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Solving Electronic Mandate Headaches

by Malcolm Wheatley

Meeting the data interchange requirements of larger customers can be stressful and costly. It doesn’t have to be like that.

For smaller companies, winning business from a large organisation is a prize that offers the opportunity of significant growth. But it’s a prize that comes with an awkward catch. Larger companies usually have their own, very specific, ways of doing business—and increasingly, that involves requiring suppliers to interact with them electronically.

For the larger companies in question, the logic is clear. Trading electronically imposes efficiency-boosting standard procedures and processes, and is more productive—and cheaper—than exchanging and processing pieces of paper.

But for the smaller businesses supplying them, complying with the requirement to trade electronically can be surprisingly onerous. To start with, the technology involved can be complicated. And if your in-house IT people are struggling to keep your existing network and enterprise applications up and running, the added burden of maintaining links to customers’ networks won’t be welcomed with open arms.

Then there’s the question of just how those links are going to be constructed. Go back a few years, and there used to be just one way of trading electronically: EDI, or to give it its full name, Electronic Data Interchange. And even though EDI came in several ‘flavours’, building EDI links was relatively straightforward.

But roll the clock forward to today, and there’s something of a proliferation of standards and protocols. Not only has EDI itself fragmented further, with different standards emerging in different industries and different parts of the world, but wholly new standards and network protocols are emerging to take advantage of new technological developments, often Internet-based in nature.

The result is something of an alphabet soup, full of acronyms. The growing use of XML technology for data interchange, for example, has seen an ‘XML-friendly’ EDI standard called AS2 emerge. But the industry in which its take-up has been strongest is the retail sector.The automotive world remains wedded to Odette and EDIFACT (apart from in the United States where ASC X12 is used), while sectors like banking and aerospace use protocols like FTP.

The danger? While supporting perhaps one, or maybe two, of these divergent approaches is feasible, scenarios in which several need to be supported at once are all too easy to envisage. And for the smaller business, every new customer win brings in its wake the fear that the intricacies of another EDI standard or network protocol will need to be mastered.

As if this weren’t enough to daunt the smaller business with upwardly-mobile aspirations, electronic data interchange also embraces entire business processes, as well as the individual transactions that collectively constitute them.

How quickly, for example, is a purchase order confirmation required to be sent? Two hours? Four hours? Or longer? What precise form is the confirmation to take? How are invoices to be formatted and transmitted? Are advance shipping notifications (ASNs) required? If so, how far in advance of shipments being received are they to be sent? Twenty four hours—or two hours?

Such issues are far from trivial, and again complicate the task of working with and supplying the larger corporate customer. The kudos to come from winning the business is very satisfying—but the process of complying with their trading stipulations can be fraught. And it’s a fact of life that more and more larger organisations are making such stipulations, simply because by doing so it boosts their own efficiencies.

So what is the smaller business to do? Increasingly, it seems, the answer is to outsource the whole mess. Go to a specialist service provider—GXS, for instance, is one such, having been in the electronic data interchange business since its inception over 40 years ago.

Increasingly popular, B2B outsourcing shields the smaller business from complexity of meeting the requirement to interact electronically, while fully supporting the widest possible range of EDI standards, XML and proprietary data interchange formats.

Nor is it expensive: once the costs of trying to offer the same capabilities in-house are fully accounted for, outsourcing the EDI problem is usually cheaper, say experts.With large retailers now issuing mandates requiring suppliers to move to AS2 EDI, B2B outsourcing offers a way to meet mandates quickly and easily—and without adding infrastructure, expense or expertise.

Better still, a B2B outsourcing company like GXS can provide useful extra visibility and process controls—‘exception alerts’, for example, to enable companies to react immediately to unforeseen challenges, while reducing the amount of personnel time spent tracking and troubleshooting.

In short, for businesses worrying about the costs and complexity of meeting the demands of larger customers, the message is clear: B2B outsourcing has never been a more viable solution.