As companies have begun to make more supply chain and purchasing activity digital, the data formats used to share that digital information have multiplied in kind. The advent of multiple format options brings flexibility and the power of choice, but it can also lead to additional cost, even in today’s world of transform engines and configurable system connectors.
To control the inevitable data format explosion, companies should strive to standardize their data formats by understanding the effort required to maintain integration of these various data feed formats, the feasibility of standardizing formats across various partners, and how standardization can be accomplished.
Data Format Proliferation
The explosion of data formats didn’t happen in a big bang; rather, the various types evolved over time. As with other business tools, existing formats were improved and new formats were developed to meet changing business requirements. It’s no surprise, then, that as companies have added new technology, new suppliers and new partners, the variety of formats required for integration have kept pace.
A manufacturer with multiple integrated supplier and distribution partners might be working with data feeds in a number of formats including XML, CSV, EDI, JSON, etc., each of which may provide a unique business benefit. Of course, each format feed also requires maintenance and support whenever software or hardware updates are performed, which can often require focused efforts from the internal IT team. Rather than suffer through trying to support a myriad different formats, you can find cost and labor efficiencies by simplifying and limiting the number of different data formats.
Controlling the Data Explosion
One of the best times to think about managing, and potentially reducing, the number of different data formats that your company uses is when you are planning to implement a new collaboration system or portal with trading partners.
Instead of moving all existing processes and data streams onto the new platform, take the time to review the data format policies for the solution as well as inquire about format flexibility with your trading partners to consider what standardizations to put in place. You may find that more of your trading partners are in a position to help standardize feed formats than you initially presumed. When reviewing data format policies, it is important to follow these three steps:
- 1.Identify collaboration systems/portals that can integrate with your partners in a variety of formats (EDI/XML/CSV/etc.) but deliver information through a single console. Although many systems may claim format flexibility, this claim can sometimes be deceiving. Often a few formats are still relegated to direct back office system integration, leaving you with disparate feed formats and multiple, separate data channels to manage. The better systems will be architected with powerful messaging layers and transform engines that can either receive/pass all data to other systems or enable transaction monitoring and control through a centralized management console.
- 2.Plan for a single format data feed between your internal system and the 3rd third party system. A single format feed will help reduce the amount of required support from your internal IT team going forward. For example, in the current environment, the internal IT team must support, maintain and troubleshoot different types of data formats (in terms of processing the data received, as well as processing the internal data to send out.) If you have a few partners on EDI and others requiring data in XML, a company needs to be able to process all these feeds that require different technologies. Consolidating all these feeds into a single designed format suitable and easy to support based on internal IT team experience will simplify operations significantly and prevent wait time for upgrades and new trading partner onboarding.
- 3.Avoid the “all at once” approach – stagger onboarding so that the risk is minimized and focus is maintained on successful implementation.
- •EDI formats – Plan for transitioning partners one at a time. Even though there are EDI standards for each transaction, EDI format integration is likely to be more complicated and require additional discussions and testing of the feed for each partner.
- •XML/JSON formats – Plan for transitioning one to two partners at a time because XML and JSON are less complicated than EDI, but more than CSV. This becomes the “just right” format for integration.
- •CSV– Plan to transition three to five partners at a time. Compared to XML, CSV files are easier to read and therefore slightly easier to integrate.
One of our current customers divides their suppliers into Low, Middle and High Tiers. Low-Tier suppliers have low transaction volume and only input data manually into the online portal without any automated data feeds. Mid-Tier suppliers have some level of data automation, while High-Tier suppliers have EDI and high volume. The customer has on-boarded the Low- and Mid-Tier suppliers working out any issues along the way. This process has eased the path and the risk for transitioning the High-Tier suppliers that make up the bulk of the transactions and monetary volume.
Standardizing Data Streams
It may seem that your data streams and the corresponding formats have multiplied uncontrollably, but it’s not too late or too costly to move to standardization. Implementing a new automated supplier collaboration system is an ideal time to discuss and negotiate this transition with your trading partners, who can help distinguish the advantages and disadvantages to each format.
Leveraging the advantages and benefits of standardization will only strengthen relations with your external and internal partners, and provide your company with a significant edge.