Estimated reading time: 2 minutes, 15 seconds

data integrationAs the supply chain becomes more intricate, more demanding, and faster moving, margin for error decreases. The complexity of omnichannel retailing in itself means predicting the next order is impossible. It may come from a web catalog, from a retailer, or from a service like Amazon that integrates multiple processes. With the speed and complexity of product demand it's critical to record and automate each transaction when it happens. Because there's no time to go back and record it later.

 

EDI transactions are great for standardizing orders and supply chain flow. But for too many suppliers those transactions begin and end with the EDI provider or even inhouse software that's used to manage them. When the orders are evenly spaced and are for bulk purchases it's simple to justify the cost of manual intervention - even though the true cost of doing things manually is probably far more than the hourly wage paid to the data entry clerk.

When orders are not predictable and are for quantities as small as single units, the cost of manually transacting a single item sale is likely to eclipse any profit from the sale. At that point the only real option is to automate the financial aspects of the order with the company's ERP system. After all, the ERP is able to automate the internal transactions once the data is added from the external processes. 

It may seem obvious that this simple step is one that needs to be implemented, but it's often the very last piece of automation completed. That's probably because the pressures to automate come from both ends of the company and rarely rise to critical levels at the mid-point. Having an ERP system to handle accounting and inventory is a necessity, and likely one of the first software acquisitions a company makes. Implementing EDI is frequently done because a retailer demands it. So once those demands have been met there are no external pressures to complete the integration between the two.

That is until order volumes get too high and item counts per order get too low. At that point the possibilities for errors increase and costs of mistakes become higher. What I've seen is that this final integration - one that can bridge the gap between internal and external systems and deliver a start on full supply chain visibility - is relatively simple. Most ERP systems already have integration points built into them and are waiting for the mechanics to be implemented. The companies that have completed this final step have said that they wondered why they had delayed implementation of integration. I'd be interested in hearing your story - whether you've integrated or are still waiting.

Last modified on Tuesday, 04 February 2014
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Scott Koegler

Scott Koegler is Executive Editor for PMG360. He is a technology writer and editor with 20+ years experience delivering high value content to readers and publishers. 

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