The Problem with ASNs
By Tom Ryan
According to a recent survey of retailers, 89 percent required the use of ASNs (advance shipping notices) by their suppliers, but found accuracy and efficiency to be lacking. As a result, compliance-related deductions are higher around ASNs than any other supply chain document.
The study by GXS, a B2B e-commerce solutions provider, and the Vendor Compliance Federation (VCF) found that the use and application of ASNs has improved over the last three years but the rate of improvement has slowed and hit a plateau. It found that ASNs have been beleaguered by a number of factors, including inconsistent implementation by retailers, a pervasive lack of data quality and the difficulty of on-boarding the supplier community.
The study found several possible causes:
Numerous PO changes: Retail EDI professionals don’t believe purchase order changes have a significant impact on ASN accuracy, but suppliers think they do. There is no quantitative data to validate or invalidate either view. Retail survey respondents indicated that they issue, on average, 4.4 changes per purchase order, much higher than vendor’s estimates.
Lack of standards: While standards abound in terms of EDI syntax, structure, documents and communication protocols, the EDI practitioner still must understand the unique business rules of their trading partner. The amount of time and resources required to educate manufacturers about unique business rules as well as train and test EDI capabilities creates unintentional delays.
EDI not tied to e-commerce: While EDI used to be universally seen as strategic to e-commerce, many retailers no longer recognize it as part of their online strategy. E-commerce is seen as B2C; EDI is seen as a legacy messaging system for B2B. As a result, little strategic planning takes place between EDI and e-commerce.
Inadequate funding: The arrival of technology initiatives such as RFID, XML, data synchronization and sophisticated portals has pushed EDI further to the background. Each is laying claim to being the successor to some part of the EDI space. Yet, the market footprint for EDI continues to grow with more suppliers being on-boarded, including retailers’ offshore private-label manufacturers.
Lack of measurement metrics: EDI managers still lack adequate tools as part of the standard EDI toolset for measuring business flow. In addition, basic EDI services do not appear to provide adequate visibility into the data traversing the network. As a result, EDI professionals are constrained from providing appropriate business insights and from helping companies move from strictly transaction sharing to higher order value functions such as real-time visibility.
“Deductions are not a solution to a problem, but they are used to motivate change in supplier behavior,” said Mark Jones, managing director of the VCF, in a statement. “By optimizing the ASN process and combining it with supply chain visibility tools, retailers and suppliers can avoid the prevalent problems and reap the benefits in multiple areas of their business.”
Discussion questions: What do you think is causing the continued inaccuracies and inefficiencies around ASNs in the EDI process? What do you think of some of the findings of the study? What solutions do you think will improve ASN accuracy?
It is an interesting subject and the paper certainly highlighted to me what appears to be a fragmented approach being adopted across a number of retailers in treating an ASN as a separate entity when in fact you can’t. It has to be part of the Procure to Pay suite, all supported by EDI as the underlying standard. Accepting phone calls and faxes for PO changes is an absolute nonsense if you expect an ASN as the receiving document.
For what it’s worth, we learned very early that when you move suppliers onto B2B electronic trading, it is the whole thing…or not. This includes EDI, catalog, Purchase Order, Purchase Order Acknowledgement, Purchase Order Change, Reverse Purchase Order, Advance Ship Note, Recipient Created Tax Invoice, Adjustment Note, Rem Advice. Portal access to a Trading Partner Management System.
We even made the ASN the receipting document using supplier Item Cost in our systems for payment. It is amazing how data integrity issues reduce if the supplier knows he will only get paid off the ASN receipt, paper invoices become obsolete and unacceptable, and using the data he provides to the company through the catalog.
You can’t compromise on standards, if you do, the benefits to both suppliers and retailers are diluted.
Data quality certainly plays a role in ASN accuracy, but I agree with some of the later conclusions, that EDI is the stepchild of B2B. B2B technologies have evolved to the point that there are huge opportunities if EDI was incorporated into an overall visibility solution.
I sold supply chain visibility solutions in 2002-3–and the market just wasn’t ready for it. The only people who got it were logistics people, whose business was so complex they were more aware of the issues than everyone else. It amazes me that in 5+ years the messages haven’t changed at all. EDI is one data point, that when taken with all the other data points available within a supply chain, can contribute to supply chain visibility–that’s what an ASN is trying to accomplish, after all, visibility into inbound orders/shipments. Why rely on one protocol with one set of transaction information, when you could have a whole string of updates across the multiple parties handling your goods–and tools that could alert you to the exceptions, so that you don’t have to try to monitor them all?
