Why We Love EDI … and Why Your Customers Will, Too

 In Best Practices, Business Intelligence, Industry Trends

In today’s omnichannel retail world, fulfillment is a critical component to meeting evolving market demands. And because many companies have multiple sources for products and even more online and offline channels by which they sell, data accuracy and standardization is paramount.

That’s where electronic-data interchange (EDI) comes in and why it is so important. EDI is the exchange of business information utilizing a format that’s standardized.

A well-tuned, automated, and integrated fulfillment solution helps companies meet supply and demand needs in the complex digital retail environment. It does this with the agility to quickly adjust, increase accuracy, and enhance invoicing, packing, ordering, and sales.

In addition to distribution, manufacturing, and other channels, fulfillment is also about connectivity with trading partners. According to Scott Bolduc, SPS Commerce’s director of supply chain strategy, full integration with suppliers and third-party logistics is crucial to strengthening trading partnerships while providing customers what they want and when they want it.

SPS Commerce operates the largest electronic data interchange (EDI) network in retail, with more than 70,000 trading partners from more than 60 nations. SalesPad EDI, powered by SPS Commerce, integrates that network.

“Retailers who haven’t fully embraced (EDI) technology may be overspending and overstaffing,” Bolduc said. “The problem is they rely on a lot of staff time to prepare and compare documentation to ensure the purchase orders match the warehouse/store receiving document and invoices.”

He recalls his days overseeing one retailer’s operations and administration, with 15 staffers reconciling documentation before issuing payments. When they started fulfilling orders, they found 30 percent of invoices had issues, primarily pricing and quantity discrepancies and payment terms problems. The improved capabilities with EDI-powered fulfillment provided the ability to free up resources and focus more time on matters that need resolution to ensure a customer’s needs were met.

“We ended up needing fewer staff members to process payments, allowing us to reallocate resources to other functions,” Bolduc said. “We were also able to take advantage of more cash discounts, thanks to on-time payments and other special offers from our vendors.”

Data synchronization with EDI supports the omnichannel, the multiple channels through which customers can make purchases. That transformation is yielding it increasingly as the focal point for businesses’ operations and strategy.

“Keeping up with current trends and in front of the curve is increasingly important in an ever-changing retail landscape,” said Jeremy Boogaart, SalesPad vice president of business development and operations.

“We assessed the EDI landscape and chose to integrate SalesPad Desktop with the SPS EDI network for a number of reasons. Primarily it was because of  the strength of their connections and the stability and consistency of their data and processes. With SPS, we can connect the backend operational ERP functions (purchasing and inventory management) with countless other partners and retail channels.”

A recent SPS Commerce study commissioned with RSR Research revealed that omnichannel is no longer a stand-alone initiative; it is now driving the entire business. The report, Retail Insight: Moving Beyond Omnichannel, surveyed 500 retailers, suppliers and third-party logistics providers from the SPS Retail Network. The results showed that retailers are more and more concerned about consumers’ purchasing preferences than on the economy. The report also found that 60 percent of manufacturers and 58 percent of distributors said they operate websites selling directly to consumers.

Looking ahead, respondents reported the following when it comes to the order fulfillment ecosystem over the next year:

  • 55 percent expect their assortment to increase.
  • 53 percent expect online orders fulfilled from stores to increase.
  • 43 percent expect use of item attributes to increase.
  • 40 percent expect drop ship vendors to increase.

Last, legacy systems are considered a hindrance to omnichannel execution and fulfillment effectiveness, according to 29 percent of companies surveyed. Becoming more responsive and agile means consolidating e-commerce, mobile and physical channels into a unified retail experience, with retail stores now also doubling as pickup sites for online orders or handling deliveries out of their inventory. More than 75 percent of companies surveyed by RSR Research in the report cited consumer demand as the No. 1 factor impacting business the next five years.

To meet ever-changing customer needs, it’s a necessity to reduce operational, shipping, returns, and fulfillment costs while improving inventory visibility and payment cycles. That’s where fulfillment can play a key role in creating efficiencies, Bolduc said.

SalesPad EDI, powered by SPS Commerce, is integrated product fulfillment that connects to the SPS Commerce Retail Network.

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