I agree with you Dave. Especially for Western manufacturers, EDI are associated to legacy (for instance invoice, administration, account). The only doubt, actually is how is feeling from companies in migration towards new platforms or services (as SaaS) due permanent status of financial crisis.
EDI should almost be synonymous with ROI, particularly if you have a system that's been written for the needs at hand as well as for the needs to come. I've worked with an EDI provider and they stress the point that a good system is one that can grow as the transactional volume grows.
It’s just a matter of time.Many companies utilizing EDI are also running their systems on legacy mainframes, probably still using the original COBOL or RPG applications.Eventually they will modernize as the expense to maintain these legacy systems and transactions will become too costly.Give it 5-7 years.
It's catching on in some verticals, but my guess is that most larger enterprises like Arrow have existing internal EDI systems and entrenched constituents. SaaS essentially outsources 80% of those internal functions. So unless there is some reason to change (acquisition, internal structure) there is little incentive for existing staff to recommend change.
Barbara - Yes... I do understand the differences in transaction details. However that is precisely one of the advantages of a SaaS based service. As an example:
Arrow has only 1 set of transaction details that all their suppliers must adopt. Avnet uses the same EDI documents but has different details. Their suppliers (many are the same as Arrow's) must now have 2 sets of transaction maps - one for each customer. And so on, so that the more customers the supplier has, the more document maps they need to support.
Imagine that Arrow and Avnet both use a SaaS based service (not necessarily the same service) that understands their document maps. They keep them updated and any suppliers can use that SaaS EDI service to map their own transactions to their customers. That means the suppliers only have their own document maps to deal with, and those are translated to/from their customers by the SaaS service.
In addition, changes that Arrow makes to their maps are incorporated one time by the SaaS provider, meaning the supplier does not need to know or manage their customers' changes.
That is the economy of scale that I'm talking about.
Hi Scott--amazing you could read through the typos of the last comment :-) From what I understand, at least in electronics distribution, just about every EDI link (supplier to distributor, distributor to customer) is unique. Therefore, a significant investment is required for each link. Distributors such as Arrow and Avnet, which have hundreds of suppliers and hundreds of thousands of customers, therefore spend a lot of money on EDI. While it's true that they can leverage economies of scale, and many of these costs are NREs, it's still a significant outlay. Distributors consider it cost of doing business, so I guess the ROI could be measured. I'll ask them about it for a future post.
For small companies, on the customer and supplier side, the cost can be prohibitive. That's why e-commerce has been examined as an alternative, but lack of a standard continues to hinder that. RosettaNet had a limited adoption but is still used, I think.
Barbara - I'm pretty sure that EDI is (and will be) the low cost solution, simply because it is so pervasive. The economies to be gained are by using advanced facilities like (as you point out) cloud or SaaS platforms. These bring economies of scale and reduced internal costs by moving the capital and maintenance costs of supporting locally installed EDI processing applications to multi-tenent platforms.
It's my belief that costs and efforts required to replace EDI would be extreme and not achieve any real cost reductions - even if they were ever to be enacted. The costs of EDI don't lie in the format, but in the old-school transport and support systems.
This is a really interesting question. In electroncis distrbution, it generally isn't even posed. If a supplier, distrbutor and custoemr want to be linked, it's EDI or nothing. The industry has been looking for a less expensive laternative to EDI for decades and hasn't found on yet. The cloud is promising, but still a ways away. Maabe if mroe copaneis ran this litmus test better ways would be found.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.