Tuesday, July 29, 2014

7 Truths About Electronic Communication in the Promotional Products Industry

Suppliers and distributors are finally moving forward in improving electronic communications. While there are plenty of hurdles still to overcome, the industry is finally moving forward and making real progress.

Here are things that are happening now:
  • Top suppliers are now providing inventory via web services. 
  • Top suppliers are sending order status via web service and via email formatted for electronic consumption (as well as human consumption).
  • Select distributors are sending orders with XML data so that the vendor doesn't have to re-enter most/all the information.
Plenty of work remains to be done:
  • Distributors need to provide accurate and complete information on purchase orders including attaching artwork.
  • Proofs must be delivered via web services or other method to reduce process complexity.
  • Vendors need to start sending invoices with both a PDF and XML attachments.
  • The configured product data issue must be solved.
Finally, more organizations need to start adopting the standards that are already working. A standard must supported by enough people it becomes a standard in practice and not just in name

Most small distributors and suppliers are dependent on the industry service providers to implement these standards and that is potentially bad news.  The industry service providers do want the problem solved. However, most (not all) service providers want to be in the middle of the transaction and place the priority on revenue rather than efficiency.  Therefore, the service providers may be a roadblock to improving industry electronic communication since most industry firms are dependent on industry service providers.

For larger firms not entirely dependent on the service providers, the collaboration has been increasing and has already provided a real return on investment.  The investments made by the larger firms comes at a high initial cost but with so many orders processed, the return can be relatively quick. These investments ultimately benefit firms of all sizes as more firms adopt the standards.

The most successful efforts have limited the up-front expense and delivered value to firms of all sizes.  Recent successes (see the first 3 bullet points above) were shared openly at the PPAI Technology Summit in Atlantic City and event attendees continue to collaborate via online groups (for IT staff only) further driving improvements in efficiency. All attendees agree that the primary keys to success include ensuring priorities are aligned and that up-front investments must be minimal.

In the meantime, there is something very basic and essential that all distributors should do that requires no technological expertise at all.  Distributors must provide an accurate purchase order to suppliers when placing orders (technology can make this easier but is not required).  In case you haven't heard, as many as 70% of all orders placed by distributors have some missing or inaccurate information.  Sending an incorrect purchase order electronically only exacerbates the problems.  In fact, most suppliers who receive "EDI" type orders from distributors today still manually enter the order into their system. Manual entry allows the supplier to correct the errors before processing which often involves a call to the distributor to get the missing information.

For suppliers, the most basic and essential thing you can do is make it very easy to provide the appropriate information. Provide your product data in a very easy to "consume" format so distributors can leverage this when placing the order to generate an accurate purchase order.

Unfortunately, significant money continues to be wasted on technology efforts that do not result in the desired outcome. This is not the fault of technology; it is the fault of leadership.  As a leader of your company or as a leader in the industry, it is your role to ensure efforts (technological or not) are focused where the results will deliver value.  Collaboration across a large group of suppliers and distributors is critical to achieving success when it comes to solving the industry electronic communication challenge.

If you have thoughts or ideas to contribute to improving our industry efficiency, contact me or leave a comment below.

Dale Denham, MAS+, is considered the industry's top technologist and is the Chief Information Officer at Geiger. Read Dale's thoughts on technology, business, and the promotional products world every other Tuesday. Follow Dale on Twitter @GeigerCIO.

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