While I was in the area I spoke with an EDI professional who knows about outsourcing all too well, and from personal experience. Lisa Stinebuck is an EDI Specialist with Perfetti Van Melle USA Inc. (think Mentos). She told me her story about a corporate decision to outsource her EDI job as part of a company wide restructuring initiative.
According to Lisa, her division of the European company handles more than 90% of its business transactions via EDI, which makes the function indispensable. Her take on the situation is that the European part of the company doesn't rely on EDI extensively, and because of the organization's lack of familiarity with its benefits, would be inclined to drop the initiative altogether.
As an alternative "better idea" the company has decided to outsource the function. Lisa didn't know the name of the company that will be taking over her duties, but she has heard that the cost will be five to six times her salary. As a one-woman department, her payroll expense makes up the bulk of the company's EDI budget. They have been using TIECommerce's software to connect with its trading partners, exchanging 18 different document types.
The company expects the transition from its internally managed and hosted system to its outsourced solution to be complete within two months. According to Lisa, "I think it will take at least six months, during which they will have some pretty extreme data issues." Fine tuning the company's ASNs is likely to be a significant issue in itself. "I was given two weeks to implement ASNs for a dozen companies. Each version was different, and it wasn't possible to just copy and modify from one to the next. In the end we had our vendor supply three people on a full time basis for the two week period, and we completed the job on the last day of the deadline."
Still, I've seen lots of companies outsource their EDI operations, and many are more than happy with the results, savings, ROI, and their ability to focus on their core business expertise. Lisa is less optimistic, having struggled with assessments of penalties for bad or missing ASNs from some of her customers. She says, "We use third party warehouses, and they just don't have the same urgency to supply the data our customers require in their ASNs. We continually work with them to get it right, but in the end, the customer charges the penalties to us, not to our warehouses. I wonder how motivated the outsource vendor will be to devote the time and effort required to work with the warehouses and reduce the penalties."
Lisa left me with another thought as she completes her final weeks at her current job. She is about to become an outsourcer herself, working for EDS on assignment. In truth, it's a different kind of outsource... one she expects to turn into full-time, direct employment with her new company.
I scooped up the last spoonful of chili and headed to the door, wishing Lisa all the best. I'm cruising toward Atlanta this week. Let me know where I should stop for a meal and a conversation.
Till next time... Cheers!