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?