For decades, EDI has been the standard of how businesses exchange information, documents, and data — to this day it still remains a backbone for global business, but some would argue that it’s outdated, not easy to understand, and requires technical expertise (and they wouldn’t be entirely wrong). The biggest challenge is that most companies assume an “if it ain’t broke, don’t fix it” approach, where they react to an issue when it happens but don’t think about how they can avoid it in the future — simply put, they’re not being proactive.
This approach can be a costly one for today’s businesses and is especially true for retail, an industry that is making strides with new technologies. Yet something as mundane as EDI isn’t thought of as a technology that could significantly, positively impact their business — they’re looking at new, shiny technologies like IoT, AR and AI.
EDI is still very much alive and really cuts across a couple of ‘new’ categories: big data, analytics and business intelligence. The key to using it effectively is updating the approach, so that less technical support is needed and business leaders can utilize it in meaningful, impactful ways. Chargebacks are one of those thorns in retailers’ sides that could be tackled with a new approach that’s leveraging the right technology that works for your organization.
The EDI Evolution: (Big) Data And (Predictive) Analytics
Today’s EDI is so much more than exchanging data and staying compliant — it’s about understanding that data and acting on it. So while organizations face several challenges with EDI, nearly 40% say that chargeback costs are one of their top three biggest obstacles.
And for good reason — last year, e-Commerce chargebacks (and associated costs such as fraud and managing them) cost merchants $40 billion — and on the merchant-to-customer level, some even say chargebacks are the equivalent of cyber shoplifting so there are frustrations all around. And if we go back just two years to 2017, merchants and banks reported losses of roughly $31 billion as a result of chargebacks, which is a staggering amount.
I always share these stories to truly illustrate how big (and costly) chargebacks can be. In fact, I met with a potential customer a few years back (one of the country’s largest retailers) and they told me that because they don’t understand all of their data and aren’t being proactively notified of errors or issues, chargebacks end up costing them 3%-5% of annual revenue!
Data is the key word here — EDI is a significant source of big data, which can provide a wealth of information when analyzed properly. It all boils down to big data analytics, visibility, and the incredible benefits this information can offer retailers, which ultimately touches every part of the supply chain. So, if you’re reading this and nodding your head, but unsure how to get started and even analyze your current system, let’s break down some best practices.
Tick These 5 Boxes To Get On Track
I’ve been working with EDI throughout my entire career and can share five fundamental things that I’ve seen as core to getting organizations back on their feet — and ultimately avoiding chargebacks:
1) Collaborate with key stakeholders in your company — from the C-suite and marketing, to sales and customer service — all teams can benefit from big data insights, so everyone needs to fully understand and embrace what challenges these solutions can solve. Analyzing data to benefit a company’s bottom line is no longer just the IT department’s responsibility.
2) Calculate how much chargebacks are costing your company and where the breakdown occurs to proactively address them. Is it a lack of understanding on the business side? Is there a de facto policy of ignoring notifications because there’s no quick solution? Is IT spending too much time on queries and assisting business users with access to the data?
3) Assess whether or not you’re even tracking the right data to solve your business challenges and improve relevant processes. In many cases, I’ve had to first help clients understand what data they should be tracking, and then determine how to ingest, analyze, read and act upon that data.
4) Evaluate what technologies you’re using and if they’re the right investment. Implementing something new (or different) won’t always fix an old problem — understand and work with what you have first before putting a proverbial band-aid on it (or even ripping and replacing!).
5) Agree and take action on how your data can become more actionable, provide clear next steps, and bridge the gap between IT speak and business strategy — there are solutions out there that can significantly cut costs and reduce complexity.
Say Goodbye To Chargebacks, EDI Has Come Of Age
To many organizations, EDI is just a standardized format that’s necessary when exchanging data and information. But the reality is that EDI is big data and business intelligence just dressed up in some new clothes. Solutions that are available now are becoming interoperable, so solving past challenges — such as chargebacks — with a new approach is very much a reality.
You don’t want to be a retailer that just accepts an annual 3%-5% hit off your bottom line because you think there’s nothing out there to solve your EDI/big data challenges. So take a step back and follow the five steps I mentioned above to take control of your roadmap, rid your company of those growth-stifling chargebacks, and ultimately achieve long-term success.
As CEO and Founder, Michael Rabinowitz is responsible for the overall strategy and vision of CoEnterprise. Founded in 2010, CoEnterprise delivers supply chain and business analytics solutions and services that transform how companies connect and do business. Connect with Rabinowitz on LinkedIn.