Using EDI to Manage Vendor Compliance and a Case Study of an Inbound Management System - Part 1: The Need for Compliance

Introduction:

Over the past few months we have been discussing EDI in some detail, starting with the history and ongoing usefulness of EDI and more recently the importance of integration planning in B2B EDI projects. Today, we’re starting a series discussing the benefits of using EDI to manage vendor compliance. To complement this discussion, in a subsequent post, we will be presenting a case study of a Tier 1 Canadian retailer that realized substantial benefits through an automated and integrated vendor compliance program, known specifically as an Inbound Management System. 

Essentially, vendor compliance allows businesses to collaborate with their various vendor communities of trading partners to obtain end-to-end visibility, with a highly responsive and accurate supply chain operation. An automated and integrated vendor compliance program eliminates all of the non-compliant aspects of a supply chain and helps to achieve a highly vendor compliant operation both for the retailer and its trading communities. This results in millions of dollars being saved by the vendor communities through the avoidance of compliance fee charges levied by the retailer. In addition to the huge financial benefits, a highly vendor compliant operation also increases the speed and accuracy in the entire order-to-cash process.

The Need for Compliance:

Bottom Line: Organizations that implement good merchandise compliance programs benefit from having a very responsive, timely, accurate and satisfied relationship with their vendors. Vendor –compliant trading environments help the vendor community in eliminating compliance fees and other penalties. If this community can reduce and/or eliminate the problems of incorrect and untimely merchandise shipments, everyone wins.

A compliant trading environment helps the retailer sustain profitability and remain in business as a result of a compliant supply chain. One which is responsive to the need of its customers and can provide its customers with customer service that is responsive to customer needs.

With the proper use of EDI and other non-EDI automation technology implementation for vendor compliance, the retailer and its vendor community will benefit from the following;

These are only some of the benefits; there are literally endless benefits that a well implemented vendor compliance program can provide.

The best-in-class companies are those that have the most successful vendor compliance programs that substantially reduce errors and problems in the supply chain. The errors and problems that a good vendor compliant program eliminate are;

Any one of these problems can make a good company lose money, reputation and market share. 

This is why Best-In-Class companies are reaping the benefits of well thought out vendor compliance programs. Next time we will take a look at the state of the vendor compliance market place and assess the benefits of a well-executed vendor compliance program, an Inbound Management System, in more detail.