When Kansas won the NCAA men’s basketball championship in April, it confirmed the tournament predictions of many basketball experts: Memphis wouldn’t and couldn’t win the championship because of their poor free throw shooting.  It just took Memphis to the last minute of regulation in the championship game to prove those prognosticators right.  Yes, up by 3 points with handful of seconds left, Memphis could have called time out and set up a defensive play designed to stop Kansas’ last second drive in regulation.  Yes, Memphis could have fouled Kansas and forced them to take the ball out – thus wasting precious seconds.  And, yes, Memphis could have fouled again, forcing 2 free throws that would have stopped Kansas from attempting a 3-point shot.  All of those things could have helped them win the game.  But in the end, missing 3 of their last 4 free throws in regulation really did Memphis in.  Free throws: the most basic and fundamental skill in basketball.

Memphis was a flashy team with a penchant for “Sports Center highlights”.  And they were very, very good.  They won an NCAA record 38 games this year, and came down to the final seconds of regulation with a chance to win their 39^th game and a national championship.  But in the end, Kansas will be remembered as champions and Memphis will be relegated to the sports trivia books as the team that has won more games in a season than any other, yet it didn’t win the championship.

So what does this basketball story mean to us? No, I’m not going to rename B2B as “ball-to-basket”.  But it is Memphis’ failure to get the ball in the basket on their free throws that should catch our eyes.  Information Technology historically has a reputation – often well deserved – for focusing on flashy technologies – the cool moves, the next-big-thing, the fun stuff, the technology equivalent of the “Sports Center highlight” while ignoring the mundane fundamentals of aligning with and supporting the business.  However, these fundamentals, these “free throws” of business, are what wins our championships – improving stakeholder equity and increasing customer satisfaction.

Recently Tony Friscia of AMR Research wrote a nice piece (You’re Not Tiger Woods!) in his executive newsletter “Above the Noise” suggesting that implementing fancy technology solutions without having sound business practices is like the average golfer purchasing a new driver and expecting to radically improve his or her game.  Only if you have sound business practices already will you find value in your investment and only if you are already very skilled and disciplined in your game – like Tiger Woods – will you really benefit from the new driver technology.  In fact, the executives Tony speaks with routinely indicate that they receive no or negative ROI on back-office software “investments”. 

Similarly, this article, penned by yours truly in 2005, draws parallels between golf and B2B mistakes we’ve made over time.  The short of it is that even with all the new technologies, golfers scores haven’t improved in 30 years as they ignore the fundamentals of the game to instead go for the flashy big drives.  As I work with companies, I find that many continue to ignore their fundamentals.  Whether this is ignorance, willing actions on IT’s part, fear of IT in the CEO/CFO/COO seat, or something else, business basics are neglected as IT departments go for the flashy new technology.  Tony’s findings and mine are echoed in an article in CFO-IT a few years back that found that close to 70% of purchased software becomes “shelfware” – applications purchased but whose functionality isn’t utilized.

I have never been a big Colin Cowherd fan, but on April 21, 2008, he made a great point on his radio program.  Success, in sports or in business, is more about having the right culture than it is about anything else.  He pointed to sports and to the University of Wisconsin as an example and how its football fortunes turned around with the arrival of Barry Alvarez because of the culture he instilled.  Likewise he mentioned successful leading companies that have struggled after their CEO was changed and the new CEO didn’t understand and work within the culture of the business (or perhaps the business didn’t change to the CEO’s culture).  Overall he made a compelling argument.

Likewise, John Dvorak made a compelling argument in his 2004 column entitled “The Myth of the Disruptive Technology” which questioned Clayton Christensen’s ideas of disruptive technology.  I support John’s view and, though I am not partial to guns, suggest an analogy to the gun advocates’ saying that “guns don’t kill people, people kill people.”  I’d say that “technology can’t fix business, people can fix business”.  The corollary is that technology can cripple a business if it is lacking the right culture and processes to take advantage of it.

I believe that getting your supply chain automation right – whether you are on the buying or selling side – is about getting your culture right.  And that culture has to support appropriate best practices, not just hot technologies.  And true cultural change depends on having your people buy into what you are trying to do.  It isn’t easy, but it will bring the biggest benefits to your company.  Finding an experienced partner to help in developing and executing those best practices can certainly help, as well.  It may be that the outsourcing trends for IT services – and more recently for B2B services – are a reflection of companies realizing that they can control costs and reduce risk better through a partner motivated to provide success through business “free throws”, not technological “Sports Center highlights”.

This is my third entry regarding the Olympics.  But will it be my last?If you haven’t worked out what you need to regarding the Olympics with your Chinese suppliers by now, it appears it is too late.  Smart carriers have been working with their contacts to secure their capabilities during the Olympics. But factories across several provinces in China will be shut down for some time in order to help clear the air for the athletes and guests at the Olympics (seems normal business travelers, tourists and residents don’t measure up to deserving similar consideration!).    So, you might have shipping capacity, but nothing to ship.

Inspired by the radio program, Only a Game, I offer up Supply Chain and B2B Haiku.  The program featured Super Bowl haiku this past weekend and I figured if they could do it for football, why not supply chain and B2B?  The suggestions are supported by recent AMR and Stanford Global Supply Chain Management Forum studies.

B2B brings growth.

Increase revenue today.

Stakeholders go wild!

Lower costs, but how?

Supply Chain Automation.

Why wait? Start today!

Stanford says outsource.

High ROI they did find.

Lower your risks, too!

Now, what type of haiku can you do?  I look forward to your responses.

