Five Things You’ll Never Hear from EDI Lovers

Written August 22nd, 2010 by
Categories: CEO's Blog
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I used to loathe EDI (electronic data interchange).  Its promise to totally automate the industrial supply chain with “hands free” computer-to-computer interchange of key business documents seemed to threaten the fundamental existence of b2b2dot0.  We had a bit of drama at b2b2dot0 last week that…once again…reinforced the fact that while hype may make our job difficult, reality presents our opportunities.

What happened last week?

Our service was accused of committing THE cardinal sin of a Software-as-a-Service provider.  One of our client’s customers filed a support ticket telling us that she couldn’t find the ETA (estimated time of arrival) of a part number that she was 100% certain she had placed an order for.

Not good!

Our CTO, Adrian Zehnder, jumped in to do the detective work.  Since we don’t store ANY business data on our service (we retrieve it in real time from SAP whenever we need it), we knew we couldn’t have lost it.  That left only one other explanation, the order wasn’t in SAP.  Further research confirmed that this particular order was placed via EDI and the status check was performed before it had a chance to get posted to SAP.  The customer’s expectations for real time status, literally minutes after having submitted the order, clashed with the batch nature of EDI transactions…and that got me to thinking.  What other “dirty little secrets” does EDI have?

Here are my top five.

  1. EDI isn’t collaborative, it’s tyrannical – Walmart doesn’t “suggest” that their suppliers “should consider” using EDI.  They must…at their expense, and with penalties if they get it wrong.  Here is an entire website devoted to helping you deal with the “daunting task” of working with Walmart.  Walmart accrues all of the benefits while their suppliers kill each other to bear the costs.  How exactly do we expect “totalitarian communication channels” to support “collaborative supply chains”?
  2. EDI isn’t electronic, it’s manual – Every supplier I talk to tells me that close to 100% of the EDI orders they receive have to be reviewed by human beings.  In fact, one chip manufacturer told me that  there were 90+ ways that each inbound order could be defective…bad product data, new ship-to location, unrealistic delivery date, bad pricing info, etc., etc. etc.!.
  3. EDI isn’t real time, it’s batch – (it has to be because of all of the manual interventions required…see #2 above).  Batch processing is totally doomed in our Blackberry, Twitter obsessed society.  Witness our support incident from last week where our desk tapping distributor is up in arms when he can’t get the status of an EDI order that he just placed!
  4. “EDI standards” is an oxymoron – The joke is that if a standard doesn’t work for you create a new one.  Basically, if you’re a supplier, no matter how you look at it, each integration with a new customer is a new adventure.  Also, the standards, as incomplete (or over-complete) as they are, don’t even attempt to deal with “non-document oriented” business transactions.  Today’s purchasing managers want to know inventory positions or available-to-promise dates, current pricing, anticipated shipping charges, etc.  Those real time calculations will never be available through EDI, which leads me to my fifth, and probably most powerful dirty little secret of the EDI industry…
  5. EDI isn’t for amateurs, it’s for professionals – There is a HUGE self-sustaining industry that has been built around selling EDI software, managed services, consulting, programming etc.  It’s not going away any time soon, even though in most supply chains, the benefits are elusive at best.  In fact, if you’re an EDI programmer at a mid-level supplier, you’ve probably created a tenured position for yourself.  What you do is so complicated and volatile, that your management can’t afford to let you go.  Congratulations!

In the end, I actually respect EDI and clearly believe it’s an important industry initiative.  I simply believe that it shouldn’t be portrayed as the “be-all and end-all” for the supply chain’s communication challenges.  I also believe that the internet can add way more value to the EDI community than a cheap alternative to proprietary value-added-networks (VANS), but that’s another rant that I won’t get into today 🙂

For today, I’ll simply leave you with one thought:

In spite of what everyone around you is telling you, maybe you should listen to your instincts when they suggest that the complicated solutions may not be real solutions after all.

Sam