Going Beyond EDI to Enable B2B CommerceSUCCESSFULLY EXCHANGE DATA BETWEEN TRADING PARTNERS

Citations:[1] Bryan Keythman, The Disadvantages of Direct Write-off Method, AZ Central[2] Association for Information and Image Management, Overcoming the Top Pitfalls of Manual Invoice Processing

OBSTACLES IN B2B COMMERCE

EXCHANGING DATA BETWEEN TRADING PARTNERSComplications often arise when communicating among businesses, particularly for retailers exchanging electronic data, such as purchase orders, invoices and inventory data, with a multitude of trading partners. There are a variety of methods to keep track of important business-to-business (B2B) documents between companies. Issues emerge as new technologies and methodologies evolve and enter the business sphere; every company has its own specs on the preferred format to send and receive data, but companies must be able to communicate in a format that is compatible with their partners’ standards. In this paper are some of the glaring examples of B2B data communication issues; we will also explain how disparate B2B communication methods are affecting your business and how to navigate the changing landscape of electronic data exchange to enable successful communications.

MANUAL COSTSWhile some companies are quick to adopt the latest method of automated technology, others are happy to stick with the traditional. But manual invoices, purchase orders and documents may be causing a comedy of errors when businesses try to communicate.

Loss of orders can hurt both parties when a disparity between documentation styles occurs. Not only can a budget misappropriation occur, but expenses and profits for both companies may come into question as losses are written off and miscommunication causes budget deviances. [1] Lost invoices and

1. Manual Costs and Processes

2. Confusing Solutions

3. Varying Standards

4. Constant Change

5. Cost of Solution

5. Implementation Challenges

6. Security Concerns

paperwork will negatively impact the business relationship between businesses if mix-ups and mishaps accumulate.

Manually handling business documents is hardly a cost saving solution instead of adapting new technology. The cost of manual processing rose more than 100 percent between 2000 and 2010 to an estimated cost of $23 per transaction. The cost for a lost document can exceed $120, and manually replacing a document can run upwards

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Citations:[3] Steve Kiefer, The “Long Tail” of e-commerce standards, Supply Chain Quarterly, Quarter 1, 2009

of $200. [2] Who ends up absorbing the cost and the subsequent fallout can fracture a once healthy business relationship.

A lack of investment into how your company handles the documentation process can put you behind your suppliers, partners and competitors. Relying on manual processes because they have been the standard practice can lose you clients and customers. Without support from vendors or the scalability to match modern software, it could prove a greater burden on your budget than you know.

CONFUSING AUTOMATED SOLUTIONSPerhaps the above information is nothing new to your company. However, you may be asking yourself several questions: Will it be compatible with your partners? Will your default templates and documents properly synchronize with different programs and software? Will you grow so frustrated that you return to manual processing?

Although it may seem cost effective to keep your current system in place, it may be costing you more to stay put than it will be to upgrade. You would be surprised how low the implementation cost of a new document exchange practice could be, and in the long run, it could save you even more money.

The proliferation of varying standards through

the past three decades has complicated B2B communication. According to Supply Chain Quarterly, the 1990s Internet boom led businesses to a do-it-yourself approach, “that empowered any organization, large or small, to create its own e-commerce standards.” [3] Yet disparity between these different methods has created a scenario where businesses adopt a preferred method of handling B2B commerce transactions, but using a myriad of solutions can cause problems when interacting with different standards, interfaces and methods.

The reliance on Electronic Data Interchange (EDI) through the 1980s is an example of how outdated B2B commerce technology has continued to have an impact despite being an antiquated system. EDI helped set a standard in documentation and transference but as the internet presented

Complications often arise when exchanging electronic data, such as purchase orders, invoices and inventory data, with a multitude of trading partners.

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newer delivery methods by the mid-1990s, EDI’s infrastructure has begun to suffer as people turned to FTP, HTTP and cloud based delivery methods. [4]

Implementing any new system may seem daunting, but switching to a new data exchange solution has low barriers to entry and requires minimal investment of your organization’s time and resources. EDIs alone require different components, which include the basic software, transmission capabilities and translation software. [5] The costs of implementing an EDI solution will require continued maintenance costs as well. Yet the ability to communicate seamlessly with various trading partners is not always guaranteed, and if your partners are using different standards, there is little promise that your systems will communicate seamlessly. The question becomes whether to continue investing in a system that is familiar to your staff but ill equipped to handle your partners’ methods and whether the cost of replacing the system is worth the investment with ever-changing B2B communication standards.

