May 3rd, 2021
Some investments are so undeniably necessary and valuable that you might even say they’re…priceless. And while we’re certain that all service providers think this way about supply chain digital transformation, we also know that price transparency is becoming increasingly important as businesses attempt to optimize IT spending by limiting haphazard software investments. After all, you want the most bang for your buck, and you don’t want to waste your time evaluating a solution that is, quite simply, out of your reach.
So what are the supply chain costs you should expect to incur on your path to digitalization? We’ll give you as good an indication as any when it comes to EDI implementation fees and ongoing expenses. In other words, we can’t give you an exact quote of anticipated supply chain costs without a proper evaluation, but we can give you a ballpark range.
A Short Recap
In our previous blog, How To Achieve Digital Supply Chain Transformation, we discussed four major barriers that prevent many businesses from moving forward with digitalization initiatives and how to overcome them. Here’s a quick summary, because it’s all connected when it comes to keeping supply chain costs down:
1. Don’t get ahead of yourself. If your organization is scrambling to implement digital technologies that should have been deployed years ago, it’s important not to rush into new technical investments prematurely. This can quickly make your supply chain costs skyrocket, and it’s unlikely that’s you’ll realize the same benefits that a structurally sound business will achieve.
2. Have a clear plan. The best way to minimize unnecessary IT spending and cut back on supply chain costs is to assess your pain points and choose solutions accordingly. Be realistic about your organization’s level of maturity and explore the right technologies from the start.
3. Start from within. Digitalization is often hindered by humans rather than—or in addition to—lack of the right digital technologies. Make sure your internal IT team is educated on new technologies and that the organization as a whole is prepared for change. Investing in the right talent (experts) and internal communication (strategies and collateral) will lead to lower supply chain costs in the long run and better situate the organization for success.
4. Get your trading partners on board. Ecosystem enablement is a huge undertaking, but one-sided digitalization efforts will only get you so far. Don’t hesitate on investing in additional onboarding services—you’ll need all the help you can get.
Who Should Invest in an End-to-End EDI Solution?
If you’ve been keeping up with our Digital Supply Chain Series, you probably already know the answer to this question: This type of investment is for organizations that are ready to launch a full-scale EDI solution of their own. Once again, if you’ve been keeping up with this series, the answer may very well be “you.” If you’re ready, of course.
As a primary component of any supply chain digitalization plan, an end-to-end EDI solution is cloud-based and seamlessly integrates with your ERP or other back-end system. It’s also able to connect with a wide range of other supply chain technologies, like WMS, and provides detailed reporting on exchanges in real time. Additionally, it helps businesses to achieve faster business transactions and automates both procure-to-pay and order-to-cash processes for full supply chain transparency. In other words, it helps you to achieve digital transformation in your supply chain.
But going back to the points listed above, it’s crucial that your EDI solution fits into your broader supply chain digitalization plan. It has to be flexible—that’s why an end-to-end EDI solution typically provides more than one option for document exchange, and supply chain costs vary accordingly.
TIE Kinetix’s FLOW platform, for example, provides three solutions to enable 100% supply chain digitalization: EDI-2-FLOW, PDF-2-FLOW, and PORTAL-2-FLOW. These options make it possible for businesses that are working toward supply chain digitalization to exchange documents electronically with trading partners of all sizes and, ultimately, meet their digitalization goals.
By investing in an end-to-end EDI solution, the organization that decides to implement the end-to-end EDI solution can easily connect with the trading partners that are EDI-enabled while also offering a suitable solution for small and mid-size partners that aren’t ready to invest in a solution of their own.
Supply Chain Costs for an End-to-End EDI Solution
Okay, enough chit-chat. Here’s what you came for: A rough estimate of what it costs to implement an end-to-end SaaS solution for EDI:
One-Time Set-Up Fee: Unfortunately, one-time set-up fees are difficult to guesstimate. Sorry to disappoint! However, this fee is typically calculated based on a combination of three factors:
1. Number of processes required to send EDI messages
2. Number of EDI mappings
3. Number of trading partner connections
Document Exchange Fee: from €0,02 per document (electronic/EDI documents)
Document Exchange Fee: from €0,75 per document (PDF documents)
Document Exchange Fee: from €0,25 per document (submitted via web EDI portal)
Additional Supply Chain Costs
While the above expenses should give you a general idea of what an end-to-end EDI solution will cost you at a basic level, there are additional supply chain costs to consider. Other expenses include, but are not limited to:
Electronic Archiving (E-Archiving): This is an optional service that many businesses choose to invest in due to legal archiving requirements imposed by the government. In the Netherlands, for example, businesses are required to store business records for at least seven years. TIE Kinetix provides an easy solution to ensure audit risk compliance.
Disaster Recovery: Business continuity and disaster recovery go hand in hand. It’s becoming more and more common for businesses to invest in a real-time disaster recovery solution to ensure minimal disruption and loss in various instances (i.e., power outage). TIE Kinetix’s disaster recovery services ensure business continuity in under five minutes for only 5% on top of the monthly SaaS fee.
Onboarding Services: Onboarding is a huge challenge, and it’s incredibly time consuming. That’s why many businesses have come to the conclusion that the entire process is best left to the experts. Meaning, the service provider. TIE Kinetix even has the option for FLOW customers to automate the onboarding process entirely.
Additional Trading Partner Maps: The bulk of supply chain costs associated with building trading partner maps is included in the one-time set-up fee. But if you’re a growing business and rapidly expanding your trading partner network, you’re going to need more maps, and maps aren’t free (although it would be nice!).
Out-of-Scope Work: This could be anything and everything that may come up before, during, or after implementation. This type of charge is typically a one-off request from a business and is billed accordingly.