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Problem: Variety of integrations is difficult to manage

What is the problem?

Small suppliers can often struggle to cope with the different demands if they have several customers who want to integrate. This is a common problem in retail, but occurs in other sectors as well.

For example, the UK supermarkets typically insist on electronic integration for Purchase Orders and Invoices, but they each have somewhat different integration requirements. For those suppliers who are receiving thousands of orders each year this is not a significant problem, as the advantages of electronic integration greatly outweigh the costs. However, for suppliers who receive just a few orders per month, the effort of supporting even one integration can be significant – and doubling the number of retailers (or other sales outlets) not only doubles the cost, but also significantly increases the complexity.

Organisations may start off by running a few integrations in-house, but as the number and variety of required integrations becomes large this can become distracting and present scaling problems. The net effect of this across the supply chain network is sizeable, and has an inevitable consequence of increasing supply-chain costs. Although costs are squeezed at each point in the supply chain, inevitably an element of the increased costs is passed on, making the products more expensive to the end consumer.

If customers cooperated to use a common integration approach they could save on integration costs for all. However, particularly in retail, the customers are in competition with other customers, and suppliers are in competition with other suppliers, so everyone pursues their own individual approach.

In the health sector, cost reductions are currently being targeted, by mandating the use of the PEPPOL standard. Initiatives such as PEPPOL aim to reduce these supply chain costs, by imposing a specific common standard that must be used by both suppliers and customers. This avoids the need for each supplier to have a different integration solution for each customer. The total supply chain complexity (which equates to cost) is therefore reduced to the sum of the number of customers plus the number of suppliers, instead of the product of the number of customers multiplied by the number of suppliers.

What solutions are there to this problem?

There are ways in which a flexible EDI service provider can help both the suppliers, and the customers. In a supply chain a single organisation may act both as a customer and as a supplier, so both may apply.

  1. The supplier agrees a single interface with an EDI service provider, who operates a general purpose hub and manages the many separate integrations with the variety of customers.

Pros: This significantly reduces the complexity of the integrations for the supplier.  

Cons: The number of customers and transactions needs to exceed some minimum for the supplier to decide this will worth doing, as the cost is borne by the supplier.

  1. The customer appoints an EDI service provider to provide a customer-specific hub and manage the many separate integrations with the variety of suppliers.

Pros: This significantly reduces the complexity of the integrations for the customer, and potentially also for many of their suppliers.  

Cons: The cost of the service is generally borne by the customer, although in some cost models the suppliers pay a contribution to the costs of their integration.


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EDI Plus Ltd

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