Suppliers Held Hostage To Procurement Platforms, Services - InformationWeek
Suppliers Held Hostage To Procurement Platforms, Services
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User Rank: Apprentice
6/17/2015 | 3:30:05 PM
Re: Fees Correction
It doesn't matter what price you push it for.  Your business model is Psuedo extortion period.  You sign on national retailers to hand over their supplier list to negate their EDI costs and then attack the vendor/retailer relationship with testing fees and fines.  SPS smuggly thinks this middle man wedge was ingenious.  Before SPS such testing fees for trading partnerships were unheard of.  You are the Bank of America in the EDI industry.  A stain.  An unnecessary embarassment to vendor relationships.  You encourage retailers to make testing unnecessarily complicated because you profit from it.  I have evidence of SPS's incompetence in testing and I will continue to spread it as far as I can in hopes the truth will be known.  When Grainger Supply's buyers met with our execs about EDI they asked "Can you work with SPS Commerce"?  We reluctantly said "yes".  They said "Are you sure"?  This was clearly alluding to the complications almost EVERY vendor who's forced to "test" with SPS has encountered.  Ask around in the industry.  EDI Analysts worldwide cringe at the acronym SPS.  We laugh at you, not with you. 
User Rank: Ninja
7/16/2014 | 2:01:06 PM
Re: Suppliers Held Hostage To Procurement Platforms
Wow, cool to see some new faces here in the comments! I guess this is a topic that is close to many of you - I get the impression we have a lot of people who work directly with the supply chain here, and that says a lot about your dedication to your jobs. I hope some of you will stick around for all the other great content on the site, though - there's tons of great sutff on a huge range of business/IT topics on the front page every day! As for the topic at hand, well, I'm in the opposite boat - I don't work in an area that's touched at all by this issue (and never have), but maybe that will allow me to offer a bit of a different perspective.

Someone mentioned modern suppliers needing to compete with Amazon, and the importance of EDI in doing so. Now, that's certainly true, but at the same time there are some caveats to that.  Does Amazon pay a per-transaction fee to a third party EDI service provider for each order it ships? I doubt it - and, if they do, I bet they get a very good rate. In fact, it's very possible that a lot of these processes are internalized at Amazon (etc.) because their scale allows them to do so, capturing even more value for them. If I'm already a little guy thousands of times smaller than Amazon, can I really afford extra fees in an area that's supposed to save me money? Ultimately, it's a complicated web that requires give and take on both sides, but I think it's fair to say that service providers are milking the  cash cow a bit where it looks like they can get away with it.

Supply Chain Pro
Supply Chain Pro,
User Rank: Apprentice
7/16/2014 | 11:36:48 AM
Add value to integration, not cost.
There's no question data integration can deliver huge efficiencies to a company. But the article makes a great point: finding a collaborative way to approach integration is the way to go.  All too often integration that should deliver value does so at the expense of the supplier.  

Can this be avoided in all instances? I don't think so, but it can be made more equitable than it typically is.  Buyers and sellers collaborating more openly is critical to the process. Both should be open about the solutions or methods being considered and how to best address an integration opportunity. Failing to do this can put an integration method in place that costs more than the data is worth.

Certainly a cautionary note for solution providers as well... make sure you add value to the process.    

User Rank: Apprentice
7/15/2014 | 3:53:51 PM
Fees Correction
Hi Kate,

Thanks for your post. This is an interesting article.
In response to: "Suppliers that didn't want to switch to SPS but instead wanted to use another EDI provider would be charged $500 per test -- verification of each required EDI document for data integrity and accuracy. So if four documents are involved, that's $2,000. Testing fees vary based on the retailer's requirements and the deal it cuts with the VAN provider, but the fees add up quickly."

I wanted to note tha $500 is a flat fee, applicable to all document types for a certain retailer. So whether it's 2 or 14 document types, same price.

In addition, any other costs associated are for a suppliers existing EDI provider, and are totally variable, as you've stated. But these are not costs that are unexpected when adding a trading partner.

