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Resolving Corporate Structure Challenges in an EDI Transaction Processing Environment

One element of Dynamics EDI transaction processing that is frequently overlooked or not addressed is the challenge of resolving the different “views of the world” that often clash between organizations. For example, a company such as Wal-Mart may see themselves as a straight-forward organization with stores and warehouses that are considered delivery destinations in their corporate structure. However, some of Wal-Mart’s partners may see it quite differently; they may see Sam’s Clubs and Wal-Mart USA as separate entities (customers). Still other companies may see the individual stores as separate customers, or a mixture of customers and delivery destinations. Herein lays significant automation complexity.

On this topic, I recently had a conversation with Glenn McPeak. For those of you who don’t know Glenn, he’s a supply chain expert with over 25 years of EDI/ERP solution consulting and ERP/EDI software product and management. Here’s a recap of Glenn’s insight on this all too common challenge:

Jon: What happens when companies acquire other organizations that are already conducting business with an existing partner like Wal-Mart?In some cases Wal-Mart will view the newly-combined company as two separate suppliers and it will look to keep all of the interactions distinct while the company decides to combine product lines and operations on to a single ERP platform, such as Microsoft Dynamics. On the other hand the complete reverse could happen – the companies are to remain distinct but Wal-Mart elects to see the two companies as a single supplier. That decision can be quite random and based on circumstances that cannot be predicted.

Jon: Is this the same for all partners?No, other organizations can pose the opposite challenge. For example, Caterpillar could approach each of their manufacturing plants as separate organizations, yet their suppliers see Caterpillar as a single organization/customer and each plant as a different delivery location. This can be a big factor as price agreements in ERP systems are maintained and calculated at the customer level – setting up multiple customers can be quite cumbersome inside the ERP application.

Jon: Doesn’t this cause unnecessary conflicts and complexities? And what’s your recommendation on how to deal with the EDI business needs when these issues arise?I don’t know if I’d use the word unnecessary – there are many factors that go into the decisions on both sides of the business process that are unavoidable. The important thing is to make sure the conflicts and complexities can be managed without customization of the ERP platform or forcing the ERP user to compromise or even worse, force the process into a manual one where a user has to make all of the decisions and adjustments. Automating unpredictable challenges requires advanced flexibility and power in the transaction (EDI) platform.

In order to successfully integrate EDI in most scenarios, you cannot simply approach it as a task of converting one file format from one to another. Instead you also need to consider inter-organizational challenges and the fact you’re bridging two different ERP platforms, different organizational visions and diverse (at times convoluted) business practices. It’s a tall order, but by approaching it from a strategic angle, rather than a task-oriented perspective, you’ll avoid a rigid design that limits options going forward or forces ERP customizations that are expensive and compromise future growth.

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