of sectors that, arranged in a particular way, constitute the “map” for the message. The segments are populated with data, such as customer number, product number, gross price, and net price. Trading partners agree on a standard map for each type of transaction and therefore on the segments and the data structure within the map. Any deviation from standard results in message failure.

These deviations stem from the every-day ordinary workflow: a product number is changed on the sending out or receiving end, data is gone into incorrectly, new product master data isn’t uploaded into someone’s system, a suffix or prefix is added to a value in one of the sections, a trading partner changes part of the map and fails to communicate the change, or a required field is blank. Adding to the complexity are increasing demands for more data on the EDI message itself, some of which, such as service warranty information, is almost difficult to integrate into an EDI map.

For the master data portion, data synchronization tools exist and are important in an EDI environment. Methods to keep these records in sync range from emails to spreadsheet uploads to third party services. It’s not exciting work, which is why it’s so easy to give it little attention.

There are at least three ways to line up data between trading partners. One is to utilize electronic synchronization through standard EDI messages. In this scenario, the systems utilized by your trading partners are instantly updated for modifications in your master data. Another is to use a third party data management service such as 1 World Sync, and another is to incorporate your data synchronization with your EDI services company. SPS Commerce is one EDI services firm that has established item data maintenance as part of its offerings, and it offers user portals to identify and display messaging errors and message tracking in human-readable formats.

The electronic and third-party data synchronization solutions also potentially exclude many data elements that are vital for continuous EDI messaging, such as DUNs numbers, banking information, item cross-referencing, and unique codes. Until somebody invents the next generation of e-commerce we are stuck with traditional EDI and its weaknesses; being aware of those weaknesses is the initial step to conquering them.

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