When it comes to managing their EDI infrastructures – especially their maps – retailers have it rather easy.  They define their formats and then tell their suppliers to deliver their EDI documents in that format.  Suppliers, on the other hand, have a significant challenge on their hands.  They have to meet the formats, standards and data requirements of each retailer.  Shoot, many still have to keep translation tables to cross-reference retailer versions of product numbers with their own manufacturer or GTIN numbers.  What a nightmare! 

Just getting started is a challenge, but thinking about the long-term is another problem altogether.  And if the long-term isn’t considered at the very beginning of a project, a substantial amount of corporate risk can be associated with the way a company chooses to create and manage their EDI maps.  In short, there are three primary ways of managing maps.  The first is a one-to-one model where every transaction with every trading partner is handled with an individual map.  The second is a one-to-many model where similar transactions for multiple trading partners are handled within one map.  The final model utilizes a “canonical” method where all data is mapped to an “internal standard” format and then mapped again into whatever output format is needed – and might also include aspects of the one-to-one or one-to-many model – or both.

The One-to-One Model

While many will argue the merits of all of the formats, the one-to-one model provides the lowest risk option for companies.  In the long run it might also prove to be the least costly and most manageable option as well.  Individual maps are created for each transaction for each trading partner.  Where possible, maps are “cloned” or duplicated, renamed, and then used for new trading partners.  Minor or major changes are made to make sure the map meets the customer requirements, and then the map is tested with the trading partner.  All the separate maps require a strong document governance process to make sure everyone knows where each map for each trading partner can be found.  Companies also must make sure each map is referenced in the translation tools that utilize the map.  Though many maps are created, this is the simplest and safest method to create and manage EDI maps. 

The One-to-Many Model

The one-to-many model looks exciting on the surface.  Fewer maps need to be developed because maps are shared across multiple trading partners.  However, each map is more complex – sometimes exceedingly so.  If multiple companies are utilizing one map, conditional statements (“If partner A, do this.  If partner B, do something else”) within the map will most likely need to be made.  While this reduces the number of maps to manage, it means that if a change is ever made for a trading partner, it is imperative to re-test with ALL trading partners using that map or risk transaction failures.  However, it isn’t easy or customer friendly to keep going back to your customers and asking them to re-test a transaction they have tested already.  From a business standpoint, you are left with the option of increasing operational risk (and potentially customer satisfaction) by not testing with every company using the map or absolutely decreasing customer satisfaction by re-testing with each customer.  Neither is a good option, with the former providing potentially catastrophic risk if a mapping problem impacts a major transaction or multiple customers at one time.  Also, when managing documents, it will require a significant effort to document the code in each map to make sure each individual customer’s requirements are called out in the code comments, and then equal efforts to track which trading partner uses which map within the appropriate tools.  A potential mitigating step, exits, however.  That would be to move each trading partner to its own map once they requested a change to their shared map.  Eventually this B2B program would look exactly like the One-to-One Model.

The Canonical Model

The canonical model has been pushed since internal integration and enterprise application integration tool vendors tried to move into the EDI market.  In fact, some internal integration companies made the use of canonical models the basis of the entire operations of the backbones of their applications.  The theory is that a company can map their back office systems into a neutral format and then map from the neutral format to any other format needed by a trading partner or other internal system.  Supposedly this helps mitigate risk associated with ERP migrations and cross-application internal integration, but it introduces all sorts of other risks that don’t make a lot of sense for B2B transactions.  For instance, if the field level requirements for a canonical format ever need to be changed, then there is a potential to impact all transactions that use that canonical format.  Also, instead of doing one map for a transaction, a company needs to do multiple maps – one into the canonical format for each back office system and one out to the trading partner.  This, then, is the 1+ map method.  In fact, the canonical model can be seen as a combination of the other two models where a one-to-one approach is used from back office systems into the canonical documents and then either a one-to-one or one-to-many approach is used to go from the canonical model to each trading partner.

While the canonical format might help in massive internal integration projects, it doesn’t necessarily help B2B projects – and can in fact negatively impact them if the tool utilizing the canonical format doesn’t support the same validations and limitations necessary for assuring EDI success.  Finally, the idea that you spend extra time 1+ mapping up front for B2B to minimize ERP migration risks down the road seems strangely off-base, since the cost of re-mapping is usually an insignificant part of any ERP migration.  What should be of more concern is the potential costs of redoing all the maps if the application changes at some point and requires a change to the canonical format, the way maps are built/used, or something else that impacts translation and/or transactions – and there isn’t a big budget ERP project to absorb the costs.

If You Outsource

No matter which model you chose, if you do it yourself, you face the risk of having to redo/revise every map each time your translation software vendor significantly upgrades their application.  Sometimes a transition tool/process is provided, but sometimes the applications change so drastically that wholesale remapping needs to be done.  Choosing to outsource means that your outsource provider will cover those migration costs themselves, reducing your variable costs and potential risks.  And because your outsourcing vendor will eat those costs for all their customers, it is in their interest to make sure the transition to new tools is seamless and cost effective.  And because of SLAs, the risks should be low, too.

Managing Your Corporate Risk

The challenge of managing corporate risk has always been of concern for certain executives, but today risk has become a more common topic.  Combine government regulations (e.g. Sarbanes-Oxley) with industry mandates and activist stakeholders, and C-Suite residents are more risk adverse than ever.  Now might be a good time to take long hard look at your EDI and other B2B operations.  If you are utilizing a one-to-many or canonical method, you might want to consider a one-to-one model when you need to change your EDI infrastructure – or if you are experiencing too many negative business impacts tied to EDI.  If you are considering a change anyhow, ask your vendor how they recommend your maps be done.  The one-to-one model provides the safest method for building and managing maps over time.  If you are looking to outsource, make sure your outsource vendor provides one-to-one maps to minimize risk and maximize value in the long run.

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.