RSX - THE STANDARD FOR TRANSACTION PROCESSING IN THE CONNECTED SUPPLY CHAIN

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1 INFINITE RETAIL POWER TM RSX - THE STANDARD FOR TRANSACTION PROCESSING IN THE CONNECTED SUPPLY CHAIN The world of retailing has been changing ever since the first online store appeared. The advent of Amazon.com was the first wakeup call for most traditional retailers who thought online sales channels were amusing but not viable over the long term. That notion has long since been proven wrong as each of the stumbling blocks to full acceptance by retail customers has been overcome or otherwise fallen away. But the pace of change is only accelerating as consumers find shopping online to be convenient, economical, and secure. The ability to have a nearly unlimited selection of products from an ever-expanding galaxy of stores means consumers can not only shop for the best prices, but also discover new products by casually browsing or searching web sites. The power of the consumer is forcing retailers to seek out products that fill the demand created by consumers exploring their stores virtually. And at the same time they are pushing suppliers to provide more and better information about their products so that retailers can quickly and inexpensively include new product offerings in their online stores. SPS COMMERCE, INC. P South 7th St., Suite 1000 Minneapolis, MN spscommerce.com In addition to expanding selections of products, consumers are increasingly taking advantage of omni-channel retailing. Driven by the ability to search for products online and purchase them through multiple channels, consumers are able to base purchase decisions on values they determine to be most important for any particular purchase. They are no longer driven to purchase from a single source, but can purchase the same product from multiple sources based on their needs and opinions at the time of purchase.

2 These pressures combine to create both great opportunities and treacherous chasms. Those companies that respond to consumers increasing demands and are able to deliver an everexpanding mix of product, price, and service level will become this century s global titans. The companies, both retailers and their suppliers, that miss the opportunity will face an ever-declining presence where would-be customers bypass them for better selections that more exactly fit their desires. CHANGE IS BEING DRIVEN MORE BY WHAT CONSUMERS WANT THAN BY THE PRIORITIES DEFINED BY IT AND CORPORATE BUDGETS As presented in a recent RSR survey of 500 retailers*, change is being driven more by what consumers want than by the priorities defined by IT and corporate budgets,...changes promised by the consumerization of IT where corporate IT strategy is driven less by enterprise-grade investments and more by the pace of change in consumer electronics now sit on the doorstep of collaboration processes, promising a renaissance around the topic in the near future. WHAT THE MARKET NEEDS It s one thing to understand the fluid nature of the retail customer s desires, but it is something completely different to be able to respond to them in the time frames they have become accustomed to. The move of computer applications to cloud based systems lead by such consumer technologies as Facebook, Google Apps, and now even Adobe, continues to show consumers that advances are not only to be expected, but in many cases, to appear automatically. And the constant race to deliver better features, more advanced products, and the best value in a highly competitive market is a standard of daily life. USE SOCIAL MEDIA TO GAUGE AND TRACK CONSUMER INTEREST AND GET AHEAD OF DEMAND This pace of change means that retailers and their suppliers must work even closer than they have in the past to surface new products and opportunities to offer consumers. Using social media is one of the many ways retailers can track and gauge consumer interest, and can even get ahead of demand by monitoring conversations about products in their sphere of offerings. But a more difficult task is sourcing those products and making them available to meet the demands in time to capture the first surges of purchases. * 2012 RSR Benchmark, 2

