So, you’re a manufacturer or supplier of goods. It could be tomatoes, it could be tires, it could be school textbooks…let’s just lump it all together as ‘widgets’.
As you’ve probably already discovered, producing or sourcing those widgets is just the start. Now you’ve got to get them into an environment where they can be sold to an end user.
Electronic Data Interchange Explained
To accomplish this, there’s a lot of data and documentation that must be exchanged between you and a retailer. From Orders and Invoices to Remittance Advices and Advance Ship Notices, there are hundreds of business documents that can be exchanged between trading partners. Electronic Data Interchange (EDI) has become the preferred method of exchanging this data between B2B buyers and sellers.
In simplest terms, EDI is a data pipeline that’s established between a supplier and a retailer, and data needs to flow in both directions. The aforementioned business documents flow from buyer to seller. Other data, such as standing inventory levels, sales reports, purchase orders, invoices and many other pieces of information flow from the seller to the buyer. In today’s Just-In-Time (JIT) retail environment, many retailers will only deal with suppliers who can provide data via EDI, and suppliers with any kind of sales volume generally find transmitting data via EDI solves a lot of internal data management headaches. But how do you choose the EDI solution that’s best for your business?
Choosing the Right EDI Partner for Your Business
There are currently about 150 different EDI providers doing business in North America. Yes, that’s well over 100 possible solutions to your needs! It is important to choose the right EDI solution provider because they will truly become a partner in your business, acting as a liaison between you and your trading partners, facilitating the daily communication of business documents.
Deciding which one’s best could be a pretty daunting task, but everything starts to become a little clearer if you follow these selection criteria to narrow down the EDI provider field:
- 1) Determine the Specific EDI Needs of Your Business
Where are you now? And where do you want to be in 5-10 years? Do you want to play with the big, big boys on an international mass retail scale or are your goals more niche market and regional? Answering these questions will help to hone in on the extent of your future data management requirements and the levels of EDI transaction volume you’ll likely have. Not every EDI partner will be able to scale up (or down!) to meet your current and future demands.
- 2) Stability of the EDI Partner
A lot of these are the same questions you’d ask when screening any service provider. How long have you been in business? What sort of environment (office) do you have? Tell me about your data security standards? What is your system uptime record? If you’re not a techie, you may not understand all the jargon but at least you’ll have it to compare and ask those who do know.
- 3) How Accessible is Your EDI Partner when You Need Them?
The geography of your EDI partner is an interesting point. Yes, EDI operates in the same fashion as the internet. Yes, data can be transferred from one side of the world to the other in a flash. So, technically, the location of an EDI partner’s offices shouldn’t matter. But what if you need tech support or operational help? A partner located three time zones away may not be available when you need them. At a minimum, find out about a provider’s customer support policy and hours of operation.
- 4) Industry-Specific EDI Partners
Some EDI providers focus on very specific industries, product lines or even individual retail chains. Their entire business is based on servicing that niche and they’ve become very effective at dealing with the nuances involved. They can be a fantastic partner if you’re actually in their target industry but they probably won’t do business with you if you’re not.
- 5) EDI Scalability
As mentioned in the first point, some EDI providers focus exclusively on SME suppliers who only deal at a regional level, while others will only partner with high volume, international suppliers. Only about 25% have the scalability in their platform to effectively do both. Keep this in mind if you’re starting small but have plans for world domination.
- 6) References/Testimonials for Your Selected EDI Partner
Just as if you were hiring a builder, accountant or any other specialist, ask for a list of current clients to whom you can actually speak. And don’t accept a “no” on this request. Get their opinion on the platform’s usability, stability and functionality, as well as the partner’s customer service.
- 7) EDI Suggestions from Retailers
While they’re often hesitant to hand out pure recommendations, the retailers you are, or are aspiring to, deal with often have lists of EDI partners they know of or have worked with in the past. Conversely, while retailers may be able to make some recommendations, they may just be comfortable with their current provider and not realize that there are better options available. As a result, it is probably best to seek out additional recommendations as well.
- 8) Value Added Network (VAN)
A Value Added Network (VAN) is the system of gateways, switches and routers that connects the EDI data sender with the receiver. While there are about 150 EDI partners in North America, only a few manage their own VANs. Those that do are somewhat akin to suppliers who not only offers the phones (the EDI software) but also control the phone lines (VAN), as well. Providers that do not have their own VAN have to buy capacity on other providers’ networks. EDI partners with their own VAN have total control over transmission routing, system stability, data security and other integrity issues. Aligning with a partner that controls their own VAN goes a long way toward ensure your EDI functionality will always be there when you need it.
- 9) Does the EDI Partner Offer GDSN Compliant Services?
Compliance with the Global Data Synchronisation Network (GDSN) is an emerging trend in supply chain management. Basically, the GDSN is a set of worldwide data formatting standards created to ensure there’s a common structure used by the thousands of buyers and sellers sending EDI data around the globe. Most large, international retailers now mandate that their suppliers be GDSN compliant, and it will become the industry standard over the next decade. If you want stay ahead of the curve, partner up with an EDI partner who’s already a GDSN certified data pool provider. There are only two in North America right now and they are on the leading edge of the future.
- 10) Software as a Service (SaaS) EDI Solutions
Do you want your EDI software and database to be hosted on your own internal computers or stored remotely and accessed anytime you need them via the internet? If you chose the latter, you need to source out an EDI partner who offers a SaaS EDI solution. You may have heard of Software as a Service (SaaS) and its close relative, “cloud” computing. Right now, about 50% of North American EDI providers offer a SaaS-based EDI platform. Because SaaS platforms are hosted remotely, they require no IT support from your end, no additional hardware, and can be accessed from anywhere there’s an internet connection. Plus, if your computers go down for any reason, your data is backed up and available on the partner’s servers. The entire software industry is slowly heading in this direction so, again, if you want to be ahead of curve and ready for the future, a web-based SaaS solution is the way to go.
Find out if Commport Communications is the right EDI partner for you! Contact us today for more information.