User Rank: Apprentice
7/15/2014 | 12:34:25 PM
Re: There is not enough data being shared throughout the supply chain.
SupplyChainAdvocate - you're spot on with 90% of your response, however why should suppliers be forced to pay for this exchange of data? I can understand that line of reasoning years ago, however today there are a number of great eInvoicing providers that do not charge suppliers to exchange very basic data that you refer to. Yes, the data is extremely valuable, I agree. So why would you force suppleir's to pay when ultimatley you want every single supplier to adopt such methods. Too many Buying organizations are taxing their supply chain to death, and companies like Ariba and OB10 wonder why they're solutions yield such low adoption rates of eInvoicing or why Suppliers hate their supplier fee networks. Truth is that there is other ways to offset the cost of this miniscule data being exchanged...find a much more sophisticated cloud based solution and look into a platform that provides functionality that leverages the efficiencies created by a highly adopted "FREE" eInvoicing program. The obvious functionality would be an early payment solution such as Dynamic Discounting. There is such a way to create a Win-Win for both the Buyer and the supplier. Provide the supplier with highly effective eInvoicining options that are FREE and congruent to their IT capabilites, which then creates a much more efficient process internally for AP, invoices get approved faster, then give the supplier the option to be paid early for a reasonable discount. The buying organization drives substantial discounts, becomes much more electronically efficient, and the supplier is incredibly happy because they did not "pay to play" and now have a reasonable way to unlock working capital that was previously tied up in AR.  Seems like a no brainer!

All in all, I completely agree with everything else you pointed out, however there are increadibly successful vendors out there that do not charge suppier fees and provide outstanding additional functionality. I have no idea why anyone would deploy a "Supplier Fee" solution in 2014. Technology and better business models have left the supplier fee model in the past.
Kate Vitasek
Kate Vitasek,
User Rank: Apprentice
7/14/2014 | 8:12:21 PM
Re: There is not enough data being shared throughout the supply chain.
Dear SupplyChainAdvocate

Thank you for your passionate reply to my IW blog.  

I violently agree that EDI and other procurement platforms can and do add a tremendous amount of value to driving efficiencies in the supply chain.  While I might be an academic now - I have 20 years of experience as a practitioner on both the buyer and supplier side and was on the Board of Directors for the Council of Supply Chain Management Professionals for 5 years.  My work on creating highlighly collaborative relationships through "Vested" sourcing business models won the Supply Chain Council's Academic Advancement Award and has led to 5 books.

In all of my books I openly advocate that more companies need to do MORE to collabroate with their trading partners - including automate their supply chain exchanges and using data to help drive better analytics.   

You suggest if I "can step back and look at the supply chain as a whole everyone wins when we can communicate more information and improve visibility in the supply chain."    I have stepped back - and what I see is tremendous gains in efficiencies where supply chains ARE becoming more streamlined and efficient.    YEA!  The point to this article is that the way that platform service providers charge for data exchange, the BUYERS are the winners in the efficiency gains much more than the suppliers.  And the real winners?  The platform service providers.   Yes - data exchanges are NOT free...but let's be transparent about the value of the improved exchanges and how allocate that value in way where suppliers don't feel locked in without a choice.  

Thank you again for your passion.  I am gald you have shared the power of automated platforms.  The more we can educate companies about the value of procurement platform services - the better.   As a professional edcuator, I also feel passionate about helping business professionals understand that sometimes a  "winning" decision may have perverse impacts that need to be explored.  

Kate Vitasek


User Rank: Apprentice
7/14/2014 | 2:59:49 PM
There is not enough data being shared throughout the supply chain.
With all due respect you have clearly not done your research before sharing your thoughts and opinions. Most of the above information is entirely false and was more than likely heard from another supplier rather than experienced firsthand. Are you familiar with the benefits of EDI? Is this a joke? Do you understand what EDI is? Do you understand the benefits of EDI for BOTH the retailer and the supplier? Have you read the book The World is Flat? Do you have any supply chain experience? Any company who is resistant to collaborate with their retail partners and resistant to automate their own processes to ultimately decrease their own overhead (not just the retailers) should consider selling their business to a company that understands the supply chain today and how it is continuing to evolve. Or perhaps we should just all resist these changes and go back to fur trading posts since you do not seem to see the value in improving communications across the supply chain.

As for the transaction based pricing models... the data being exchanged is actually very valuable. Everyone is trying to gain more market share and also compete with Amazon. How can you complete with 2 day shipping when you do not even know where your goods are or when they are arriving? How can you win when your trucks are traveling around the country half empty with increased gas prices? Data isn't free... you pay for your cell phone usage, you pay for high speed internet, you pay per page for faxes. If you can step back and look at the supply chain as a whole everyone wins when we can communicate more information and improve visibility in the supply chain.

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