I’ll buy that for a dollar!

If you’re old enough (or have an extensive enough Sci-Fi DVD/movie collection), you may remember the film RoboCop from 1987.  It was directed by Paul Verhoeven, who later became famous for that fantastic piece of cinematic achievement – Showgirls!  But he also gave us the Arnold “The Governator” Schwarzenegger classic “TOTAL RECALL”, and another classic of camp cinematic achievement “Basic Instinct”.

RoboCop was a futuristic view of life in the US – specifically in Detroit, MI – where violent crime is the norm – much like today?  Throughout the movie, there are glimpsed scenes of a sitcom TV show (later identified as “It’s Not My Problem”) where a major character uses the catch phrase “I’ll buy that for a dollar!

This wonderful ditty of a catch-phrase came to Me over the past few days when I was reading a post on the EDI-L Yahoo! group about “What is a decent price/cost per EDI message?” and everybody started weighing in with replies – some giving us examples of how much it costs per message at their company (about 50 cents per message) and others going down the “I pay 20 cents per KC” and others talking about the varied costs of the VANs per KC charges.  The poster suggested something about “32 cents per message” – a flat fee.

But here’s where the logic of the question – and the answers – falls apart.

Think about the documents – the messages – which you work with everyday in your EDI system…  Some are POs, some are ASNs, and some are Invoices.  You may be also sending or receiving catalog data, revised POs, acknowledgements, and more.  And now think about the SIZE of those messages.  The 997 Functional Acknowledgement (FA) can be a very short document or message – maybe just a hundred characters long.  It takes 10 of those to make a single KC…  Well, it takes 10 and nearly a quarter to make that KC – there are 1024 characters in a KC.

And then look at a BIG record – the 832 Price/Sales Catalog – and how many KCs are included.  It’s probably a few hundred KCs long – at least.

Or just think about a simple set of transactions:

     ·         A PO for a single line item
     ·        
The FA
     ·        
An ASN
     ·        
Another FA (for the ASN)
     ·        
An Invoice
     ·         Another FA

So we’ve got 6 documents.  But now let’s say that the PO is for 15,000 units of the single item.  It, too, will be a small document – we’ll say its 1 KC of data.  Above, I show an FA at about 1/10th of a KC.  The Invoice will also probably be a short document – as it’s for just the single item – so another single KC of data flow.  In just 5 documents, we’ve got less than 3 KCs of data.

But that ASN; now there’s a big document to trade…  Let’s say that the vendor packages those items being ordered – My famous WIDGETS! – at 10 units per carton.  With 15,000 units, that’s 1500 Cartons!  And if your ASN is a carton level detail, that’s 1500 line items – actually 3000 lines (2 for each carton) – plus the data for the Shipment level and the Order level loops.  Now we’re talking SIZE.  Of course, we may still only be talking about – maybe – 10,000 characters – 10 KC.

But the concept of paying per message – now that’s not really quite fair is it…?  You’re paying 32 cents for that ASN, but you’re also paying 32 cents for the FA.  Big price difference…! 

For that 10 KC document, you’re spending 3.2 cents per KC.  But for that FA at 100 CHARACTERS, you’re spending – what – $3.20 per KC…?  Or is it $32.00….?  And if it’s just that 1 KC PO or Invoice, it’s .32 cents per KC.

Let’s take that comparison out of the EDI world for a second; let’s think about houses.  Assume that a new program comes down the pike where EVERY house will cost the same.  Size, location, amenities, all the rest – doesn’t matter.  It’s all about a unit – the house.  And each house will sell for $250,000.  The problem is that you can have small shacks of 500 square feet selling for the same price as one of the big, 5000 square foot mansions in Beverly Hills or a Malibu Beach house.  A 400 square foot studio “condo” in “the ghetto” selling for the same price as a huge 8000 sf penthouse apartment on Fifth Avenue in New York.

Can you see the problem with this logic?  Using the same concepts I used above on the KC scale, let’s go to the unit of measurement for buildings – the square foot.  In that 500 sf shack, you’re spending $500 per square foot!  But that mansion?  You’re only spending about 50 bucks a square foot.  It’s 10 times the cost for the smaller space, once broken down to the square foot level.  The studio is $625 per foot and the penthouse is just $31.25 per square foot.

