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Chris Reddick (President and CEO at Clarity Ventures) and Ron Halversen (Vice-President of Sales and Marketing at Clarity) continue their discussion about the ubiquity of EDIs in nearly every industry.

Part 2 of a 4-part series (return to Part 1)

RON: So let's dive in and have you give us some of the best practices for using EDI and buying groups, tell our audience some of the easy things. You know, bullet number one: automatically place orders without human interaction. Obviously, that's a good one. But there are other things, too, about de-duping and proactive notification—some of the things that you started mentioning with the VAN—and some of these other things. I definitely want you to drill down a little further into some of them.  

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CHRIS: Absolutely. And you know, it is really interesting because per industry, there are nuances that make a lot of sense. So I'll dive into a couple of these. And I hope that this is helpful for the audience, possibly for your industry or if you're using a group buying platform. And one of the things we want you to think about is, “what are the nuances in my space that are going to make sense from what Ron and Chris are talking about, and what are some that don't necessarily apply.“ 
 
Like you said, Ron, the main thing here, in general, is this automation of what would otherwise be a manual process or a less effective process. Everything that we possibly can, we want to be able to validate in this type of format. Now, the reality whenever you're dealing with automation is there will almost always be edge cases. We highly recommend setting up a testing environment, a development, staging, and UAT in production.  

Depending on the scale at which you're operating, it makes sense to have all of those environments. If you're operating at a smaller scale, you can scale back the number of environments, but the main point is that you need to be able to do testing and validation in progressively more stable environments until you get to a formal approval process for production on the actual eCommerce buying platform.  
 
Then fundamentally, during the development process and the project planning process, you're going to want to think about all of the steps that are currently occurring. Whether or not you're using EDI in eCommerce or not, what are the processes that are occurring and how can we make these more effective? One of the most interesting things about using EDI is that a lot of times people just don't know what it can do, and sometimes it can be this set of assumptions that results in not fully taking advantage of some of the capabilities.  
 
And we're going to go into some specific examples of what it can do, but if you look at different industries, for example, the automotive industry, the workflows that you're going to be able to take advantage of and the or designed into X12 or EDIFACT or other standards for EDI commerce, what you'll find is there are some very specific document types that will apply to your industry, and there are best practices for how to use those.

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CHRIS: You're going to want to understand, first of all, what are the workflows and what is your current business process? What are some edge cases? And then what are the document types that might apply. Any that you don't know very well, you're going to want to dig in and make sure that you get up to speed on those with a vendor like Clarity who's done this before and can say, “No, no, no, no, that's not how that's typically used.” Or, “Yeah, that's exactly right. This is a great use case for you guys.” And they really need to be a vendor who's proactive and is going to make recommendations based on their experience. You don't want to work with somebody who's just working on EDIs and a group buying platform for the first time.  

Another thing is setting up an infrastructure where you are using this transactional integrity mechanism. A VAN is a very proven mechanism, but there are other mechanisms within the EDI space that are more modern. And although it's not necessary, and there's a lot of tendency toward VANs, there are other mechanisms for this transactional integrity that we can employ and walk you through the pros and cons of those as well.  

Ultimately see what you're going to end up with is a capability to put a first-phase—or maybe it's an upgrade of your current existing EDI capability—into place and then incrementally make improvements over time. That's one of the biggest things that I would encourage folks to see this as is, make successful incremental progressions as opposed to doing everything at once. Whenever you're dealing with automating data between back-office and front-office systems, it can be very cumbersome when you run into edge cases.  Ultimately, especially if you try to roll something out at scale like a buyers platform, this is something that can become a reality whenever you get into it, and it can bounce off a lot of people whenever they haven't actually done this before.  
 
But you really want to think through all of the different workflows in the edge cases as a best practice and then exercise those with any changes to your EDI system. There are different document types, there are different requirements for the data. And a lot of times what we've seen is that the data itself will cause problems whenever we're trying to interchange between the systems. 

Ultimately, this is something that we would say is a best practice as well. Being aware of the data, having an approach to dealing with errors and issues that are going to occur. Then having a testing mechanism to be able to actually progress changes through a pipeline, and having more and more stringent and formal approval process as you get toward your production environment.

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RON: And if the audience is wondering what the most common things done with EDI are—at least from a sales perspective—when I'm talking to clients, one of the bullets here talks about inventory warehouse that's the second. The biggest one is just the orders.  

So the example I gave you about Laser Pros a minute ago, let's say, for example, I have an eCommerce website and I sell a lot of tools. But we only warehouse about 10,000 tools. The other 50,000 tools in our catalog are all dropship from vendors. We can connect, use an EDI, to all of those vendors for numerous reasons. One, they're going to send us a list of all the products that we can sell in a file, and we're going to pick up that file and that's what's going to populate our catalog. That could also populate what their cost is to us so we know what the uplift should be. That could also populate the inventory account that they have in stock. If we want to show real-time stock counts of products available even from our vendors that are going to be drop shipped.  

For example, today in the world, we have a run on microchips, right? We're short on chips. So even if all those chips were drop shipped from a vendor, I know a lot of my clients are like, “Oh, it's just drop ship. They're never going to run out.” So on the eCommerce implementations we put out, they'll have us just put not counted so it always just shows in stock.  

Well, what happens if that vendor runs out of stock? And your website, meanwhile, starts showing in stock and you're selling more and more and more units and you're sending all these orders that cannot be fulfilled. One of the things you might want to do is this inventory warehousing where you know exactly how many units are from each vendor. You could have multiple vendors supplying the same product and you know where to dropship. That would be one simple option to be able to do that. 

That was just one I wanted to mention because it applies to any warehousing, low stock, being able to automatically kick off a purchase order in any eCom system or buying group platform we roll out. if I say I'm stocking items in my warehouse, but I want my inventory to be a little more automated, we can set up low stock accounts that when I get below X number of units for a particular part, it could automate, generate the file in place an order with one of the vendors to replenish that.  

Continue to Part 3 to get some more examples of EDIs in many industries.

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