Tuesday, May 31, 2011

The Case Against Category Management – SRDC and Suppliers -1


Suppliers can be connected to the SRDC computers in the same fashion retailers and stores are connected; however, because most suppliers operate in an environment identical or similar to SRDC’s, the connection can be equally efficient. NOTE: Our retailers are using our computers, so they are already integrated.

In our book “Turning Convenience Stores Into Cash Generating Monsters,” Jim and I delve deeply into the issue of “Interfacing vs. Integration,” but to put it simply, ‘interfacing’ is a connection in which computers trade information, and ‘integration’ involves a situation in which computers are actually working together in a real-time environment.

Here are two simple examples:

Interfacing: Let’s say I prepare a collection of data, whether it be an invoice, a list of inventory items, sales, or names and addresses, and send them to another computer through a format such as, EDI, XML, NAXML, CSV, XLS, flat-file ASCII, etc.; at the moment the transactions are sent and received, our computers are loosely connected through some type of interface, oftentimes referred to as a ‘parser’.  If we decide to change the attributes of the data on either side, parsers need to rewritten by computer programmers on both ends.

Integration: If the data is located on my computer and our computers are integrated, we both share the same copy of the data. If you change the data on your computer, the data on my computer is also changed. Integration precludes the necessity for EDI, XML, etc., and the elimination of the need for any kind of parser. It also solves another problem: It prevents the need for ‘synchronization’, because there is nothing that needs to be synchronized.

The reason most computers today cannot integrate, is because they are dissimilar in the way they function which make any attempt at integration impossible. Someday, ALL computers will be integrated; but today, integration is limited to only computers with similar data processing environments.

Case in point: In 1985, I wrote an interface for one of my customers to interface a GasBoy pump to our accounting system. Everything worked perfectly until the GasBoy technician upgraded a chip in the pump, resulting in billions of dollars in charges appearing on customers’ statements. It took us two weeks to get the information we needed to fix the interface. I’m sure you can imagine the turmoil it caused.

Interfacing only works if all parties synchronize their parsers. In the past, changes in data have been successfully used to purposely destroy a competitor’s ability to function. In an era when every software company was suing every other software company for copyright infringement an illegal competitive activities, there was a rumor: When Microsoft decided to compete with Lotus 1-2-3, there was a sign at Microsoft headquarters that said, “DOS ain’t done til Lotus won’t run.”  

PCATS is an ‘interfacing technology’ to do the best it can to make it appear there is some form of integration going on, but no amount of interfacing can offset the advantages of integration. If you would like to know more about this subject, you can Google “integration versus interfacing” and you’ll find millions of discussions, far too complex to get into here.

The lowest form of interfacing, the paper invoice, has served to paint how retailers are forced to work with their suppliers, and for this purpose, electronic invoices serve to lessen the time it takes to handle physical documents. Most retailers who receive invoices electronically must continue to use Category Management, because rarely do suppliers send valid UPC codes with their invoices, and even if they did, very few retailers have the ability to track items. We have been successful in changing all this.

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