If ASNs are not correct, it puts all kinds of questions in one’s mind about the accuracy of other data obtained from that particular supplier. ASNs are instrumental in improving the efficiencies of the distribution process in the supply chain and ultimately, customer service. This report is disturbing to me as a consultant as it is, I’m sure, as a retailer. The inherent charge backs to the vendor for wrong ASNs should ultimately get their attention to tighten up their data. Many times the problem could exist in the warehouse management system software. A lot of vendors are using old and antiquated software and may have to update to resolve the problem.
It’s sad that ASN accuracy is often driven by retailer fines. Retailers who track ASNs know which suppliers make the majority of errors. Suppliers know which retailers consistently make the most PO changes. In both cases, the 80:20 rule often applies: that a big proportion of errors are made by a few uneven performers. Some retailers give out supplier report cards, and the winners are honored. The poorest performers sometimes show great improvement when the issues are consistently brought to the CEOs’ attention.
Accuracy is always an issue but the cause of inaccurate data is not always a problem with how it is keyed in. From the discussion and study results, integration of EDI into the whole supply chain database appears to also be a problem. EDI is not a stand alone activity with its own definitions and data. It is integrated into the total supply chain and if that integration has not been done carefully, the discrepancies will continue to exist.
I think my main take away is that we are hitting the inflection point that Nikki Baird is looking for with regards to visibility. If we focus on just the bad data, we miss the point that the reason there are so many unique expense offsets for ASNs is the fact we have moved past the “did you send an ASN – YES/NO” state and are now really worried about fine tuning the execution–perfecting the process. We have the “luxury” of doing this because adherence to sending ASNs now exists.
Why is this important? It means that companies are now starting to focus on what they can do with the information about and within the transactions. Visibility that enables real-time actions is one of the best ways to leverage this data. Some companies have been doing this for several years, but we are still on the very early part of the curve. And yes, the ASN is just one of the many feeds into such a visibility application. Other feeds might come from carriers, customs, brokers and more.
The key to visibility is to have it–and act upon it–as early in the process as possible. And if you are a supplier, it can be as valuable to you as a retailer, since a good tool with built in data and rules validation can alert you to compliance problems within minutes or hours rather than weeks after the fact–thus reducing the number of times you commit the same mistake.
In regards to data quality, the problem might start upstream with product data but it can just as easily originate in any of the manual processes that interrupt the order-to-settlement process. Unfortunately, most companies do not appreciate the need to keep that process automated. And EDI staff usually are not gifted in the ways of marketing the value of investment in these areas to their executives, especially when many sources are telling executives to invest in the latest and greatest new technologies.
Finally, I agree that older systems can be a problem. But institutional knowledge is also a factor. Turnover in key B2B positions (a skill that lacks any formal collegiate or university educational track in the US) leaves companies with poor knowledge of best practices and, thus, poor ability to plan and execute when it comes to B2B. Check out the high-tech industry where many prominent companies (dozens) have abandoned automated B2B and have asked their automated suppliers to instead get forecasts and orders, and to input invoices and ability to meet forecasts, manually via portals.
One prominent US retailer has likewise dropped electronic receipt of product data and has asked all suppliers to manually enter product data into their private portal. This includes apparel, for which product data is entered for thousands of skus and used for only a few orders before the next seasonal line comes in. From my experience, actions like this can be directly tied to a dearth of corporate knowledge in the B2B space.
All of these things makes me wonder if there is a growing need to outsource the “utility” function of B2B (messaging, translation, technical implementation and testing) so companies can focus on the higher-order business functionality. Is it a coincidence that it is in the latter places, where execution is fine tuned and perfected, that we are seeing new sources of funding today, while traditional B2B is in a maintenance mode?
The actual system of ASN is a very simple process; however, either the retailers or suppliers can make it very complex, difficult, and often painful. This maybe through ignorance in understanding the process or it maybe a vendor trying to be deceitful or in defiance.
One way that I dealt with ignorance, was hold a vendor appreciation meeting where the highest accuracy vendor was rewarded. All rules were reiterated, suggestions were taken and credible ones implemented. It helped foster a teamwork approach and broke down many boundaries.
I think in too many applications people are treated like a part of a problem and not part of a solution and respond accordingly.