While business to business (B2B) ecommerce continues to grow in importance there are other technologies that can also play key roles in digital transformation for your business. Here we take a look at some of them and why they are important.
Let’s start by answering some of the most frequently asked questions about EDI, Punchout, and XML – mainstays of the business world.
What is EDI?
Electronic data interchange (EDI) is a cornerstone of B2B transactions and has been in use since the 1960s. Initially, its purpose was to reduce reliance on paper records and to manage the size of electronic data files.
How does EDI work?
EDI shares structured information electronically between two systems without human involvement. Standardized information can include the format of invoices, purchase orders and shipment confirmations. It’s ideally suited for exchanging large amounts of information and has been used by many big organizations and their suppliers to manage high-volume transactions.
What are the benefits of EDI?
Because the process is automated, EDI can speed things up and improve accuracy and efficiency by reducing human errors. It also means that everyone in a supply chain can see and understand information that is clearly formatted and shared.
What are the limitations of EDI?
If any organizations in your supply chain don’t use EDI it can cause a bottleneck and the benefits can disappear.
It’s also worth noting that EDI isn’t designed to be used as an online sales portal or as a sales and marketing tool.
Is EDI old technology?
While the end of EDI as a business tool has been predicted for many years, largely due to its lack of flexibility, it remains strong in many sectors including healthcare and logistics. In Europe the Pan European Public Procurement Online (PEPPOL) protocol has been developed to support EDI connectivity in the future.
In this type of value-added network (VAN) multiple suppliers, retailers, shipping partners, banks and others can be connected to an EDI hub. Once they are connected, business transactions with other participants are streamlined and there’s no need to set up a bespoke exchange.
What is Punchout?
A Punchout system integrates a customer’s e-procurement system with a supplier’s ecommerce catalog. Early versions used one-to-one EDI protocols. More recent Punchout approaches either import information from selected suppliers to create an internally hosted catalog or select information from the supplier’s own ecommerce site.
What is a Punchout catalog?
Punchout catalogs allow B2B suppliers to integrate their catalog with their buyer’s back-office platforms cost-effectively.
In contrast to manual catalog imports, which can become out of date quickly, Punchout catalogs are always up-to-date, and data is transferred between platforms without manual errors. Changes made to the catalog or product details can be seen immediately by your buyers.
What are the benefits of Punchout catalogs?
Buyers benefit from real-time product, pricing, discount, and availability data without having to import and host a catalog. They can search, browse, compare, and buy products online without leaving the controlled environment of their own e-procurement system.
Using Punchout, the buyer’s organization has more control of their procurement processes. They will have accurate information about expenditure, buying patterns, and can monitor and manage purchase approvals.
B2B ecommerce businesses can offer enhanced user experiences for searching, browsing, and accessing product information via their own site, rather than through an e-procurement system and the procure-to-pay process is streamlined. It also creates opportunities to reach new users within a customer organization and to increase sales with existing customers.
What are the limitations of Punchout?
Integration of buyer and seller platforms can be challenging because of the wide variety of combinations. As well as the variety of e-procurement, spend management, and enterprise resource planning (ERP) systems that buyers might use there is also a wide range of ecommerce platforms.
Communication protocols and application programming interfaces (APIs) might be incompatible, so a translator is often needed for Punchout to work, which can be time-consuming and costly to create.
Alternatively, a managed Cloud-based gateway, hosted by a third-party provider, can mediate communication between organizations. The provider will make sure that data can be received and shared across ecommerce and e-procurement platforms.
What is XML?
eXtensible Markup Language (XML) defines how to create other programming languages. Because it largely uses plain text, files created using XML can normally be read and understood by opening them in a browser.
Because of its accessibility, XML is often used in open source environments and for customization projects, making it popular for ecommerce applications. This has led to the development of commerceXML or cXML, which is often used to support Punchout catalogs.
Data integration and B2B ecommerce
While many businesses realize the benefits of using EDI, Punchout or customized integrations for the major part of their expenditure, they often don’t want to apply these solutions to all of their purchasing.
For many, 10 or 20% of their ‘tail’ spend is on low-volume, one-off or infrequent orders involving many different suppliers.
Many larger businesses don’t manage this aspect of their procurement closely. However, there’s growing recognition that significant savings, improved efficiency and better control of these low-volume purchases can be achieved.
When buyers are looking for something new or specific that wouldn’t be part of their usual buying choices, they want fast and relevant online results.
According to Forrester, almost seven out of 10 B2B customers prefer to research online before approaching a supplier. More than half don’t want to speak with a sales representative at all.
An effective modern B2B ecommerce platform will ensure your business is discoverable online. Even if ecommerce isn’t your preferred sales channel, as millennials who have grown up in a digital world start to dominate buyer organizations, your business could depend on it.
Modern ecommerce sites integrated with back-office systems, can now support large-scale electronic requests for information (RFIs or technical queries) and quotations (RFQs), as well as electronic document management.
As a strategic choice, some distributors are now stocking a wide range of these low-volume products, helping larger organizations to meet their ‘tail-spend’ requirements quickly and efficiently while working with fewer suppliers.
Find out how Cloudfy can help to optimize the procurement potential of your B2B business. Book a free Cloudfy demonstration.