Estimated reading time: 3 minutes, 16 seconds

How Managed EDI Tools Offset Supply Chain Risk And Complexity

role-of-complexity-in-businessOnce we talk about a World class EDI system and couple it with risk and complexity, aren't we thinking of a Supply Chain Control Tower? The SCM control tower is the single point of contact to reduce complexity and risk. And guess what?, EDI is the glue that holds all the participants together.

So let's get “managed EDI” out on the table, define it, and show how and why it is such a powerful tool. The simple definition used throughout the industry is: “Managed services systems outsource the EDI document control to a third-party provider.” Digging a little deeper, isn't it a specialized area of IT service management (ITSM)?

IT service management (ITSM) refers to the entirety of activities – directed by policies, organized and structured in processes and supporting procedures – that are performed by an organization or part of an organization to plan, deliver, operate and control IT services offered to customers. It is thus concerned with the implementation of quality IT services that meet the needs of customers, and is performed by the IT service provider through an appropriate mix of people, process and information technology.

Differing from more technology-oriented IT management approaches like network management and IT systems management, IT service management is characterized by: adopting a process approach towards management; focusing on IT services rather than IT systems; stressing continual improvement.

It is all about “knowledge”. Air controllers get information on weather, speed, direction, and altitude of aircraft and use that knowledge to keep their air space safe. Companies must know what is happening with their supply chains so they can prevent disasters too. They need to be able to do “what-if” analysis and work their way around events that will cause disruption and risks to the supply chain. Same thing with supply chains. Everybody needs to know what is going on. How? EDI.

Before going into the list of biggest risks, here is a “preamble to risks”. You need to be familiar with emergency procedures. This means the entire Chain (purchasing, etc.). The Control Tower idea, when done correctly and in conjunction with other fixes can be very successful. Visibility is a prerequisite to supply chain agility, responsiveness and almost everything in the supply chain. The “other fixes” are headed by improving EDI to a World-class system.

It all boils down to: (1) Being familiar with emergency procedures; (2) Having VISIBILITY of the supply chain; and (3) finding the right people, provide continuous training and allow them to learn and develop by rotating their roles in the supply chain. Supply chain managers are always on the “hot seat”: Excess inventory equals obsolescence; lean inventory equals stockouts; either/or hits the bottom line. These “mini crisis” are on a daily basis and prepare the SCM crew for tougher crisis. Be it inventory, transportation, production, or planning, these folks are ready!.

When it comes to supply chain risk: Lack of Visibility (“WHAT IS BEHIND CURTAIN NUMBER 2”) is the biggest danger. While high-tech and apparel industries have the best visibility, the supply chain still needs improvement across the board. It is all about those lower-tier suppliers, and even some tier 1 suppliers. If asked, a high percentage of companies have continuity plans and a dual-source strategy. My question is if this is all reactive stuff or have they addressed the unknown? Is the whole SCM organization on board? Suppliers, Procurement; Logistics? Yet again EDI is necessary. In my first take at staffing the SCM Control Tower, I have Logistics, CRM, Demand Planning, Procurement and EDI/Electronic Commerce.

So what does this modern, managed EDI look like? Well, we know EDI is simply the transfer of structured  data by common messaging standards, computer-to-computer, without  manual intervention. EDI used to be slowed down by technology issues. Now the sky is the limit. If managed properly! Proprietary standards make the interchange slower.

Source data – a single version of the truth shared  to all on a common, managed platform.
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