Electronic Cash News

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.

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.