From Idea to In-Store: Making Sense of EDI
It is a momentous rite of passage in the growth of many businesses. After the hard yards bringing an idea or product to the market, the opportunity is there for the kind of contract you dreamed of. One of the big retailers wants to buy your product… but before you pop the champagne open, there is something you need to figure out. How on earth are you going to satisfy the retailer’s ordering requirements?
When you’re fulfilling orders with most major organisations, such as supermarkets or online retailers, you will need to be able to receive, interpret and respond to an electronic purchase order. This might include an extraordinary amount of details that must be adhered to – specific delivery windows, expiry dates, packaging requirements and the like.
Whether you’re an established business or an emerging provider, you will need an electronic data interchange (EDI) solution that ensures you can meet the contractual requirements of your big customer. There will often be penalties in place if you miss even a small detail, and, ultimately, your big fish may find other alternatives.
These order requirements are ultimately designed to make life easier for the big business you’re supplying. They have sufficient buying power to insist – and after all, they are dealing with perhaps tens of thousands of line items every day, so they want everything to happen with precision.
Let’s say you’re a dairy producer who’s developed a cheese so delicious that you’ve caught the attention of a major supermarket. Up until now, the product has probably been your focus, which means your IT systems may have a number of manual processes. Dealing with the demands of the ordering process may seem daunting, but Team EDI specialist Emilio Rodriguez says this can actually be a real opportunity to make your life easier.
‘Before starting an EDI process, you do have to tidy up a few manual processes, but the short-term pain can bring some great benefits.’
These benefits include saving your people a lot of time, saving your business money, and having more accurate records that make tax time less painful. Sales forecasting becomes easier, meaning less waste and lower warehousing costs. And what is really exciting is the reports that you will now be able to generate – you will be able to see more clearly what is working for your business, and what can be improved.
So how does it work? The supermarket places an electronic order for 8,000 cheeses, packed a particular way, with specific labelling, a six week minimum shelf life, to be delivered to its distribution centre ready to go to 300 stores. The order goes to a value-added network (VAN), and you may be required to download and respond to the order within a time window. This message will be in standard EDI format.
Your business will need the information in your own format, for example MYOB. Your EDI translator does the conversion, and you are able to respond to let the supermarket know that you agree to their terms. The leading EDI translator product is IBM’s Sterling, which makes handing multiple complex orders way simpler – but if you’re not yet big enough to afford Sterling and testing the waters, Team does have an option developed in-house to help you reach that point.
This is where the automation we mentioned becomes very important. The detailed information translated by your EDI solution will automatically prompt your own processes, so that you produce, pack and supply everything exactly the way the retailer requires, and avoid those late delivery penalties.
There are, says Emilio, three factors that indicate a supplier is likely to manage EDI successfully. First, they need a readiness – if the business is not prepared to evolve, then it is more likely to return to bad habits. Secondly, the fewer manual processes the better. A good EDI specialist will help with the transition for staff, and work with them to develop processes they are happy to adopt. Thirdly, it helps if the business already has some form of ERP system, rather than depending on spreadsheets. If the staff know the ERP system well, they are likely to be comfortable with EDI more quickly.
With twenty years’ experience in EDI, Emilio says that making EDI work for a business can be as much about who you know. His network of retailer contacts can ease the process, and he often finds he acts as a go-between to resolve difficulties.
‘Often, I can talk with the retailer about the situation, explain the challenges, and perhaps get an exemption from conditions that cannot be met, without losing the order,’ said Emilio.
Whether you want to improve your current EDI solution, or you’ve just landed your first big order, the EDI specialists are ready to help you to get it right. For more information about EDI, or a chat about whether it might be time to prepare your systems, contact the EDI specialists at Team Computing.