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Thoughts on Survey on EDI costs

Written by Ken Kinlock
Published on Thursday, 09 February 2012

thumb bell curveRemember the "Bell Curve" from statistics class? I looked through our recent Survey on EDI Costs to find the 10% - 20% of the responses that fall at either end of the curve, and they are, let's say, "unusual". We also found some interesting comments; especially on surveys related to EDI between big customers and small suppliers.

Question 1. Accounting for EDI Development Costs. I noticed that only 8.1% are from retail organizations. Interesting, but when I worked for a "retail organization", I was on the "buy side", so I might have said I was from the "We implement EDI for both our suppliers and our customers" group. Anyway, in 2012 our plans are to involve and recruit more readers from buying organizations and retailers

bell curve

Question 2. Do you consider costs associated with developing EDI functions to be? Only 7.2% responded that they minimized regardless of the effects on business. Some of this 7.2% qualified their answers as follows:

● The initial setup costs to begin a relationship need to have an ROI, warranted by a stable relationship with a strong customer.

● There is a large technical overhead in managing each partner.

● We try to ensure that there is a net gain but many times the intangibles of customer retention, etc. overrule the ROI.

● EDI functions are simply downloading of administrative costs on to the suppliers.

● We have began adding EDI costs as a line item in our pricing quotes.

● EDI is a pain. no two customers use the same setup.

● We do not like EDI and prefer to just use e-mail. The system is slow and just slows us down.

● We continue to review our ROI calculation so that we know if our investment is truly a time-saver, or if it is a "cost of doing business".

● We think that having EDI saves us costs in reentering data and all issues that arise with multiple entry. EDI transactions feed data into our ERP system and EDI transactions put data from our ERP system to customers/warehouses.

Question 3. What is the relation of EDI support staff to trading partners in your organization?

No real conclusions or abnormalities here; except one person can manage a lot more than one or two EDI partnerships (there is an economy of scale).

Question 4. What is your EDI related expense as a % of sales?

Conclusion: not measurable yet. Replies all over the place. Too bad there is not a "industry standard" for thisI.

Question 5. How do you measure trading partner satisfaction with your EDI efforts?

I took a look at "Customer service metrics such as surveys" which received a 12.4% vote. But oddly a lot of the comments do not support surveys:

● As a supplier we are obligated to use EDI in order to sell to specific customers. As such there is no need to perform a survey with the customer to see if they are satisfied with their own solution.

● However we do internal surveys with our employees to see if they are happy with the EDI system processes we have in place and look to make improvements for efficiency.

● I've never thought about it in those terms. I suppose if our customers weren't satisfied with my EDI transactions they would let me know.

Question 6. Add your comments about the criteria you use to determine whether to make investments in EDI related process. Well, we had 170 individuals responding and most of the responses seem to have been from small suppliers. Most of their comments indicate unhappiness with their current status of sending just a few EDI transactions to a couple of large customers. To me it says that low-cost, low-volume, no-VAN solutions that are well promoted would be a huge success. If I was in the EDI software business, I would develop such a product with a business model of making my money by having a LOT of customers, even though they were low-$$$ customers.

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