By Mark Peterman
(Second in a two-part series)
In the first part of this two-part series on Electronic Data Interchange (EDI), which ran last month (WJ, June 15), we outlined the key benefits of EDI to the inland marine industry. Let’s take it one step further in this article and look at the challenges to the adoption of EDI on the waterways and consider how we might move the decision to implement EDI forward.
What are the big challenges to adoption of EDI in the inland marine industry?
Here are a few:
- Return on investment (ROI)
- Common names (standards)
- Lack of technology
Change is hard, but inertia is powerful. The industry has a long and storied history. For some, there is a determination to keep the status quo. In other words, those who say “the way we do things now works just fine” have become a real barrier to bringing technology like EDI to the industry. It’s certainly false to say you can’t move barges if you don’t have advanced digital technology. Perhaps a better way to look at it is to consider how technology can make your business more efficient.
Investment in hard assets like boats or covers allows for a straightforward ROI calculation. An EDI system may help you reduce costs, it may help you drive more revenue, and it will likely do both. It can be harder to measure the fiscal benefits, as they are not as visible as determining the cost of increasing capacity with another boat or additional barges in the fleet.
You can build a financial model for investment in accounting or operational software just like you would to justify a new boat. As you consider the questions below, think about the impact of saving valuable time by removing manual work. Think about the value of increasing the accuracy of your invoices, or the benefits of a reduction of time between completing the work and invoicing the customer.
Here are a few questions to consider when thinking about EDI:
- Are your customers requesting (or perhaps even requiring) it? Could you get more business if you had the capability?
- Would EDI enable you to compete more effectively for new prospects, new markets, or position you to compete with larger competitors?
- Which of your business processes are the most paper intensive?
- Which of your transactions are the most time-sensitive to execute?
- Which transactions would give you the most benefit if they were all electronic?
- Is your existing business software
EDI-capable (perhaps you just need to make use of it)?
- Is your EDI solution compatible with the EDI approach that your customer or business partner use?
- Is there an industry standard for EDI for a particular transaction type in your industry (for example, placing an order and submitting a bill)? This is a key question, because standards are critical to the success of EDI! Common terminology is the next challenge.
At a high level, common terminology is a critical part of making EDI work. This is true if it’s a direct EDI model where information is passing from one trading partner to another or through a third-party Value Added Network (VAN). Of course, if you go a little deeper on standards, you can see why this is no small challenge. The messages passing from one trading partner to another must have a standard format that addresses the structure of the message (what’s included, what’s required, what’s optional, etc.), the content within the message (standards about the data, codes, references, etc.) and the method of transmitting the message. It takes involvement and commitment across the industry to work out these details. Standards for orders, status, and invoices are well-defined in the industry.
What other standardization would help the industry?
Lack of technology is the final barrier. In the inland marine industry, many companies still don’t have financial or operational systems that are ready to interface with other systems to execute EDI. In other words, there’s still management by spreadsheets, particularly in smaller companies, because it’s perceived as not always economical for small companies to invest in systems. However, technology providers continue to find new ways to make their systems more accessible and affordable, whether through Cloud-based approaches or creative subscription models for the use of the software that is installed in your office.
It’s time to take a fresh look at how technology can move your business forward. It’s time to consider how EDI can benefit your business and the industry. Competition is not just across the river. There are many modes of transportation vying for the same dollars. Competitive advantages can be gained for your segment of the industry if you and your competitors used common terminology and systems to deliver information to your customers. Your customers are likely to see EDI as a value-add to them, and that could be the best ROI measurement of all.