During my techie days, I was a very late riser.  Today?  I usually get up with our dogs around 5am.  I truly believe these early risings are good for me.  They get my brain working early and I get to see the sun rise.  It lets me think about things that are best not considered in the dark of night.  Things like how companies like to re-invent the wheel with regards to B2B rather than learn from their internal experienced staff.  This leads to thinking about things like manual portals replacing machine-to-machine automation.  Why is this happening?

I have my theories.  The cheeky answer is “because it can”.  More reasonable ones might include:

1.       Executives liked the reporting they got from portals which were being used for SMB suppliers.  They asked for the same from their automated trading partners, and it was simpler to just tell the large suppliers to use the portal rather than implement similar reporting off of the B2B feeds.

2.       The need to address Sarbanes-Oxley drove the need for quick, unified reporting.  This is similar to #1, but the driver is a bit different.

3.       Companies thought “hey, wouldn’t it be cool to have one way in which we deal with all our suppliers?”

4.       Businesses forgot the reasons they moved to automated transactions like EDI in the first place – faster, more reliable, fewer errors and less costly business execution. 

To be honest, I strongly believe that portals have their place.  Trading partners that can’t or shouldn’t automate (seasonal, few transactions) for instance.  Another is for the sharing of incidental information or information that doesn’t lend itself well to traditional B2B transactions.  They are superb for such situations.  Portals have also shown the value of good reporting in the B2B space – something most EDI and IT departments just haven’t addressed when it comes to traditional automated B2B transactions.  That reporting – that visibility – is needed by the functional business units.  But it just doesn’t make sense to use manual portals for high volumes of transactions – especially if you start asking for all the usual documents – PO, Invoice, Ship Notice, Change, Forecast, etc.  That’s a lot of manual effort shoved right back into your supply chain costs.

I first learned about this most recent migration from automated to manual processes when I was working with the Electronics Industry Data Exchange Association (www.EIDX.org), part of CompTIA.  We did a survey and wrote a white paper on the subject.  If I recall correctly, those surveyed indicated that automated transactions were their preferred way of doing business, but they also indicated that they were seeing a reduction in automated transactions and increases in manual transactions across their trading partner communities.

Based on the fact that the survey went to B2B/EDI folks, it supports my personal findings that these folks are not involved in the decisions to move automated suppliers off of EDI.  They just see a decrease in transactions and learn after-the-fact that the supplier has been moved.  Or they learn from the supplier when they receive a call saying “are you guys crazy?”  But, hey, this is very similar to the disruptive “solutions” sold by Commerce One (and Ariba, too, early on???) in the late 1990s and early 2000s.  Those you integrated to the buy side but early suppliers had to replace their EDI purchase order feeds with manual portals.  When you get hundreds or thousands of orders each day, that’s a lot of warm bodies you need to add to your staff, a lot of potential errors from re-keying data and a significant chance for delays in fulfilling the order.

I spoke to the head of North American operations for a well-known high-tech brand at the time of the EIDX survey and he indicated how important he felt B2B/EDI automation was and how he wanted as much automation as possible with his suppliers.  He directed me to his point man on supply chain execution for further talks.  That gentleman told me in no uncertain terms that he didn’t want to deal with the setup, change and testing of automated suppliers and getting them up on a portal was the way his company would handle things.  His suppliers subsequently had to hire staff or outsource the relationship with this company because of new need for manual data entry.  Somewhere margins decreased and costs increased.

What an amazing disconnect between the C-level and the operational level of the business.  What a short-sighted view of supply chain management.  I wonder if this is why the company saw its position erode and its ability to meet customer demand diminish thereafter?

What do you think?  Is it crazy to swap automated processes for heavily manual ones?  Is it better to receive forecasts automatically, process them and then send an automated response or is it better to print it out, hand enter it into manufacturing systems, do an MRP run, print it out, and then hand enter it back into the portal?  Is portal reporting that valuable?  If so, why not develop and deploy similar reporting for your automated B2B instead of migrating everything to the portal?  Am I missing something here? 

I recently spoke with a retail supplier that indicated a retailer was asking them to move from EDI to a portal.  Have you experienced this too in the retail supply chain?

I’m quite committed to rational, well thought out use of emerging technologies within businesses today.  Unfortunately I think lots of companies go overboard in assuming a new technology will be the silver bullet for whatever it is that’s ailing them.  For instance, each business needs to consider the context within which RFID should be implemented and then integrate it into the appropriate existing business processes and associated systems.  In many ways, RFID is just another visibility tool for many supply chain applications, and as such, should be tied into existing logistics visibility and track and trace solutions – starting with the ASN.  At RFID World and in other venues, I have seen RFID solution providers promoting their RFID visibility networks as if supply chain visibility never existed before.

