Purchase orders and a cacophony of other documents and forms that comprise your supply chain are the lifeblood of transporting your goods from suppliers to your customers. Fortunately, those documents are relatively simple and straightforward. They usually follow a standardized format and include information that has already been defined and collected. In fact, most retailers create the purchase order sent to a supplier as an EDI document via an automated function completed by the company’s ERP system.
While automation and technology can enhance every aspect of the supply chain, sometimes chinks in the chain do arise. A big reason even automation can’t promise a perfect delivery every time is the transmission of incorrect data, ranging from improperly labeled products to the erroneous inputting of product numbers into a computer system.
Not surprisingly, human error is the most common reason for supply chain errors. Overall, challenges can be divided into three categories:
• Wrong data (product codes, size information, etc.)
• Bad data (incorrect characters, empty data fields, invalid data)
• Poorly formatted documents (missing or added segments)
According to industry experts, wrong data accounts for half the reported problems with deliveries. On the surface, they appear to be the result of bad data, or incorrect information. However, it’s more likely the data pumped into the documents originated from neglected updates to product information. This means the catalogues being referred to when purchase orders are being created have not been updated with the suppliers’ current product information.
In some cases, the error is as simple as outdated prices. In others, however, product codes are substituted with the retailer’s SKU rather than the supplier’s product ID number. When the order shows up, the supplier has no reliable way to cross-reference the product. While the problem could potentially be solved by a simple phone call to the buyer, the time expenditure to correct this oversight is just one cost of EDI document errors. The credibility of the supplier is also challenged by this error, potentially hampering the trust between them and the buyer.
Bad data accounts for approximately one-third of EDI document errors. They cover a range of issues that might be related to data storage or even data transmission errors across the networks. But, with the level of data checking and the robust digital transmission protocols in place across the supply chain, it’s unlikely that individual characters are replaced with random and invalid data. Far more likely is the information entered into ERP systems was incorrect to begin with or perhaps even keyed in manually when the order was created. In those cases, required information isn’t always available to be filled in automatically.
Poorly formatted documents
Poorly formatted documents account for approximately 16 percent of EDI document errors. That oversight traces back to changes made to the document’s spec on the retailer’s end. When those documents fail to process properly, one of two things happened: either the supplier neglected to effectuate the change to their inbound process in a timely manner or the retailer failed to notify their trading partners of the change. In either case, the transaction requires manual intervention such as a phone call or a retransmission via email or fax. That interruption can lead to delays in the order process, resulting in additional costs or missed sales.
It’s inevitable that errors will happen. The complexity of the supply chain, the number of participants and the variety of systems being utilized are always opportunities for unintentional errors to be made at any point in the process. Fortunately, software and networking systems that support the supply chain have matured to the point that when obstacles in the chain are recognized, fixes are usually readily available.
The persistent issue seems to be the lack of resources in the form of time and attention. While it’s not realistic to believe all changes and updates will be implemented on-time, every time a transaction occurs, that is certainly the goal of a well-oiled supply management chain.
EDI service providers that offer consolidated updates and processing services dedicate skilled staff to time-sensitive tasks while leveraging resources to service hundreds or even thousands of their trade partner’s needs. These SaaS/cloud-based processing services are able to devote the time and attention necessary to prevent most problems from hindering supply chain communications. As you review the most frequent problems in your own EDI supply chain processes, consider moving these kinds of tasks to an EDI service provider boasting a skilled, full-time staff capable of immediately correcting any obstacles hampering your supply chain communications.
Tami Kamin Meyer is an Ohio attorney and writer.