The retail industry landscape has changed drastically under the e-commerce boom. If you are a retailer, keeping up or at least adapting to the behemoth Amazon has become a necessity. Thus, a new competition is arising where retailers keep cutting down the delivery time and simultaneously increasing affordable products available to appeal to customers. But behind the curtain, there is another ongoing battle between the retailer and supplier where the latter are pressured to comply with business and management rules. This blog will shed some light on the retail vendor compliance challenges and how the supplier can overcome it with ERP- EDI integration.
Retailers are tightening their business rules and chargebacks
As retailers have to operate on a razor-thin margin that requires the highest level of seamless operation to be successful, compliance requirements work as a way to eliminate any inefficient supply chain link in order to remain competitive and satisfy their customers’ expectations. But different from other industries such as manufacturing and distribution, where better payment and trading prices are used to encourage vendor compliance, retailers are tightening their business rules and standards while evaluating various charge-backs for supplier violations.
Target, the giant brick & mortar retailer, has introduced new tighter compliance rules to speed up their supply chain process, which includes no more “grace period” for late shipments and an increase in fines from 1% to 5% of the order cost. In fact, according toSgcdigest, these charge-backs have caused millions to retail vendors last year. Leaving suppliers with no choice but to be ready to meet the requirements without disrupting their operation.
However, while traditional compliance programs ensure vendor accountability, they often do not enable visibility to alert any potential risk for being non-compliant in time. Instead, the systems focus only on reporting any compliance issues when it already happened and obtaining charge-backs from retailers. This put a negative effect on both retailers who might lose their consumers to their competitors and suppliers who directly get their profit shaved off substantially.
There is a need to exchange data quickly and accurately between suppliers and retailers to ensure the adaptability toward any upcoming change in requirements without facing disruption. The key is to automate, identify and fix any potential non-compliance issue before it occurs. One of the best approaches is through embedding compliance activities into the core business processes. This is where an integrated EDI system comes in.
Minimal manual entry
Automation can make all the difference in enabling the vendor to keep up with the retailer changing dynamics. Different from the basic EDI system where businesses will need to handle all the EDI documents manually, built-in EDI will directly integrate with the vendor ERP system, enable automation of the EDI data entry process and confirm if the document complies with the retailer’s rules before it can be sent out. As a result, it eliminates the burden of manually checking the compliance checklist each time the supplier transmits information to the retailer.
Companies that rely on an integrated EDI solution also observe a reduction of errors by minimizing human errors and duplication when doing data entry. This leads to improved human resource management where staff can focus on the core activities instead: and strengthen their business foundation with the retailer in the fast-paced eCommerce environment.
Timely data exchange
Ultimately, integrated EDI to ERP also improves the visibility of the supply chain and strengthens the retailer-supplier relationship. Suppliers can provide their performance and inventory stock level to retailers in real-time. Correspondingly, they can also access the sale forecast and inventory movement from the retailer. Thus, being able to anticipate and adapt to retail-side changes in real-time.
Moreover, suppliers are expected to be proficient and accurate with their ASN (advanced shipping notices). However, it is also one of the most common chargebacks due to businesses failing to accurately determine their inventory stock level and anticipate the movement, resulting in early or late deliveries. A properly integrated EDI to ERP will ensure automated data exchange both internally and with the retailer, enabling suppliers to always deliver their products accurately and on time.
While an EDI web solution certainly can help small businesses, as suppliers expand their scale and network, getting connected with other partners also becomes extremely difficult due to the complexity of high volume transactions. Instead of requiring days of configuration and risking operation interruptions, EDI integration uses intelligent mapping features to ensure immediate compliance. In addition, each retailer’s compliance requirements are also configured into the system through the embedded EDI, ensuring the 100% match of their specifications. So scaling your business and adding new retail trading partners is quick and easy.
In this increasingly competitive landscape, suppliers are shouldering heavy pressure from the retailers. Companies can not ignore customer expectations and have them take the business elsewhere. To avoid margin-eroding penalties, more companies are ramping up on modern EDI solutions, which directly integrate into their ERP system to provide an automated, streamlined platform for data exchange with their retailers.
To find out more about EDI solutions for the Microsoft Dynamic 365 for Business Central, please contact us firstname.lastname@example.org. Our consulting team will equip you with all the information you might need to make the right decision for your organization.