Case Study: Digital Transformation

CHALLENGE.

A global manufacturer and industry leader asked us to analyze the issues they were experiencing with logistics and customer EDI integrations.

With significant impact to the retail segment of their business due to strict logistics requirements, a lack of reliable EDI driven processes was preventing the company from delivering on promises to both customers and shareholders. Leadership was aiming for 20% growth to reach $100M in annual retail sales in under 5 years – yet didn’t have the system to deliver those results.

Upon a close look, we observed many issues that posed significant risk to both profitability and growth:

  • >80% of EDI transactions failing to reach the intended trading partner

  • >50% of existing customer EDI implementations causing errors and requiring rework

  • >50% EDI customer invoices past due or paid short as a result of EDI transaction delays, errors and chargebacks

  • EDI incident management consuming 4-6 IT and business FTEs

  • >40 weeks average new EDI customer onboard project duration and completing only 1-2 implementations annually

As you can imagine, a culture of blame was becoming endemic, as various stakeholders pointed fingers and refused accountabillity. This made matters more difficult and organizational change management became our biggest challenge.

SOLUTION.

Our core objectives soon became clear – and we quickly launched a multi-year, EDI business strategy with two strategic keys:

  1. To reduce EDI failure frequency to EDI partner target and/or industry average levels

  2. Reduce implementation time of EDI transaction development to industry average levels.

In order to achieve our objectives, we first had to fix the project’s foundation. This meant dividing the project into five work streams, each to functioning individually yet also working in alignment with the others.

Project, Change & Release Management

  • We developed an SDLC framework to standardize processes and consistently deliver on plan (schedule, budget, quality.)

  • We established a cross-organizational RACI chart to improve team engagement and alignment of priorities, risks and issues.

Solution Support & Maintenance

  • We standardized and aligned support processes with ITIL standards to improve incident, problem and change request management.

  • We updated technology and aligned EDI master data maintenance to standard SAP processes.

  • We established a first-in-industry EDI support model with a global VAN partner to improve scalability of support resources.

IT Architecture & Solution

  • We stabilized EDI middleware and consolidated three solutions into one supported by a single VAN.

  • We reimplemented all broken integrations with the new consolidated VAN and all work to existing integrations thereafter were handled via VAN migration.

Business Process

  • We improved order, warehouse and transportation management processes to account for exceptions typical of retail industry, where packing and transportation requirements often vary by customer.

  • We established cross functional workflows to drive quick detection, routing and resolution of EDI issues affecting customer invoices and accounts payable.

Performance Management

  • We established key EDI performance metrics to track and report end-to-end EDI transaction failure rate.

  • We established weekly, monthly and quarterly reporting to drive continuous alignment with key stakeholders regarding EDI project progress, issues, risks and priorities.

  • We worked closely with operations leadership to track and drive down EDI customer chargebacks.

IMPACT.

We quickly began seeing transformative results – vastly improving the customer experience and overall company culture. We accomplished the following within the first year of our new strategy:

  • We improved the EDI transaction success rate to >99% from <50%.

  • We reduced total project delivery time from a 40-week average to 4 - 6 weeks, with one EDI go live occurring every 7-10 days.

  • We successfully reimplemented 18 broken trading partner integrations.

  • We successfully delivered another 18 new integrations, resulting in a 37% increase in EDI customers yielding $3M in additional annual retail sales.

  • We significantly improved delivery. Utilizing a scalable resource model, we helped the company evolve from delivering one integration project the prior year to one integration every seven to ten days – an 18x increase in efficiency.

  • We corrected all parcel, LTL and FTL packing and shipping processes to satisfy strict customer-specific retail logistics requirements.

  • We successfully delivered nine separate EDI enhancements, including several new EDI transactions sets.

  • We significantly reduced customer chargebacks and delinquent invoices to not only improve cash flow, but more importantly, stabilize strategic customer relationships that had been built over many years.

In the end, we declared “mission accomplished” and were awarded twice for our tireless efforts and valuable contributions to company profitability.