Which place would YOU rather have…?  Where’s the bargain…?  Would you buy that concept for a dollar?

It’s the same problem in “per message” pricing vs. “per KC” pricing.  You’ve got these tiny little messages costing as much as the huge monster messages.  And your figures are skewed.  Now, since it costs as much to send the FA as it does to send the Catalog, you might get trading partners that balk at sending the FA for the traded documents.  Then you’ll get trading partners using charge-backs to enforce that FA compliance.

Suddenly, the “low cost per message” now starts to have a lot of other costs involved.  Charge-backs and the human hours required to track down messages – if they’ve been received by your trading partner – and more.  All to save – what, a few cents?

And that’s really one of the problems I’ve often talked about – especially on those groups – in that you can’t just look at the basic cost – the per KC charge – and base your decision off of that fee.  If you do, you’ll likely end up costing yourself a LOT more money in the long run.  Suddenly, that cheap 2 cents per KC rate you worked so hard to get is really costing you an extra 5 cents per KC in other features and benefits that maybe were included in the 6 cent per KC quote you got from that other VAN or SaaS provider you also heard from.  That cut rate deal maybe isn’t such a deal anymore.

There is another catch-phrase that comes to mind – Caveat Emptor; Latin for “BUYER BEWARE”.  It basically means you should look into what you’re buying – and all the aspects of it – and not just buy something without thinking.  Another “Look before you leap” comes to mind.

I’ve said it before – maybe in a blog, maybe in our forums, maybe on EDI-L or some other EDI related group.  But I’ve mentioned how – every once in a while – I’ll get a call or an e-mail or … something … from a VAN or network provider promising Me that they can save Me “50% of your VAN costs!” – expecting that I’m just going to JUMP right onto their wagon and sign up to save a few pennies.  But then again, what about the possible down time?  Or the archival storage?  Or any of the other features I get from My current VAN provider that aren’t included in that “50% off” cost…?

You get what you pay for – there ain’t no such thing as a free lunch – and everything has strings attached and other aspects of the deal to consider.

Yep, I’ll buy that for a dollar, indeed!

Author: Craig Dunham – EDI Coordinator
Read more about Craig here: http://editalk.com/contributors/

“I’m Too Sexy for … EDI?”

With all due respect to Right Said Fred, I’ll take a bit of their song and use it…

But, let’s face it – EDI isn’t sexy. It’s not glamorous… We’re not going to get many invites to black-tie-and-beaded-gown-red-carpet-fancy events. There are no EDI “Oscars” or “Emmys” or “Tony Awards” or anything like that. There’s just data. And details. Lots and lots of details.

And they do say that “the devil is in the details”…

And do I know a thing or two about details! I’ve often been told that I sometimes put in TOO much detail. When I was taking some creative writing courses in college, one teacher was always fascinated and enthralled by the amount of details I’d provide in a story and another always warned Me about too much detail – to let the reader create the image in their mind, of their experiences. If you’ve read much of My work on EDI Talk (or My latest blog over at Inovis), you’ll know I do tend to go into some details – and, yes, sometimes get a bit off track with them…

Now, where were we…?

OH! Yes. Details. And not the men’s fashion magazine!

Truly, however, it is just those details and our attention to them that can make or break our EDI career. How well we provide those details to our trading partners in our outbound documents and how concise we can make our EDI Document specs, the better documents we can receive from our trading partners in return.

In a lot of ways – whether related to our work, our homes, our personal relationships, our cars, whatever – if we do not pay attention to the details, we can lose track of something that can – and usually and probably will – create havoc a bit later on. Take the driver on their cell phone… They’re so into that conversation, that they seem to neglect the details involved in driving… So they don’t stay in their lane; they run that red light or stop sign; they sideswipe some car on the road or cause some other kind of accident.

True, it doesn’t happen all the time. But the opportunity is there for disaster. That recipe has at least an ingredient or two and just needs a few more to be complete.