3 The opportunity in leveraging this hyperactivity is to be able to quickly identify the suppliers that have the products ready for sale, and that have the proper facilities in place to support the type of retail distribution the retailer wants to implement. Traditional methods of researching products, finding suppliers, determining capabilities, and negotiating details are slow and cumbersome, and those retailers that continue to rely on these methods will lose sales to more nimble and well-prepared competitors. What is needed is a large network or trading partners that are already prepared to work with each other, and are employing a standardized approach to maintaining their offerings, their capabilities, and their product catalogs so that retailers and suppliers can easily find prospective partners and move forward at lightning speed to capture opportunities as they emerge. Today s fast-paced retail environment must be prepared to respond to new customer expectations and changing buying trends with agility and flexibility. Cloud computing, social media and trading partner collaboration are all necessary elements retailers and their supply chains need to embrace to remain nimble and capture more wallet share. WHAT RETAILERS, SUPPLIERS HAVE TODAY The ease of partnering between retailers and suppliers is currently far from fast and simple. While the EDI standard has brought ongoing trading between existing partners closer to an automated process, it s done little to ease the discovery and implementation of new relationships. Finding the right supplier and product is still a largely manual and time consuming process that involves chance and conversation. Even when a desired product is found, understanding whether the product s supplier is able to work with the retailer s requirements involves a detailed question and answer process. What s even more difficult is that even if all the answers indicate that the supplier is a good match, there s no guarantee they can deliver on their promises. Assuming a viable match is found and the details of the relationship are worked out, the connectivity between both partners EDI transactions still requires substantial work. Both partners may abide by one of a number of EDI standards such as X12, EDIFACT or TRADACOMS to produce a purchase FINDING THE RIGHT SUPPLIER IS STILL A LARGELY MANUAL AND TIME CONSUMING PROCESS THAT INVOLVES CHANCE AND CONVERSATION HUNDREDS OF SUPPLIERS RETAILER REQUIREMENTS NEW SUPPLIER 3

4 order, but the retailer s purchase order is almost guaranteed to be different in some ways from all of the supplier s other customers. That means that the supplier must have the resources available to modify their EDI translator to accept this particular retailer s EDI document and translate it to fit with the supplier s order processing system. AS HELPFUL AS EDI IS, IT STILL HAS CHALLENGES THAT DEMAND INVESTMENT MANY EDI STANDARDS CUSTOM EDI MAPPINGS UNIQUELY USED EDI FIELDS CHANGING INTERNAL SPECIFICS Every EDI professional knows that each trading partner s document is different in some ways, and that s just part of the way EDI works. They also understand that retailers can and do change the internal specifics of their EDI documents as their needs and business processes change. Those changes can be infrequent or come in rapid and unending succession. And if the supplier wants to process the orders they receive, they have no choice but to devote the manpower (time and expense) to getting the modifications in place. This arrangement has inherent limitations stemming from the nuances of how companies uniquely use EDI fields, the resources needed to maintain point-to-point mappings, the numerous standards versions available and those organizations that elect to use a proprietary system outside of the standards. These added expenses occur because it is essentially a point-to-point arrangement in which there is no coordination of standardization. Each connection is independent of the others, and each trading partner relationship requires the efforts to maintain the single trading relationship. This arrangement duplicates the costs and time for each relationship. In an age where cloud-based systems have led to extreme scalability because of the reuse of common computing facilities and programming, the EDI transaction system of moving transactions from one trading partner to another is due for an update so that the redundancies and cost burdens can be removed from the equation. STANDARDIZED APPROACH RESOLVES THE PROBLEMS The solution to alleviating this point-to-point complexity is to connect all trading partners through a standardized system that allows each trading partner autonomy to develop and manage its own business processes and requirements as it best suits its needs, and hides the complexities of 4

5 translation specifics of the process. With this kind of approach each trading partner can connect its ERP to a digital feed that consumes and produces communications with its trading partners in what appears as that partner s own native language. In a practical sense, this means that each trading partner creates a single digital link that connects it to thousands of trading partners with no need to make changes to accommodate new partnerships. SPS Commerce s Retail Standard XML (RSX) is a comprehensive data interchange format that includes the data elements that retail trading partners need to transact business and communicate inventory, delivery and status information. A set of APIs provided by SPS enables tight cohesion of trading partners because the connections are made between the functional areas of each enterprise and RSX, making the movement of data transparent. The integration with each company s ERP to RSX allows for complete automation of processes. Retail Standard XML Connects to All Trading Partners Only One Integration Required Trading Partners Data Reusable Business Process Staff SPS RSX INTEGRATION ERP UI Technology Infrastructure At the heart of RSX is the comprehensive data interchange format that includes the data elements retail trading partners need to transact business and communicate inventory, delivery and status information. SPS maintains trading partner-specific document matrices that include the trading partner s required records, fields, codes used and the looping structure to meet each trading partner s specific data interchange requirements. This means the knowledge of data translations that drives the efforts and costs in translating EDI documents is centralized and managed by a single staff of professionals rather than by a team of professionals located at each trading partner s EDI department. This one-to-infinity connection is the antithesis of the current point-to-point system that now dominates the supply chain, and can reduce costs for each trading partner. 5

