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When is Your Supply Chain Considered Completely Automated?

automatesupplyAs companies continue to look at automating more and more of their suppliers, several have moved beyond the scope of the traditional merchandise purchases. They have found that with different partnerships there are other supply chains to automate. Areas that are being looked at are what some call Expense suppliers which would include Service suppliers, Utility companies, replacement or repair parts and services and some are even looking at automating the process of warranty parts.

 

When you look at these types of suppliers or processes you'll notice that there are many similarities to what is already in place for merchandise suppliers -

  • Some buying organizations are required to issue a purchase order for parts and services with a supplier in order to set invoices up for payment. These orders can be sent through some of the common merchandise EDI transactions like an 850 or 875 document. When considering this path make sure that you take into consideration that some of the suppliers of parts may also be the same suppliers that you may purchase the original merchandise from, thus you may need to collaborate with several of these to determine the best method of sending these types of orders. It may be as simply as a new EDI send or receive ID or perhaps define an order type for these types orders. Also be aware that using the 875 would require that an order requesting services verses a part will require the service to be a line item as the EDI standards requires item detail in this transaction.
  • Obviously all of these partners create and send invoices for payment. Like the orders, receiving invoices electronically can be done through the same EDI transactions used with other supply chains (810 or 880). Also similar to the orders, consider a different type of invoice, or using a different ID for this data. Remember too, that you do not need to transmit an order electronically to receive invoices electronically, as the grocery industry will attest. If your company does not require an order number to pay invoices, then move forward with just supporting the receipt of the invoice only, this would then support getting the Utility companies to send your electric bills electronically.

If you're also looking at a way to automate your processes for handling orders for Warranty parts, again there is no reason that this supply chain could not also be automated. For this type of process, both in and out-of warranty service agreements would need to be considered. In some cases, the suppliers of these replacement parts will be required to report on availability of the items and receive an order that is more or less a request for a quote. If the goal is to use existing EDI transactions, this process would look something like this -

  • An 850 would be used when placing the order or requesting the quote. With many companies there are warranty agreements in place so this order type would need to indicate to the supplier/manufacture whether the request was under their warranty agreement when appropriate
  • The response to the requested pricing, expected ship dates or availability is sent back on an 855 PO Acknowledgment
  • Perhaps request daily feeds of on-hand inventory from the suppliers to get advanced visibility
  • Alerts on the status of the shipment may be useful for the technicians that will be making the necessary replacements, so perhaps an ASN would be in order
  • An 810 is always a favorite for the suppliers for invoicing. Again, there may need to be extra information on whether warranty or not

Of course, there are concerns that some of the players in these supply chains will not have EDI capabilities thus the adoption levels may be poor and thus the ROI needed to offset any changes to support electronic trading. As I and others have mentioned in previous articles, there are many services available to these types of suppliers/partners that can be utilized such as SaaS model providers, so don't let perceived technical limitations shut down your initiative.

The above are a few examples that you may want to consider as you continue to leverage the infrastructure already built for electronic trading. Look outside the box; there are many opportunities just waiting for automation, you simply need to look.

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