The daily newspaper and the evening news always have stories of issues or disasters or problems – and oft times you can see that if somebody had just paid attention to a detail or two, the situation may never have gotten out of control. Remember the bridge collapse in Minneapolis in 2007? How about the plane exploding just after take-off in Madrid in 2008? These disasters – and may others – may have been prevented if somebody had just paid attention to the details.

Years ago, I was taking a Carribbean Cruise. 10 wonderful days aboard the SS Rotterdaam, in the Holland America fleet. I was living in Northern California at the time and had to fly to Fort Lauderdale to meet the cruise. And, of course, the travel agent couldn’t seem to find space on a non-stop flight and so I had to swap planes in Dallas-Fort Worth. At the time, DFW Airport had 2 sets of runways – one for all Eastbound flights and one for all Westbound flights.

So, here I am, all snug in My 727 as it’s zooming down the runway and beginning to lift off. Now, if you’ve ever flown on a 727, it’s an experience, as they tend to build up all of their speed on the ground and – seemingly – LEAP into the air, with a quick and very angled climb. Only then, after they’re so many feet into the air, do they begin to level off. Back to My flight, the nose was lifting and you knew it was just a second or two before the back wheels would lift and we’d be in the air…

Just a milli-second before the rear wheels left the ground, a warning light flashed on the dash and the pilot put us back down, stopped us and turned us around and headed back towards the terminal. He told us, as we were heading back, about the light and how he wanted to get it checked out so to be sure it was nothing.

An hour later, we all find out that the bulb socket is what caused the problem and it wasn’t related to the systems it covered. Never did know what system it covered… But a new socket was installed and the light bulb replaced.

Of course, now that we’re an hour later, there’s a stormfront moving in from the west and the Eastbound runway is backed-up with other planes on their way out. Luckily, our pilot talked to a tower controller and got permission to fly out Westbound – where there was far less traffic – and turn around and head east. We were up and flying again in minutes, rather than sitting on the tarmac, waiting in line to take off.

That pilot was paying attention to the details. Because of his attention to details, we were only marginally late in arriving in Florida, but we also all arrived safe and sound. Never knew if the warning lamp COULD have been a big issue and could have resulted in a disaster. But because of a detail oriented pilot, disaster was averted.

Hmmm… where was I…? RIGHT! DETAILS…! DISASTER…! Aversion therapy…

WHAT?

But truly, it’s those details that keep us going. By getting the right information to our vendors and suppliers and customers, we can avert disaster. Or, in the very least, we can avert some problems and issues that could arise later on.

One of the things I’ve always mentioned – in blogs and comments here and on other sites – is how wonderful EDI is at helping to curb errors and mistakes. You don’t get keying errors from an AP clerk or a Customer Service clerk that types in the wrong information and your order for 100 widgets becomes 1000 widgets. Or the invoice for $568.00 becomes 5680…  You miss the errors where somebody wasn’t paying attention to the details and “Oops!” – an error happens.  Hopefully somebody catches that error, but…

And what about the details of our translation specs..?  They matter a lot too.  It makes much more sense if we put an “order quantity” (from the PO1 segment of an X12-850 Purchase Order) into the correct field in our ERP, rather than just put it any ol’ place.  It matters that we pull the total dollar value of the invoice – the amount we’re looking to get paid for the productds or services we’ve rendered – from our accounting application and put that in the TDS segment of the Invoice (or similar, based upon the standard you’re using!) so that when the customer gets the invoice, they pay us the right amount.

Those details matter. Those details can be the difference between “No problemo!” (Terminator 3) and “Houston, we’ve got a problem!” (Apollo 13). 

Those details make it so we have the right information in our systems and can do the right thing with that information; from filling an order to creating that order; paying an invoice to setting up items to be ordered to be put on that invoice.  Details are truly important cogs on the gear wheels we use in every day life.

Details are not sexy. 

Details are plain, dull and ordinary. 

But details matter; details get the job done.

Author: Craig Dunham – EDI Coordinator
Read more about Craig here: http://editalk.com/contributors/