6 A key difference in the staffing requirements between implementing RSX and maintaining an EDI environment is the mix of skills required by each. An EDI professional will create a single integration to RSX, requiring knowledge of EDI and the business processes. The integration is created using XML, instead of several integrations across multiple EDI standards to diverse ERPs. XML is more widely known and is a skill many technical professionals are able to develop. It is a transferrable knowledge set that is used for much more than EDI and supply chain applications. For the enterprise, this differentiation translates to a lower cost of staff required to maintain the trading partner relationships. In addition, implementation is a single event rather than an ongoing maintenance task because the EDI document transfers and translations take place at SPS Commerce s facilities that are staffed with experts dedicated to keeping the systems updated with the most current translations for every trading partner. Integration updates historically have been managed at each of the thousands of trading partners as time permits depending on the availability of internal EDI resources. The SPS staff incorporates the changes quickly so that each of the thousands of trading partners benefits from the single, centralized expertise. DEVELOPING SOLUTIONS An advantage for developers and integrators to using RSX is that the system is open for developers to create interfaces directly between internal processes and systems. This openness allows systems integrators to create custom interfaces that provide specific functionality that enhances their own offerings and sets them apart from their competitors. The availability of immediate interaction with trading partners greatly reduces the need to understand the specifics of EDI and provides a powerful advantage to developers who can offer instant integration with existing and future trading partners with no additional technology requirements. IT S LIKE HAVING ONE DEGREE OF SEPARATION WITH MORE THAN 50,000 T R A D I N G PARTNERS RSX is the result of years of integration testing and systems development. It is the result of experience meeting the needs of more than 50,000 trading partners, each of whom have connected through the SPS Commerce infrastructure. The external presentation to each trading partner is via XML, making integration easy to understand and integrate. SELECTING A PLATFORM SPS Commerce is uniquely positioned to present RSX as a wide-ranging solution to simplifying the trading partner relationship. It has a large base of thousands of existing trading partners that are already transacting business and it is already maintaining the EDI systems needed to provide the translations. In addition, SPS Commerce is a leader in enabling connections between trading partners and understands the issues involved in making systems work together reliably and consistently. 6

7 SPS is already staffed to deliver the technical assistance that developers need to create their own integration solutions that leverage RSX. Their capabilities include existing facilities for testing and validation of integration components developed using the API. Multiple factors and conditions have come together to present an opportunity for retailers and suppliers to leverage their experience and join together under a unifying platform to increase their competitiveness, reduce their supply chain costs, and to take advantage of the legacy that using EDI transactions has built. RSX delivers a set of tools that trading partners and application developers can use to leverage their existing investments in data and technology without recreating their trading systems. Using RSX to integrate existing ERP systems seamlessly with the supply chain removes a layer of complexity and cost while simplifying and enhancing overall operations. ABOUT SPS COMMERCE SPS Commerce perfects the power of your trading partner relationships with the industry s most broadly adopted, enterprise retail cloud services platform. As a leader in on-demand supply chain management solutions, we provide prewired, proven integrations and comprehensive retail performance analytics to thousands of customers worldwide. With a singular focus on the retail marketplace, we revolutionized traditional EDI systems by developing a platform that enables highly cost-effective and reliable trading partner collaboration. SPS Commerce has achieved 50 consecutive quarters of revenue growth and is headquartered in Minneapolis. 7