Hey! Been there.  Done that. 

ASNs, bar codes, carrier status – all these things can and are used to provide very successful visibility solutions today. There needs to be a compelling reason to do a wholesale replacement of an existing technology or for introducing a technology that will co-exist for years, perhaps decades, with bar codes.  The ROI needs to be there.  In 1998 XML was proclaimed to be the immediate replacement for EDI.  EDI usage continues to grow to this day.  XML use is growing, too, but something like 85-90% of all automated B2B traffic is traditional EDI and most companies using XML for B2B are also using EDI.  There are some specific B2B use cases that have shown some limited value for RFID.  It is just taking longer than many people want it to.

If RFID wants immediate acceptance, playing well in the existing infrastructure will be more conducive to success than forcing companies to implement and support duplicate visibility networks, reporting tools and integration points.  Like XML, we haven’t seen the quick B2B adoption that some had predicted (how many more reads do you need once the product is on the truck?).  And like XML, most early benefits seem to be coming from internally focused, closed-loop implementations where one organization can control the entire process.   I recently spoke with a logistics leader for a regional grocery retailer.  This person indicated that he desperately wanted RFID but that it wasn’t going to happen any time soon.  I asked, if he could have it, whether RFID would be used for internal track/trace or for B2B.  The former, absolutely!  But even for tracking pallets and totes internally the cost is still prohibitive for his organization.

Another place RFID has hit a bump is in the tracking and tracing of pets.  The AP recently released a story suggesting RFID chips can cause cancer in rats, mice and dogs.  This brings up questions about the risk undertaken by the 2000 or so humans that have so far had the chip implanted.  It also makes one want to see results of real, targeted medical research that shows whether there is really any true causal link between RFID and cancer when implanted in a living body.  Medical experts are recommending caution but are not raising a major hue-and-cry over the situation.  Some point out that rats and mice develop tumors around just about any foreign object injected under their skin, not just RFID tags.  I wonder if there have been any tests of cattle that have been tagged for track and trace in case of an outbreak of mad cow or other disease.  They probably don’t have the tags in long enough but it would be interesting to know.

I happen to have two dogs that are tagged, so I’m concerned.  Still, I have to weigh that risk against the risk that one of the dogs gets lost and it has no way to get back to me.  If you, too, are concerned about your pets, see more extensive thoughts about this topic, and additional links, at http://nrfid.goingon.com/permalink/post/19298. That site is the portal for the National RFID Center and National RFID Institute.  For full disclosure, I’m an advisor to the organizations and authored the piece that Kurt Wall posted.  Let’s hope for all our sake that this gets better understood quickly.

Merriam-Webster OnLine provides 3 definitions for integrity:

1 : firm adherence to a code of especially moral or artistic values
2 : an unimpaired condition
3 : the quality or state of being complete or undivided

The short, one-word definitions are:

1.     INCORRUPTIBILITY

2.     SOUNDNESS

3.     COMPLETENESS

For a synonym, the dictionary suggests HONESTY.

Most companies that I’ve worked with would like these terms to be reflected in their businesses.  They want a sound, complete business that is incorruptible.  They want it to function as a unified whole. They want their business to be seen as honest.  These are the things that can bring success and deliver stakeholder equity.

Yet, when it comes to supply chain automation and business-to-business transactions, many companies are not even close to exhibiting integrity.  While this may sound like a subjective pronouncement about their staff, it is really more of an objective view of their operations gleaned through nearly 25 years of work in the integration space and supported by many analysts today.  In fact, the words “integrity” and “integration” come from the same Latin root, integr- or integer, which means “entire”[1].  In some industries, B2B integration is even being replaced with manual processes that threaten the integrity of the supply chain and the entirety of their businesses.

My name is Bryan Larkin and as the strategy and marketing leader for GXS in the retail and consumer products space, I am on the alert for value chain and B2B challenges in these industries and ways in which I can help companies meet their needs.  If you don’t mind terms like “holistic”, “cross-functional”, “collaborative” and “culture” when considering your business operations, this blog should help you find both bottom and top line growth and ways in which you can reduce costs – all while keeping the focus on the ever changing needs of the consumer who’s number one issue today is product availability.

Every company has their own business drivers, their own goals and their own strategies to meet them.  Success means the application of best practices to those specific strategies in ways that are often unique to each company.  The key is finding the technology, the people and the processes that will let you do just that.

I welcome your perspectives in a thoughtful discussion on how you see the interplay of integrity and integration in your business lives.

[1] http://www.m-w.com/dictionary/integrity