The failing of EDI and the many solutions created to communicate with its infrastructure were exposed during the initial Healthcare.gov fiasco. Those who enrolled created profiles which contained pertinent information to be included in an 834 document to be sent to healthcare insurers. However, the EDIs Healthcare.gov and

insurers used caused several issues. Only small amounts of 834s were sent to participating providers and many of the completed documents were incorrectly formatted or incompatible with insurers. [6] The inability to communicate across interfaces has caused numerous fixes that have now cost the government and healthcare providers more than $840 million [7] caused by “constantly changing requirements” due to miscommunication between the varying automated solutions.

This is but one large instance in a continually fractured EDI system that does not play well

with new, emerging systems. The list of errors continues to grow, including incomplete pricing and invoicing, proof of delivery errors, confusion over customer modification requirements and read errors caused by formatting issues. [8] How is an automated data exchange process any different from manual documentation when both pose

Switching to a new data exchange solution has low barriers to entry and requires minimal investment of your organization’s time and resources.

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Citations:[4] Steve Kiefer, The “Long Tail” of e-commerce standards, Supply Chain Quarterly, Quarter 1, 2009 [5] Cost of EDI, EDIbasics.com [6] Healthcare.gov Has a Big EDI Problem, American Thinker, October 29, 2013[7] Rebecca Kaplan, HealthCare.gov has already cost $840 million, CBS News, July 30, 2014

costly solutions and yet are prone to similar mistakes?Finding the right documentation solution can be a headache. The costs involved in ensuring your preferred system can properly communicate with that of partners and clients or losing the familiarity of your company’s long held methods can cause undue stress and capital. However, if your solution is proving too pricey, a change for the sake of change may also undercut your budget and cause further setbacks. Finding the right documentation method requires assessing the price, implementation time and how it interacts with other systems to ensure minimal cost for optimum performance.

FINDING WHAT WORKSHaving options is great, but the inability of different systems to communicate comes with its own set of problems. The pitfalls of automated and manual documentation can be boiled down to the amount of marketable solutions available. Worse, many cause businesses to feel powerless over their B2B commerce practices. A survey found that more than 25 percent of business owners admit to losing control over finances and

billing. [9]

Your business may need to make a change in how it handles the exchange of data between partners. The needs of your business, as well as the businesses you will interact with, are key in deciding how to approach a change that is right for all parties, is cost effective, and will not cause your company to fall back into old practices.

When figuring out what system(s) to implement, consider these key points:

Community Management: Make sure your company’s leaders and your customer’s management is being updated about documentation updates as needed. Give everyone who needs access the ability to invoice and update. The ability to exchange data between parties is crucial to successful partnerships and building trust.

Synchronization: Any format, document or protocol should be able to communicate between your system and those of your customers. Transfers and translations should not cause a headache or added costs when updating your chosen data exchange solution.

Process Monitoring: Follow every step of the process as it unfolds to ensure timely invoicing and proper receipt. The ability to keep track and archive documents can help stop an issue. Prevent documentation losses and replacement costs before they happen.

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Citations:[8] Daily EDI Problems, DATA Communication Solutions [9] Rebecca Burn-Callander, UK small businesses are failing to invoice for billions, The Telegraph, October 7, 2013

Security: Any and all transactions should keep your company’s and your customer’s information discreetly secured. Peace of mind for all parties is a top priority.

Scalability: Updates to software/firmware that keep it ahead of emerging trends and able to speak with other systems minimizes costs and aids to avoid wholesale system replacements in the future.

Personal Service: There should be faces and technical support behind the system you choose. Finding people who will walk you through any problem that arises is imperative.

CONCLUSIONTo stay current in today’s rapidly moving marketplace, your company needs to find the right B2B solution to reduce overhead and minimize losses. Without investment into a comprehensive system that doesn’t waste human capital or eat away at your company’s assets, your company can suffer loss of income and customers. An inability to meet demand and securely receive and transfer data to ensure orders are met and stock is available will wear at your company’s reputation and make it risky proposition for any potential business partner. Avoid these risks by implementing or upgrading your electronic data exchange system that communicates efficiently and effectively with your trading partners.

To stay current in today’s rapidly moving marketplace, your company needs to find the right B2B solution to reduce overhead and minimize losses.

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