Electronic Cash News

Most companies desire to have automated information exchange with their suppliers. This is especially true in the area of paying supplier invoices. Besides saving on administrative labor, companies also have opportunities to take advantage of supplier discounts and proactively manage working capital. There are four stages to Accounts Payable (AP) automation: manual, tactical, collaborative, and working capital.

Manual Solution: centralized, manually process and approve invoices

Tactical Solution: OCR, document and approval workflow, online reporting

Collaborative Solution: Outsource, automated matching, online dispute / resolution

Working Capital Solution: 100% electronic invoice (EDI / information exchange), supplier self-service, integrated purchase-to-pay processing

See SDCExec.com article, Emerging Payment and Discount Paradigms in the Supply Chain for more information

Importing and exporting is a costly business in terms of complying with all the International documentation requirements. Now the SAFE Port Act will require additional information prior to a ship sailing to an U.S. port. The security filing initiative of this act is called 10+2 because it requires 10 data elements from the importer and 2 data elements from the carrier before a ship sails to an US port. Technology such as EDI and electronic data exchange can solve a lot of things, but it can also support a bureaucracy. I am all for supporting the Homeland, but I would hope some smart people figure out a way for us not to stifle free trade. See SourcingInnovation’s post: 10 + 2 = 690,000,000 for more information.

Electronic Data Interchange (EDI) or any type of data exchange for a supplier is usually a burden. On the other hand, their customer, the retailer or manufacturer, sees system-to-system data exchange (EDI) as a strategic necessity. If a supplier desires to do business with large customers, then EDI or some type of standard data interchange becomes a strategic necessity. The challenge is how best for a supplier to meet customers’ EDI/data exchange requirements without going broke or being out of compliance.

Changing the data format from EDI to XML or to any other format does not make data exchange any easier for any supplier that has to exchange data with more than one customer. For any electronic document, most customer need the exact same 80-90% of data, but there always seems to be that 10-20% of data that needs to be formatted different or is mandated for a specific customer. I am an advocate for XML for web presentation and near-real-time data exchange, but it is no “silver bullet” for solving supply chain data exchange challenges. Every large customer wants at least some of their data different.

EDI is a definitely a burden to suppliers. I have come across dozens of frustrated suppliers because each of their large customers wants a different data exchange format (EDI format) and different data content in electronic documents such as an Advance Ship Notice (ASN) or Purchase Order, or Invoice. And to make matters worse for a supplier, each customer requires the supplier to use a specific transportation carrier with its own EDI / data exchange format and content.

Large manufacturers and retailers, use EDI/information exchange with their suppliers to schedule receiving, just-in-time inventory, supply chain visibility, business intelligence / metrics, catalog, matching ASN / PO, and invoices, and overall to save on labor and minimize data entry mistakes.

Direct data communications between suppliers and large customers is becoming easier and easier as most companies have Internet access and are familiar with data communications. The challenge is have a standard electronic data format that a supplier can use with all customers. Data formatting becomes the real issue for suppliers with multiple customers. Standard EDI documents like 850s, 856s, and 810s or any other data format standard can meet 80-90% of customers’ data requirements. It is the other 10% of the data requirements (specific reference information, special codes, unique product information, special electronic document) that causes suppliers headaches.

Prior to 2001 it seem like every year there was a new, emerging technology that was revolutionizing the supply chain industry. Technologies included RFID, PDAs / scanners, voice, GPS, wireless, data communications, internet, and so on. Now the challenge is synchronizing all this data from all these different technologies.

The last couple of years I have worked in the area of B2B communications and just recently came back to implementing supply chain solutions. My biggest surprise is that I see no new enabling technologies, just better use of the technologies that were already out there.

On the other hand, there are some interesting, new areas and trends. One area of growth is what I would call data synchronization. Here IT companies are enabling businesses and supply chains to synchronize their data to get better information.

This is why Enterprise Resource Planning (ERP) system providers (SAP, Oracle, and so on) have gobbled up Warehouse Management System (WMS) and Transportation Management System (TMS) software providers the last couple of years. ERP providers are intent on having their software retain and synchronize their customer’s supply chain data.

Value Added Networks (VAN) and manage file transfer providers (nuBridges, SterlingCommerce, AXWAY, and so on) have definitely jumped on the data synchronization bandwagon. They are now moving from being Electronic Data Interchange (EDI) and communications service providers to providing supply chain software and data synchronization services. VANs and Manage File Transfer providers are intent on having their software and services retain and synchronize their customer’s supply chain data. Data synchronization services are emerging to include matching Purchase Order (PO)-Advance Shipping Notice (ASN)-Invoice data, electronic catalog, and even trade network services.

The term supply chain visibility is a broad term and changes a little bit every year as we get new technology to get more visibility. I have heard DoD “war stories” from 20-30 years ago where they would assign a Lt. Colonel to daily track a high-value electronics component such as a satellite dish from the U.S. to Japan.

The last couple of years, a lot of supply chain vendors are focused on providing inbound supply chain visibility with services and software to match purchase orders, advance ship notices (ASN), and vendor invoices. SterlingCommerce just announced an On-Demand Supply Chain Visibility tool that provides this visibility if all your vendors use SterlingCommerce’s Value Added Network (VAN) or an interconnecting VAN. This sound expensive as everyone in the supply chain has to pay the VAN transaction fees for the inbound supplier (usually a large retailer) to get the visibility. At the same time this could be a good and quick solution compared to setting up your own EDI network and buying / developing your own supply chain visibility software.

SupplyChainer has a great video link on ERP in the U.S. Army. Enterprise Resource Planning (ERP) has traditionally been for manufacturers, but with the trend toward ERP II all large organizations are looking to ERP to solve their data synchronization challenges across the organization.

I am seeing three distinct ways that organizations are looking to address data synchronization within their organization and with their suppliers and customers. One is go the ERP route that the U. S. Army is going at the macro level. The other way is to use a managed file transfer solution or value added network (VAN) to exchange information between organizations and systems. Another emerging supply chain technology is RFID tags where the status of the products and shipments can actually be stored on the RFID tag as it travels with the product. Then systems could poll the RFID interrogation network to get the data and process it for the system’s unique needs. No need for systems to exchange data with each other.

Information technology professionals have wrestled with B2B information exchange standards for decades. First there was electronic data interchange (EDI), then EDIFACT, Rosetta Net, XML, and so on. Can there ever be a universal standard for B2B and supply chain information exchange between business systems?

To me there is no “silver bullet” for a universal standard for the way businesses exchange data system-to-system today. It is not because the communications, technology, or data standards cannot be developed or acquired. It is more about competitive advantage. Businesses that use information in unique ways will keep ahead of the competition. It is the old “80/20″ rule. You can get 80% of the data interfaces standardized, but the other 20% are going to be non-standard because it is supporting some unique, value add information service.

If active Radio Frequency ID (RFID) tags ever come down in price, there may be an opportunity to standardize data and data interfaces within supply chains using RFID tags and common-use RFID interrogation networks. In an active RFID scenario, the attached RFID tag would hold and update standard data elements about the shipment or product. The data about the product or shipment would actually travel along the supply chain with the product or shipment. Then business systems throughout the supply chain could interrogate the RFID tag to get as little or as much data as they want at any point in time. There are closed, proprietary RFID interrogation networks that do this today, but these networks are not available for general commerce.