One would think that we’d come far enough in our business lives to outgrow old fashioned means of sharing critical business information  While we don’t necessarily need to utilize the latest and greatest technologies, you’d think we’d at least get out of the dark ages.  Unfortunately we keep slipping back into the past.

What am I talking about?  I found that the lunacy that has taken hold in the high-tech space has oozed into retail.  Yes, my pet peeve, replacing B2B transactions with manual portals, has invaded retail.  Suppliers to the retailer in question know it well.  The retailer has eschewed common sense and asked their suppliers to manually enter ALL product data via a portal.  No option is given for uploading data.  This from a company once a leader in usage of electronic file transfers for product data.

Now, this may not be so bad if it weren’t for the fact that the data being entered includes data for apparel products.  Think about it.  All the different sizes, colors, styles, etc.  And these products are usually seasonal, so all this information is entered once for just a few orders. 

Suppliers have had to hire extensive teams just to provide the product data to this company, or that data gets provided slowly and late.  The competition must be smiling over this one.  A once proud and strong company jettisons industry leading processes and tries to compete, using a manual portal, with retailers small and large who have automated these processes in order to speed new product introduction, ensure accurate ordering, enhance the chance that orders will be fulfilled in a timely fashion, and to reduce costs.  This retailer is increasing their costs, introducing errors, minimizing their chance for accurate and timely delivery and more.  I also understand that from some suppliers they receive product up to 7 weeks after the competition – not good for products with a seasonal sales cycle.

But how and why is this happening?  Perhaps a loss of institutional knowledge is the key.  An IT team with little experience in the apparel B2B space is probably part of this company’s problem.  Loss of institutional knowledge is a problem that many companies will face – to their own detriment – as we move forward.  Mergers and acquisitions may create some of these situations, but the sense I’m getting from a few smart resources is that B2B staff members are becoming increasingly grey in their hair.  This means as people are promoted, let go, or retire, companies will be left with young, inexperienced people with no understanding of technicalities of transaction management or mapping, little knowledge of the subtleties of trading partner management, and no sense of history when it comes to the long row we’ve hoed in the EDI fields over the last 30+ years.  Taking the quick and dirty way out to put up a portal may reduce IT costs, but it increases overall business costs substantially.

An AMR analyst noted to me earlier this year that there is a lack of university and other formal educational programs focused on B2B here in the US.  There is also a dearth of reasonably available industry B2B training.  This means that folks with little experience are being handed the keys to the corporate B2B infrastructures and finding the easiest way out – building portals and then telling the suppliers to stop the antiquated electronic messaging so they can use the cool, manual web forms with a dancing mouse on them.  Ok, I made up the dancing mouse part. 

As I’ve mentioned previously in this blog, I think portals are great for trading relationships where one company is unable or unwilling to automate, but for heaven’s sake, if you can execute automated transactions, do so.  The tough thing for most inexperienced people to understand when tossed into an EDI role is that the goal of B2B is to support the best execution of the business.  Unfortunately if they fail to understand legal and operational requirements, if they get caught up in technical rather than functional needs, they can end up “executing” the operation of the business (pun intended).  Unfortunately, I know from experience that this lesson is lost on many executives as well, so the real danger comes when the bad decisions from the inexperienced in the B2B role are supported by, rather than questioned by, the members of the C-suite.

I was recently reminded of the story from the 1980s or 1990s where a software company started paying its programmers to find and fix bugs.  If I recall the story properly, the incentive program was halted rather quickly (within a week or two) after at least one programmer received a hefty bonus through purposefully creating and finding extra bugs. 

In an incident closer to home for me, I worked with a dotcom retailer that incented its merchandisers by the number of new suppliers that were brought on – not by the profitability of those relationships.  This led to infamous deals like one with a man that sold small numbers of Beanie Babies from his garage.  The dotcom merchandiser proceeded to purchase full page ads in USA Today and several newspapers in the largest US cities to sell the Beanie Babies at fantastic prices.  Unfortunately the “supplier” had about 300 Beanie Babies “in stock” and those were sold out in about an hour’s time, however the products weren’t put in an out-of-stock state on the web site for some time after that, thus disappointing many, many customers and forcing the company to find much more expensive suppliers to fulfill as many orders as possible – at a loss to the dotcom.

A more strategic impact of that merchandiser incentive program was the fact that legitimate supplier relationships were negatively impacted as well.  It would take weeks to get fully automated relationships set up with suppliers (such as the biggest brand name computer manufacturers), and just as we got our supply chain ready for significant volumes of transactions, the merchandisers would strike a deal with a competing supplier – thus earning a bonus for the merchandisers, weeks of manual transaction management for the supplier management team, and significant efforts for the supplier.  Meanwhile, the fully automated supplier was left with no promotions and limited orders, since there was no further compensation coming to the merchandiser.   And the EDI team was left to implement a new trading partner with the company seeing little value come from their efforts to implement the previous supplier.  This was an ongoing issue.

But what, you may ask, prompted me to think of these things?  Well, I’m familiar with suppliers that have compliance departments whose leaders wish to grow little fiefdoms.  They don’t want to eliminate compliance errors altogether because their team might shrink.  But I recently heard an amazing tale of incentives that stunned me.  One supplier compliance manager requires everyone in the compliance department to negotiate away each year the equivalent of their own salary.  These people are now incented to make sure as many supply chain errors as possible occur in order that they can cover their salary each year.  This means never fixing the problems identified via root-cause analysis – if such analysis is even engaged in.  Thus the problems recur so they can negotiate away some of the penalty again and again. 

So much for helping the company meet the corporate goals of stakeholder equity, customer satisfaction and operational efficiency.

This is unique in my experience.  Is it in yours? 

In my EDI career, I reported to at least four departments.  These include IS, Technology/Development, Finance and Operations.  Some of my direct managers included a CFO, a CTO, VP of Operations and IS Director.  In fact, I reported into three different departments within one company in the span of just two years.  My wife sometimes says to me “You’re weird.”  Perhaps the schizophrenic EDI life has something to do with it. 

This schizophrenia abounds in the EDI world.  Because of it, many EDI teams become the proverbial “red-headed stepchild” of their organizations.  Occasionally departments fight to have the team under their auspices.  Often they fight NOT to have it.  Sometimes the EDI team reports into one organization and has dotted line into one or more other organizations.  Having a confusing role makes it hard for the EDI team to get appropriate attention – or funding.  It also makes it hard to do their job – or even figure out what their job is.

In the early days EDI reported into senior level staff.  These days you are more often likely to find them 4 or 5 steps away.  After they stabilizes base transactions, the distance from leadership and the marginalization within the enterprise keep EDI teams from being involved in the next step.  Some might argue that maintaining the “B2B pipe” is the extent of the EDI team’s role.  However, having done all the root cause analysis and process definition, and because they so often straddle technology and functional roles, EDI teams are exactly the folks that should be leveraged for implementing refinement to EDI functionality to allow better compliance and smoother supply chain operations.  They should also be called upon to implement corporate compliance programs (which, by the way, look very similar to the types of metrics and controls EDI teams have used for years).  Instead, we’re finding companies in the high-tech space dropping EDI and other automated transactions and moving their suppliers to manual portals.  Scorecards are being implemented in retail but EDI staff is not involved when their companies undertake these initiatives.

EDI teams just don’t get any respect!  Do you?